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If you have any questions about Bankruptcy please take a look at our FAQ.
What is Bankruptcy?
Bankruptcy is designed to help people who are unable to repay their debts, to get relief from their debt. It is a legal process governed by the Bankruptcy and Insolvency Act administered by a Licensed Insolvency Trustee. Filing for Bankruptcy releases you of all your unsecured debts, with a few exceptions.
Should I file for Bankruptcy?
Bankruptcy can help eliminate most unsecured debts and help you find your financial footing. Everyone’s financial circumstances are unique. If you are considering Bankruptcy, reach out to a Licensed Insolvency Trustee to see if it is the right debt relief option for you.
How much debt do I need to file for Bankruptcy in Canada?
In Canada, you must be insolvent and owe at least $1,000 to qualify for Bankruptcy.
What is insolvency?
Insolvency is when you are unable to pay your debts as they become due. Bankruptcy is one way to deal with insolvency however, there are other debt management options available such as a Consumer Proposal.
Are there alternatives to filing for Bankruptcy?
Depending on your debt situation, there may be other alternatives to filing for Bankruptcy, such as a Consumer Proposal. A Licensed Insolvency Trustee will present all of the debt relief options available and can guide you in choosing the one that is right for your situation.
Bankruptcy vs. Consumer Proposal: What’s the difference?
Both Bankruptcy and Consumer Proposal are debt tools that can provide debt relief to Canadians. For a Consumer Proposal to be a viable option, you need to have a secure source of income. This is not the case for a Bankruptcy. In Bankruptcy you can be required to surrender non-exempt assets, depending on their value and whether or not they are held as security by a creditor. A Consumer Proposal has no impact on your assets, but your assets can have an impact on your proposal, since the value of any non-exempt assets will affect how much you have to pay your creditors under a proposal. Bankruptcies are generally shorter in duration than a Consumer Proposal, but there are exceptions to that. A Licensed Insolvency Trustee will help you determine which solution is right for you.
Why a Licensed Insolvency Trustee (LIT)?
Licensed Insolvency Trustees are the most highly trained and educated insolvency experts in Canada. Their rigorous training and experience gives them the ability to provide a wider range of credit counselling and advice than is offered from other professionals in the field. Licensed Insolvency Trustees are also the only professionals licensed in Canada to administer either a Bankruptcy or a Consumer Proposal.
How long does Bankruptcy stay on my credit report?
Both Equifax and TransUnion (Canada’s main credit bureaus) typically remove a Bankruptcy from your credit report six years after the date of discharge. If you declare Bankruptcy more than once, it can stay on your credit report for 14 years.
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Does Bankruptcy clear all of my debt?
Bankruptcy will not necessarily clear all of your debt. Most unsecured debts will be eliminated, including credit cards, tax debt, and payday loans. There are some exceptions including child support, alimony, debt that is the result of fraud or mis-representation, and fines and penalties of the court. Student loans can be included if they are older than 7 years.
What is credit counselling?
Credit counselling is a debt service available to those struggling with debt. A Licensed Insolvency Trustee can provide the widest range of advice and information from budgeting advice to consolidations loans, or guidance on Bankruptcy or Consumer Proposals.
What is the Bankruptcy and Insolvency Act?
The Bankruptcy and Insolvency Act (BIA) is a federal law designed to relieve the Canadian debtor from debt they can’t pay. The BIA sets the rules in Canada for Consumer Proposals, Division 1 Proposals, Receiverships, and Bankruptcies.
What is Bankruptcy protection?
Bankruptcy protection protects against creditor actions. Bankruptcy Protection stops all collection calls, garnishments and other legal actions related to debt and financial matters.
How to declare Bankruptcy in Manitoba?
To declare Bankruptcy in Manitoba:
- Book a free consultation with a Licensed Insolvency Trustee, such as LCTaylor
- Gather relevant income and debt information to bring with you
- Discuss your financial situation with your Trustee
- Review all debt relief options to be certain that Bankruptcy is the right choice
- Sign the necessary paperwork to file for Bankruptcy
- All collection activity and wage garnishments stop. You are protected from creditors
What is the cost of Bankruptcy?
The Government of Canada publishes annual Standards, which indicate how much income is needed in Canada for families of various sizes. If the family income is greater than the amount on the Standards, the bankrupt is required to pay 50% of the EXCESS. For example if you earned $400 more each month than the Standards indicate is necessary, you would be required to pay 50% or that, or $200 per month.
In the case where the individual does not earn more than the government Standard, the Licensed Insolvency Trustee will assess a minimum fee to cover administrative costs. This minimum fee is paid for the duration of the bankruptcy – 9 months, for a first time bankruptcy, and 24 months for a second time bankruptcy. This fee varies from Trustee to Trustee.
The Government of Canada charges a filing fee for both Bankruptcies and Consumer Proposals. That fee increases slightly each year, with inflation. It is paid at the beginning of the Bankruptcy with the signing of documents.
