Question 1

What are the first signs of insolvency?

Accepted Answer

The first signs of insolvency often include missing bill payments, using credit to pay for basic expenses, relying on payday loans, receiving collection calls, or being unable to reduce your debt despite making payments. If these warning signs continue, it may be time to speak with a Licensed Insolvency Trustee.

Question 2

What is the difference between debt and over-indebtedness?

Accepted Answer

Debt is money you owe, such as credit card balances, loans, or unpaid bills. Over-indebtedness happens when your debt becomes too difficult to manage with your income and regular expenses. A person may be over-indebted before they become formally insolvent.

Question 3

Can over-indebtedness lead to insolvency?

Accepted Answer

Yes. Over-indebtedness can lead to insolvency when you are no longer able to meet your financial obligations as they become due. The earlier you review your situation, the more options you may have to address your debt and avoid further financial difficulty.

Question 4

What debt solutions are available if I am over-indebted?

Accepted Answer

Depending on your situation, possible debt solutions may include budgeting support, debt consolidation, a consumer proposal, or bankruptcy. A Licensed Insolvency Trustee in the Ottawa region can review your income, expenses, assets, and total debt to explain which options may be available to you.

Question 5

Is there a minimum amount of debt to go bankrupt?

Accepted Answer

The minimum amount of debt required for a person to become bankrupt has been set by the Act at $1,000.00. However, it goes without saying that a person with only $1,000.00 in debt should not go into bankruptcy. In addition to this minimum debt, there is the fact that the person is insolvent, i.e. unable to meet the payments of his debts as they come due, or that the total of his debts is greater than the value of his property.

Question 6

Can creditors garnish my salary if I go bankrupt?

Accepted Answer

Creditors have no recourse against a debtor or his property from the date of bankruptcy. It should be noted that there are certain exceptions such as the collection of maintenance payments and fines.

Question 7

Can I get out of debt without losing my home or vehicle?

Accepted Answer

You may want to consider filing a consumer proposal. As long as payments to secured creditors (mortgagee) are up to date, you will be able to keep your building and/or car. This way, you avoid bankruptcy.

Question 8

Do I have to go bankrupt if my spouse goes bankrupt?

Accepted Answer

Your spouse's bankruptcy does not necessarily mean your bankruptcy. Liability arises from the joint and several endorsement or liability of the obligation. The trustee will analyze with you if you are responsible for one or more of your spouse's debts. If you are found to be liable then creditors may demand payment from you.

Question 9

How much does a personal bankruptcy cost?

Accepted Answer

The cost of your personal bankruptcy depends on your income and the value of your attachable assets. An excess income will be calculated according to the parameters defined by law and taking into account your incompressible expenses. This excess income is used to calculate the monthly payments you will have to make to balance your debts.

Question 10

What protections does personal bankruptcy offer?

Accepted Answer

When you are declared in personal bankruptcy, you are discharged from certain debts under the conditions defined by the Bankruptcy and Insolvency Act. Your creditors stop claiming payments and any seizure procedures on your income or account are interrupted. Some of your belongings are protected from seizure, such as your clothing, the furniture in your main home, your animals or the professional equipment you need to practice your profession.

Question 11

Which debts are affected by a personal bankruptcy?

Accepted Answer

A personal bankruptcy covers your unsecured debts, i.e. those resulting from a loan taken out without designating a property as collateral, unlike residential mortgages, for example, for which your home is used as collateral.

Unsecured debts involved in the personal bankruptcy process may be, for example:

Debts from credit card payments
Unpaid rents
Unpaid invoices
Consumer credit

ANSWERS TO YOUR QUESTIONS ABOUT BANKRUPTCY AND DEBT