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Personal Bankruptcy


Personal bankruptcy is a legal action that allows you to surrender your assets for the benefit of your creditors in exchange for eliminating your debts. If you have substantial debts and neither debt consolidation nor a consumer proposal applies in your case, you can claim bankruptcy under the Bankruptcy and Insolvency Act. 


In such a case, at Bernier & Associates, you are welcome to visit one of our offices - in Ottawa or Gatineau, for instance - and we will advise you on how to initiate personal bankruptcy proceedings. This solution that can erase your debts or financial obligations and help you start fresh. 

Request a free consultation now.

How Does Declaring Bankruptcy Work?

Bankruptcy is a legal process administered under the Bankruptcy and Insolvency Act.

More specifically, personal bankruptcy is a procedure that allows an insolvent person or the liquidator of an insolvent person (with the permission of the court) to make an assignment of their assets for the benefit of their creditors in general in order to relieve themselves of a financial burden when they are unable to repay their obligations.

This process frees you from most of your debts and any legal action taken against you by your creditors should also come to an end. In fact, filing for bankruptcy frees you from most or all of your unsecured debts including credit card balances, lines of credit, payday loans and tax debts. It also triggers an automatic stay of proceedings, which suspends any legal actions brought against you by your creditors such as wage garnishment.

If you’re claiming bankruptcy for the first time, you’ll typically be discharged from your debts after nine or twenty-one months (depending on your income). However, information about your bankruptcy will remain on your credit report for an additional seven years. If you file for bankruptcy a second time, it’ll appear on your credit report for 14 years.

If you need to file for personal bankruptcy in Ottawa or Gatineau, trust our licensed insolvency trustees to conduct the process.

Does declaring bankruptcy erase all debts?

Since bankruptcy only affects unsecured debts, it does not eliminate loans secured by collateral, such as a mortgage or car loan. Other types of debt excluded from bankruptcy are alimony, child support, and student loans (if you haven't left school for more than seven years).

Also, if someone has co-signed or guaranteed a loan for you, your personal bankruptcy proceeding will not release that person from their obligations.

Does Declaring Bankruptcy Erase All Debts?

Since bankruptcy only deals with unsecured debts, it won’t eliminate loans that are guaranteed by collateral such as a mortgage or car loan. Other types of debt excluded in bankruptcy include alimony, child support and student loan debt (if you haven’t been out of school for more than seven years).


Furthermore, if someone has co-signed or guaranteed a loan for you, your personal bankruptcy proceedings won’t release that person from their obligations.

What Is the Role of a Licensed Insolvency Trustee?

A licensed insolvency trustee is a person who is licensed by the Office of the Superintendent of Bankruptcy to handle proposals and bankruptcies. The licensed insolvency trustee will explain in detail the consultation process and your responsibilities during the process. He will explain the consequences of the process, including its implications regarding your credit rating and the restoration of your credit score.


A licensed insolvency trustee is the only professional authorized to administer a bankruptcy in Canada. In addition to preparing and filing the necessary paperwork, a licensed insolvency trustee is responsible for ensuring the rights of both the debtor and creditors are respected throughout the bankruptcy process.

Debts, Legal Remedies and Credit Score

Legal remedies cease on the day you declare bankruptcy except for certain criminal or civil proceedings such as matrimonial proceedings.


In addition, it is important to note that personal bankruptcy does not release you from your alimony payments or your student debts that are less than 7 years old; nor does it release the co-signer or guarantor of your loan, if applicable.

In general, information about your bankruptcy will appear on your file for a period of 7 years after your release from debt. This period will be extended to 14 years if you have previously been bankrupt.


Bankruptcy and Credit Score

Once your bankruptcy declaration is filed, your credit score will be updated and the credit bureau will give you the lowest "score", identifying you as insolvent. 

To learn more about the impact of bankruptcy on your credit score and possible solutions in such a case, please read our blog post on this topic.

Does Personal Bankruptcy Necessarily Mean the Loss of Material Assets?

Not necessarily. At Bernier & Associates, we can help you solve your over-indebtedness problem through solutions such as personal bankruptcy or a consumer proposal. In many cases, keeping your car and your home during bankruptcy is possible. 


For more information on the conditions under which you can keep some of your material assets in a bankruptcy situation, consult our blog.



Are You Considering Personal Bankruptcy? Call Our Trusted Advisors in Ontario and Quebec


If you struggle to pay off your debts, contact Bernier & Associates to discuss your options. One of our licensed insolvency trustees can explain your financial restructuring options and determine if personal bankruptcy is the right solution for you.

Contact us today to schedule a free consultation in Ottawa, Gatineau, Montreal or any of our 15 offices in Ontario and Quebec.

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