the bankruptcy Process - learn the steps
Initially, filing for bankruptcy may look challenging. However, your BDO trustee will help you understand what is happening, the legal terminology and the steps in the bankruptcy process. Below is a step-by-step explanation of the process you will go through when filing for bankruptcy. Your BDO trustee will guide you through this and take care of many of the steps on your behalf.
Congratulate yourself - Deciding to take control of your debt takes a lot of courage and you are taking a positive step toward achieving financial independence.
Set up an complimentary appointment - BDO Canada Limited is a federally licensed trustee in bankruptcy with 70 trustees in 95 offices across Canada, available to help you through the bankruptcy process. To find a Trustee, click here. The first consultation is free and there is no obligation to proceed. At your consultation, the Trustee will review your financial situation and ask you for the following information:
Why you are in financial difficulty
Your family situation and your responsibilities
Your income and assets (what you earn and what you own)
A list of your outstanding debts (who you owe and how much)
Confirm your options - After reviewing your financial situation, the trustee will discuss with you all of your options to get out of debt to help you make an informed decision about whether bankruptcy is the most appropriate solution for you.
Fill out an application - Once you have decided to proceed with filing for bankruptcy, your trustee will ask you to fill out a detailed application. However, there is no need to worry - the application looks worse than it is. It will take about 20 minutes to complete, and your trustee can arrange for someone to help you do so if you feel uncomfortable tackling it yourself.
File for bankruptcy - When you have completed the application form, the trustee will prepare documents that you must sign after ensuring that they are correct. The trustee will then file the documents with the Office of Superintendent of Bankruptcy (OSB), a department of the Federal Government. Your bankruptcy does not happen until this filing takes place. During your bankruptcy period, you will stop making payments to your unsecured creditors. You will still owe the money until the discharge happens, however:
Creditors will not be able to take any legal action against you to collect the debt (except for alimony, maintenance or support)
The harassing phone calls from creditors and collection agencies will stop
You agree to hand over any available assets to the trustee, who will be responsible for turning them into cash and giving the money to the creditors. For more information on what assets you can keep in a bankruptcy, click here.
Creditors are notified - The trustee will notify your creditors that you have filed for bankruptcy. Then, a meeting of creditors may be called depending on the type of bankruptcy, or if your creditors or the OSB request such a meeting. The main purpose of this is to give your creditors a chance to learn the details of your situation and give directions to the trustee, if they wish. There is almost never a creditors’ meeting in a consumer bankruptcy.
Sale of your assets - During the bankruptcy period, your assets - except for those exempted by federal and provincial laws - will be turned over to the trustee who will turn the assets into cash. Talk to your BDO bankruptcy trustee to find out what possessions you can keep, or visit your provincial site of the Superintendent of Bankruptcy for more information.
Payments to the trustee - In almost all cases, payments to the trustee are required. Sometimes, the payments are meant to ensure that the trustee gets paid for the work the trustee does in your bankruptcy. Where warranted by your income, there are surplus income payments. The law provides that, when you make a certain amount of money (determined by family size and after considering certain responsibilities), “surplus income” payments will be required. In this event, the length of the bankruptcy period increases from nine to 21 months. The purpose of surplus income is to balance your need for a fresh start against the creditors’ need to be paid.
Examination by OSB - This is another step of the bankruptcy process that does not normally happen. However, after you file for bankruptcy, an officer of the OSB could examine you under oath about "your conduct, the causes of the bankruptcy and the disposition of your property."
Credit counselling - As part of your duties, you must attend two mandatory counselling sessions, held at the trustee's office, which are intended to help you understand the causes of your bankruptcy and better manage your finances.
Final reporting - In certain circumstances, the trustee will be required to prepare a report that is circulated to the OSB and creditors prior to your discharge from bankruptcy. In many cases, the report is not required and, generally, you will receive an automatic discharge from bankruptcy when your duties are complete. In the event that you do not perform your duties, the report will be prepared and a court appearance may be required.
Discharge hearing - If required, you will have to attend a discharge hearing. This is only a possibility. If a creditor, the trustee or the OSB objects to the discharge, a court hearing will be held to determine what requirements must be met prior to your discharge.
Receiving your discharge from bankruptcy - This is the part of the bankruptcy process you are looking forward to. Once you are discharged from bankruptcy, you will be released from the legal obligation to repay the debts you had at the date you filed, except for certain types of debts that are excluded. For more information on how long the bankruptcy process can last, click here.