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Bankruptcy

The bankruptcy allows for an honest debtor to be relieved from a financial burden that cannot be respected in the normal course of business.

A bankruptcy is a procedure under the Bankruptcy and Insolvency Act. In a bankruptcy all assets are vested with the Trustee for the benefit of your creditors.

A payment must be made for either nine (9) or twenty one (21) months depending of your income in a first time bankruptcy. A payment of either twenty four (24) or thirty six (36) months in regards to a second time bankruptcy.

The bankruptcy will release you from all debts except:

  • Fines, alimony, debt of fraud, student loans of less than seven years

What Assets Can I Keep In A Bankruptcy?

Assets which are exempt by law (furniture etc.), motor vehicle under a certain value (depending provincial legislation)

Tools of trades (limit determined by provincial legislation)

Motor vehicle which are fully encumbered (following an agreement with the secured creditor)

Real estate which are fully mortgage (following an agreement with the secured creditor)

RRSP (except for contributions done in the twelve months prior to the bankruptcy)

Will Legal Procedures Continue?

All procedure against a debtor are stayed once the procedure of bankruptcy is filed:

  • Wage garnishment
  • Legal actions
  • Harassment from collection agencies