How do I file for bankruptcy in Quebec?

Personal bankruptcy in Quebec is a legal process governed by the Bankruptcy and Insolvency Act and administered exclusively by a licensed insolvency trustee. Although it is often perceived as an extreme solution, bankruptcy can represent a real fresh start for those who are drowning in debt and can no longer keep up with their payments.

At Mallette, we guide many Quebecers through this process every year. Our team offer a free, confidential initial consultation to assess your options, whether bankruptcy, a consumer proposal or other alternatives tailored to your situation.

What is personal bankruptcy?

The personal bankruptcy allows most unsecured debts, such as credit cards or personal loans, to be written off when repayment becomes impossible.

Unlike a consumer proposal, which involves negotiating a partial repayment of your debts with your creditors, bankruptcy involves a total or near-total discharge of your debts, but with a greater impact on your credit rating.

Steps to declare bankruptcy in Quebec

Declaring bankruptcy is an important step that follows a very specific process. Understanding each step helps reduce uncertainty and better prepare you for the process. Here are the main steps involved in declaring bankruptcy in Quebec.

1. Consultation with an licensed trustee

The first step in declaring bankruptcy is to meet with a licensed insolvency trustee. This initial meeting is free and confidential. The trustee will assess your entire financial situation: debts, assets, income and current expenses.

Based on this analysis, he or she will outline all the options available to you (personal bankruptcy, consumer proposal, debt consolidation or budgetary measures), so that you can make the best possible decision. The aim is to find the most advantageous solution based on your needs and ability to repay.

2. Gather your financial information

Once you have made your decision, you will need to put together a complete file. This includes:

• A detailed list of your debts (credit cards, lines of credit, personal loans, taxes, etc.).

• Your assets (house, car, RRSPs, personal property).

• Your monthly income and expenses.

Accuracy and transparency are essential: they enable the trustee to prepare a file that complies with the Bankruptcy and Insolvency Act and ensure full protection from creditors.

3. Official filing of the bankruptcy

The trustee will then prepare the necessary documents and help you sign them. Once you have filed for bankruptcy, you are immediately placed under the protection of the law. This means that :

• Suspension of collection appeals and letters.

• Stopping legal proceedings and ongoing seizures.

• Implementing a legal framework that manages your creditors.

From this stage onwards, you no longer have to negotiate directly with your creditors; your trustee becomes your sole intermediary.

4. Payments and obligations during bankruptcy

During bankruptcy, you must make certain mandatory payments. These generally include a minimum amount set by the trustee (often around $1,800) as well as additional payments if you have surplus income, i.e. income above the threshold set by the government.

In addition to these payments, the law lays down a number of obligations:

• Participate in two budget counselling sessions to learn how to better manage your finances.

• Provide your income and expenditure statements on a regular basis.

These measures are designed not only to help you get out of debt, but also to prevent you falling back into it in the future.

5. Discharge from bankruptcy

The final stage is the discharge from bankruptcy, which generally takes between 9 and 21 months for a first bankruptcy, depending on your income level. This discharge marks the official end of your obligations and the wiping out of the majority of your unsecured debts. You thus benefit from a genuine financial fresh start, protected by law and supported by your trustee.

A difficult choice, but a solution for starting afresh

Going bankrupt in Quebec is a serious process that involves fixed costs, but also variables depending on your income and family situation. Although bankruptcy may seem fraught with consequences, it remains a legal and supervised solution that offers a genuine financial fresh start.

Before making a decision, consult a licensed insolvency trustee like Mallette. This professional can analyze your finances, explain your options and help you choose the best strategy, whether it's bankruptcy, a consumer proposal or an alternative tailored to your situation.