FAQ

As a general rule, when your debt level becomes high and you are no longer able to meet your obligations as they fall due, your credit rating is already seriously affected. Filing for bankruptcy or a consumer proposal will obviously affect your credit rating. However, once your bankruptcy is discharged or your consumer proposal is fully executed, your credit rating will improve. To do this, you will need to re-establish your creditworthiness, or rebuild your credit.

As a general rule, you are more than likely to be granted credit once you have been discharged or once a consumer proposal has been executed in full. However, keep in mind that your proposal or bankruptcy will remain on your credit file for about six (6) years.

No. Only the assets of the person filing the proceedings are affected, unless assets are owned jointly by the spouses. In this case, agreements will usually be made regarding these assets. It is important to make the authorized insolvency trustee aware of your joint assets so that each situation can be examined individually.

If the majority of your assets and debts are shared with your spouse, it may be a good idea to consider filing for bankruptcy or a joint consumer proposal.

No, a lawyer is not required to start your bankruptcy or consumer proposal file. In rare cases, such as an opposition to your discharge, hiring a lawyer may be useful. If you feel you need legal advice but cannot afford it, legal aid may be available.

The vast majority of legal proceedings are suspended when you make an assignment of property or file a consumer proposal. If you receive a summons, writ of seizure or any other legal document after the date of bankruptcy, contact your authorized insolvency trustee immediately.

The proceedings of a secured creditor or those relating to a maintenance claim may not be suspended by a bankruptcy or proposal. The authorized insolvency trustee will clarify this issue with you, if necessary.

The basic principle is that all assets acquired before you are discharged from bankruptcy are seizable and turned over to the authorized insolvency trustee for distribution to your creditors. Therefore, unless you are discharged, lottery winnings and inheritances received during your bankruptcy are deemed to be assets of your bankruptcy. This principle does not apply in the case of a consumer proposal.

Yes, but if you owe money to the same financial institution, it may be wise to open an account elsewhere to ensure that future deposits are not used to offset debts incurred prior to bankruptcy or the filing of a consumer proposal, and to guard against the possibility of the account being frozen.

Under the Bankruptcy and Insolvency Act, an undischarged bankrupt cannot obtain credit without first informing the creditor that he or she has not been discharged from bankruptcy.

Similarly, you should hand over all your credit cards to the authorized insolvency trustee as soon as you file your case.

Bankruptcy or a consumer proposal does not eliminate the obligations of the person who guaranteed a loan in your favour or who co-signed it. Your spouse, unless he or she has filed a joint proceeding with you, could be liable for the financial commitments you have jointly contracted. It is important to inform the authorized insolvency trustee of joint debts so that each situation can be examined individually.

Documents relating to the bankruptcy or your consumer proposal are kept by the Superintendent of Bankruptcy and, in some cases, by the court. Regulatory documents and discharge registers are available at all credit bureaus. Employers are not normally notified of personal bankruptcies or consumer proposals filed by their employees, unless the authorized insolvency trustee is required by law to forward certain documents (e.g. notice of stay of proceedings). Bankruptcy notices for the vast majority of consumer bankruptcies are not published in newspapers.

Bankruptcy or a consumer proposal gives you the opportunity to recover financially and get out of debt. After filing for bankruptcy or a consumer proposal, creditors' telephone calls should stop immediately. The law is clear; all collection measures must cease as soon as proceedings (bankruptcy or proposal) are filed.

The fees for a summary bankruptcy and a consumer proposal are based on your ability to pay and your level of indebtedness. The fees charged by the authorized insolvency trustee are set by law. These fees will be included in the monthly payment you make for your file.

With a few rare exceptions, such as certain professional orders, there will be no impact. An employer cannot dismiss, suspend or discipline you for the sole reason that you have filed a consumer proposal or bankruptcy. If your wages are garnisheed after you file a consumer proposal or go bankrupt, the garnishment will cease immediately.

No, the authorized insolvency trustee will not go to your home and seize anything. However, if you are in debt and do nothing, a creditor could eventually obtain a judgment and seize your property. Bankruptcy and a consumer proposal stop this process. Despite your bankruptcy, the following assets remain exempt from seizure:

• Furniture that furnishes your residence, for household use and that is necessary for living up to $7,000 is never subject to seizure;

• Working instruments necessary for the personal exercise of a professional activity;

• Food and clothing;

• Goods needed to alleviate a disability;

• Road vehicles in certain situations;

• RRSPs, except for contributions made in the 12 months prior to bankruptcy (for certain RRSPs only).

Please note that none of your assets can be seized under a consumer proposal.

Yes, contrary to popular belief, tax debts are dischargeable debts, unless they result from fraud.

Yes, there are certain debts that can never be discharged; they are called non-dischargeable debts. They are listed in section 178 of the Bankruptcy and Insolvency Act. Here are the main ones:

• any fine, penalty, compensation awarded in a civil case for personal injury or sexual assault;

• any debt or obligation for alimony;

• any debt or obligation resulting from fraud, embezzlement, misappropriation or breach of trust while a person was acting, in the Province of Quebec, as trustee or administrator of the property of another;

• any debt or obligation arising from the obtaining of goods or services by false pretence or fraudulent misrepresentation;

• any debt or obligation arising from a student loan, unless you have ceased to be a student for at least seven (7) years.