Will I lose my car if I file Bankruptcy in Canada?
Whether or not you lose your car in Bankruptcy depends on a number of factors. In Manitoba, if you use that vehicle to get to and from work, it is considered a “tool of the trade”, and there is a $3000 exemption for the vehicle.
If the vehicle is secured by a car loan, the exemption pertains to the amount of equity in the vehicle (the difference between its value and what you owe on it). If the equity does not exceed $3000, and you continue your car payments to the secured creditor, you would keep the car. If there was equity greater than $3000, you could pay the difference to the Trustee over the course of the Bankruptcy, and still retain the vehicle.
In the situation where your vehicle is not secured by a creditor, if it is valued at under $3000, it is exempt. If it has a value greater than $3000, if you can afford to do so, you can pay the Trustee the excess values over the course of the Bankruptcy.
Payments received by the Trustee are held in trust for the creditors.
Will I lose my house if I file Bankruptcy in Canada?
Manitoba provides an exemption for some equity in your principal residence. The amount of realizable equity you have in your home is determined by the market value, minus the total amount owing on your mortgage, outstanding property taxes, and estimates of potential carrying costs and the potential cost of selling the house. If your realizable equity does not exceed the exemption, and you continue your mortgage payments, you can keep the house. If you have some equity greater than the exemption, you might want to pay the difference to the Trustee and retain the house. Your Trustee can help you decide whether that is a financially viable option for you.
To keep your home, you must also be able to make your mortgage payments. Usually, Bankruptcy can make it easier to make your mortgage payments since most of your other debt obligations have been eliminated.
There are some instances when it may be in your best interests not to keep the house. This is particularly true when you owe considerably more on the mortgage than the house is worth. In that situation, Bankruptcy can be a good opportunity to let the house go to the secured creditor, and rid yourself of the mortgage payments. If you make this decision at the time of bankruptcy, and cease payments at that time, any shortfall between the mortgage and the value of the house will be erased in the bankruptcy along with your other debts. If you continue payments on the mortgage after you have filed the Assignment in Bankruptcy, you have re-committed to that mortgage, and the opportunity to walk away from the house is lost.
Will filing for Bankruptcy affect my spouse?
Filing for Bankruptcy will not affect your spouse if your debts are only in your name. However, if you and your spouse have joint debt (e.g. co-signed on a loan, shared credit cards) and you file for Bankruptcy, then your spouse will remain legally responsible for any joint debt. While Bankruptcy removes your responsibility to pay for that debt, unless your spouse is also bankrupt, their responsibility for the debt will not change.
What does it mean to be “discharged” from Bankruptcy?
When you are “discharged” from Bankruptcy, it means that you are finished with the Bankruptcy, and you are released from the legal obligation to repay your debts that existed on the day you filed for Bankruptcy, with some exceptions. Exceptions include spousal or child support payments, fines or monetary penalties imposed by the Court, debts arising from fraud or misrepresentation, and student loans if less than 7 years have passed since you were a student.
When will I be discharged from Bankruptcy?
You are automatically discharged nine months after you file for Bankruptcy if you meet the following criteria:
- It is your first Bankruptcy and you have successfully completed the requirements
- Attendance at two financial counselling sessions, provided by your Trustee
- You are not opposed by a creditor, your Licensed Insolvency Trustee, or the OSB
- You are not required to pay a portion of your income into the Bankruptcy estate according to standards established by the Office of the Superintendent of Bankruptcy (OSB)
If you are required to pay a portion of your income into the Bankruptcy estate and this is your first Bankruptcy, you will be eligible for discharge after contributing to the estate for 21 months.
Is it best to work with a local Manitoba Licensed Insolvency Trustee?
It is up to you to decide which Licensed Insolvency Trustee is the right fit for you. However, there are advantages to working with a local Trustee versus a larger national firm. With a national firm, it is not uncommon for your Bankruptcy file to be outsourced to another province. This does not happen at your local LCTaylor firm.
At LCTaylor, we are intimately familiar with the unique court rulings and exemptions in this province and with all of the Manitoba exemptions that you may be entitled to. As a local Trustee, who has worked for decades in Manitoba, we are familiar with the requirements and attitudes of local creditors. Our entire staff is located in one building in Winnipeg where they work as a team to ensure you receive the best debt services Manitoba has to offer.
How to get in touch with LCTaylor
Phone
Call us at 204-925-6400 (Winnipeg) or toll-free 1-800-463-8371
Chat
Available during office hours on LCTaylor.com, our main website
LCTaylor – Manitobans serving Manitobans
Reach out to speak with a Licensed Insolvency Trustee today. In person or virtual (phone, email, video) appointments available.
BANKRUPTCY HELP
LCTaylor Licensed Insolvency Trustee is a Bankruptcy administrator in Manitoba. We will help you create your debt relief plan, get legal protection from your creditors, and start fresh.
