What Happens When You Go Bankrupt

Thursday, April 24, 2014 - 00:36

Bankruptcy, Asset Concerns, Collection Agencies, Wage Garnishment

Once you file for bankruptcy, all creditor action stops.

This means that your creditors cannot continue any further legal or collection activity against you, including wage garnishments, harassing letters or telephone calls.

The bankruptcy process is designed to help an honest but unfortunate debtor to get a fresh start plus you're are able to keep assets. The following are exempt from seizure pursuant to provincial (Ontario) legislation:

  • Clothing, jewelry, personal belongings totaling up to $5,650

  • A car, truck or motorcycle valued at up to $5,650

  • Household furniture and appliances totaling up to $11,300

  • Tools/equipment used to earn a living totaling up to $11,300

  • Most life insurance policies

  • Majority of RRSPs and pensions

Some other assets are not exempt (ie: a house) however, it is possible to keep them provided you are able and willing to buy them back from the trustee at fair-market-value. 

If you are making payments to secured creditors and you want to keep the assets they hold as collateral for their loan (ie: car loan, mortgage, etc.) you will have to continue making payments or be willing to surrender the encumbered asset. The rights of secured creditors are unaffected when you make an assignment in bankruptcy.

Latest Posts

Tax Season For the Self-Employed

This year the deadlines for filing your 2017 tax return are as follows: April 30, 2018 for personal returns and June 15, 2018 for self-employed persons. Keep in mind, however, that any tax owing must still be paid by April 30, 2018.

February 15, 2018

Business Concerns

Q and A: Tax Season

With income tax season in full swing, I thought it would be a good time to answer some common questions that I hear regarding government debt and tax returns.

February 10, 2018

Government Debt

Duties of a Bankrupt

Personal bankruptcy laws in Canada are governed by the Bankruptcy & Insolvency Act. Failure to complete your duties will delay your bankruptcy discharge so it is important you fully understand your requirements once you declare bankruptcy.

February 5, 2018