Law & Legal & Attorney Bankruptcy & consumer credit

Bankruptcy Rules of Canada

    Filing for Bankruptcy

    • Bankruptcies must be filed through a trustee in bankruptcy. Trustees are licensed by the Office of the Superintendent of Bankruptcy. Trustees in Bankruptcy are responsible for protecting the interests of creditors and advising debtors of their options and legal requirements; they are officers of the court.

    Release of Debts

    • Some debts are not forgiven in bankruptcy. These include alimony payments, child support and student loans if it has been less than seven years since the debtor was a full-time student. Fines imposed by the court and debts from fraud are also not forgiven.

    Possession of Assets

    • All assets of the debtor will be assigned to the trustee in bankruptcy except for those assets protected by federal or provincial laws. Some provinces allow bankrupt individuals to keep less valuable vehicles, and personal affects including clothing, jewelry and family heirlooms are generally protected. Bankrupt individuals cannot dispose of any assets assigned to trustees.

    Payment of Creditors

    • In many circumstances debtors are required to issue payments to their trustee for distribution to creditors. The amount of these payments is decided by the trustee, taking into account the debtors income and family responsibilities.

    Co-dependents

    • Debts are the sole responsibility of the debtor, however creditors may be entitled to a portion of any joint assets held with a spouse. Individuals who have co-signed a loan for a bankrupted person remain responsible for making payments on the loan after bankruptcy.

    Income

    • After filing for bankruptcy debtors are required to fill out an "income expense form" and report any income possessed. If income exceeds a standard amount set by the Office of the Superintendent of Bankruptcies, the debtor may be required to pay a portion of their income to the bankruptcy estate through their trustee.

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