CanadIAN bankruptcy questions answered
At BDO, we strive to make sure you get the answers to all of your bankruptcy questions so you can decide whether filing for bankruptcy is right for you. You may also have a lot of questions during the bankruptcy process, and after you file for bankruptcy which will be happy to answer. Below are some of the most common questions that we receive.
Q: Will my spouse be responsible for my debts if I go bankrupt?
A: It is an individual that goes bankrupt, not a family. If your spouse has not co-signed your debts, he/she will not be affected by your personal bankruptcy; except in determining family income and the calculation of surplus income. We generally recommend that both spouses/partners come to BDO to discuss the options and explore ways that the couple can work together to solve their financial difficulties.
Q: Will I lose everything if I go bankrupt?
A: No, you will not lose everything if you go bankrupt. In each province, there are assets that are protected by an exemption from seizure.
Q: Someone co-signed on a loan; what happens if I go bankrupt?
A: If someone guaranteed or co-signed a loan on your behalf (e.g. a spouse, partner or relative), he/she will be responsible for paying the liabilities incurred jointly with you.
Q: What happens to my credit rating if I go bankrupt?
A: Most likely, if you have serious financial problems and are considering filing for bankruptcy, your credit rating has already been impacted. Bankruptcy can actually help to clear up your credit rating over time.
Q: How much does it cost to file bankruptcy?
A: The cost of filing for bankruptcy varies from person to person, based on your personal financial situation. During your initial free consultation, a Trustee in Bankruptcy can outline the costs of filing for bankruptcy. A reputable Trustee will discuss your situation with you and outline the cost of filing for bankruptcy before charging you any money. You do not have to make a commitment until you feel comfortable.
Q: I have outstanding student loan debt. Can I go bankrupt?
A: If you are struggling to make ends meet and your loan repayments are causing you financial and emotional stress, there are options to deal with your student loan debt. Although you can go bankrupt, if you ceased your attendance at school within the last seven years, your student loans may not be discharged. Discuss this matter with your BDO trustee.
Q: What does it mean to be discharged from bankruptcy?
A: A discharge from bankruptcy means that you no longer owe the debts that you had at the beginning of the process. It is a fresh start. However, even though creditors will stop calling after you file the assignment in bankruptcy, you will still owe the money until you receive your discharge. Your discharge is very important.
Q: Can I keep my house if I file for bankruptcy?
A: Yes, it is possible to keep your home if you file for bankruptcy.
Q: Do I still have to pay child support if I go bankrupt?
A: Yes, child support or alimony claims are not dischargeable by bankruptcy law.
Q: Can I get a credit card if I go bankrupt?
A: You are required to surrender all credit cards in your possession to the trustee when you sign the bankruptcy papers. However, it will be possible to obtain credit and credit cards again after you are bankrupt. You will just need to disclose your bankruptcy to the lender, and a credit card issuer may require a deposit to secure the credit card.
Q: Will my bankruptcy be made public?
A: Generally, there is no public notice of bankruptcy and only creditors will be notified. However, legally, bankruptcy is a public process so people would be able to find out about your bankruptcy. If your assets available for distribution to creditors (i.e. those not exempt from seizure) do not exceed $15,000, your bankruptcy will not be advertised in the newspaper. If available assets exceed this amount, the law requires that the Trustee place a notice in the newspaper. The vast majority of bankruptcy filings are not advertised. If you have any more questions, you should discuss this matter with the Trustee prior to proceeding.
Q: How long does a bankruptcy last?
A: You remain in the bankruptcy process until you receive your discharge. Normally, the period over which you are “bankrupt” can last from nine to 36 months and it generally depends on your specific financial situation.
Q: Does a Trustee in Bankruptcy work for creditors?
A: A Trustee in Bankruptcy does not work for either the debtor or the creditors. The Trustee is an officer of the court who is licensed to administer the Bankruptcy and Insolvency Act and acts more like a mediator. He/she has duties to the bankrupt, creditors and the Office of the Superintendent of Bankruptcy to ensure that the process is fair to all parties.
Q: Are there alternatives to filing for bankruptcy?
A: Filing for bankruptcy is a last resort to be used when all other viable debt management options have been exhausted. For information on bankruptcy alternatives, check out our information about consumer proposals for an alternative way to help you take control of your debt without going bankrupt.