How to declare bankruptcy in North York-Scarborough

by admin | Bankruptcy, Uncategorized

If you’ve exhausted all options and need respite from the overwhelming stress of unpaid debts, you and your credit counsellor may decide that your best option is to declare bankruptcy.

Take heart — while it is a serious matter, it isn’t the end of the world. You will recover, and so will your credit, as long as you work to make good decisions and to change the habits that led you here.

Bankruptcy in Ontario provides legal protection from your creditors. It is available to anyone who owes more than $1,000 in unsecured debt and is insolvent, meaning that your debts outnumber your assets and you are having trouble repaying them.

To claim bankruptcy, you must meet with a certified credit counselor or licensed bankruptcy trustee, who will review your finances and file on your behalf.

While the vast majority of uncomplicated first-time bankruptcies are automatically discharged nine months later (meaning that your creditors are legally prohibited from any further action to collect or offset your debt to them, and you are free to start rebuilding your credit and accrue assets — your debts are permanently erased), sometimes things get a little more complicated. A creditor can object to your discharge if they think that you should have filed a consumer proposal instead, or that you have lied during the process or are hiding assets. As long as you complete your duties, it’s rare for a creditor to object. Once discharged, you’re free to start fresh. (Subsequent bankruptcies take longer to discharge.)

Your duties in bankruptcy, simply put, are to disclose to your trustee all of your assets and the details of your income, as well as supplying the trustee with required income tax returns; hand over your credit cards for cancellation; disclose the sale of any assets within one year of declaring bankruptcy, as well as any valuable gifts you bestowed within five years of declaring; attend the initial meeting of your creditors; and attend two sessions with a credit counsellor. Failure to fulfill any of these or other required duties could delay or prevent your discharge.

Until discharge, you will be required to keep track of your income and expenses, and may be required to pay a portion of your income to the trustee for disbursement to your creditors.

If your debts are overwhelming, it’s time to talk to a credit counselling professional. Even if bankruptcy turns out to be your best option, we can help you cut your expenses, plan your spending, and make better financial choices in the future. Give us a call today.

What are my duties in bankruptcy?

by admin | Bankruptcy, Uncategorized

In an uncomplicated first bankruptcy, as long as you fulfill certain obligations, your bankruptcy will be automatically discharged in nine months, and you’ll be released from your debts. Any failure or delay in fulfilling those obligations can delay or prevent your discharge. So, what are those obligations?

As per the Bankruptcy and Insolvency Act, bankrupts in Ontario are obliged to:

–          Disclose to your Credit counsellor or trustee all property and deliver it to the trustee if required

–          Relinquish to the trustee all credit cards for cancellation

–          Deliver all titles, policies, tax records etc. that relate to your financial affairs

–          Disclose under oath as required the conduct and causes that led to bankruptcy

–          Deliver within five days of filing bankruptcy a statement of your affairs including names and addresses of all creditors, as well as other pertinent details

–          Assist the trustee in inventorying your assets as required

–          Disclose all property of which you’ve disposed in the year prior to filing

–          Disclose any gifts or settlement without adequate compensation made in the five years prior to filing

–          Attend the first meeting with your creditors and subsequent meetings as required

–          Submit to examinations regarding property and financial affairs under oath as required

–          Aide to the best of your ability in the distribution of proceeds from asset sales

–          Execute powers of attorney, deeds, conveyances etc. as required

–          Double-check claims filed if required by the trustee and correct any errors

–          Inform the trustee of any changes to your financial situation

–          Generally do whatever is reasonably required with regard to your property and distribution of any proceeds

–          Keep the trustee advised of your address until discharged

We’ve paraphrased these duties for the sake of brevity, and they are intended just for your general knowledge. If you are considering bankruptcy, you should discuss the particulars of your situation with your credit counsellor or bankruptcy trustee.

If your debts are greater than your ability to pay them, it’s time to talk to a professional. Call us today

What happens after Bankruptcy?

by admin | Bankruptcy, Uncategorized

Before you make the decision to declare bankruptcy, you should know what you can expect when the process is over. The very best thing that happens is that after your bankruptcy is discharged, you’re absolved of your responsibility to repay your debts and free to make a new start. No more collection agencies calling you, no more shower of letters through your mail slot, no more stress.

There are, of course, some not so positive consequences too, the most serious of which is likely what a bankruptcy does to your credit rating.

A first-time bankruptcy stays on your credit bureau report for seven years, and will make it hard to obtain credit. That means not only that it becomes much more difficult to buy a car, a house, or other such major purchases, but it gets harder to do simple things like reserving a hotel room.

There are steps you can take, though, to start to restore your credit rating, such as obtaining a secured credit card. This means that you essentially prepay the card by putting money on deposit with the lender to mitigate their risk. That way, if you don’t make a payment, the lender will take enough of the money you’ve put on deposit to cover the debt, and reduce your credit limit accordingly. Making payments as required will reflect well on your credit rating, so don’t let that happen, though. You might also consider borrowing for an RRSP, or applying for a small-limit credit card or line of credit with a co-signer. If you don’t start repairing your credit, you’ll find after seven years have passed that you have no credit history whatsoever, and that can make it as difficult to obtain credit as having a negative credit history.

Even though you are released from your debts, your bankruptcy becomes part of your personal financial history, and as such must be honestly disclosed as the law requires, even after the seven years are up and it no longer appears on your credit report.

Depending on the circumstances that drove you to bankruptcy, you can be susceptible to repeating the same mistakes over again. Not only do you not want to repeat the anguish of becoming insolvent, but subsequent bankruptcies are harder to obtain and take more time to discharge. Make sure you get the help you need from a qualified credit counsellor, even beyond the two sessions required to fulfill your obligations for discharge if you need them, so you can make your financial future brighter than the past.

Will I lose my vehicle in bankruptcy?

by admin | Bankruptcy, Uncategorized

Next to their home, for many people their car is the most valuable thing they own. Naturally, it’s often top of mind when insolvent individuals — those whose debts outweigh their ability to repay them — consider declaring bankruptcy.

Will you lose your car in bankruptcy? There’s good news and bad news. The good news is you won’t be stranded. Once the value of your vehicle has been appraised for fair market value — that is, what you could likely sell it for to a stranger — if there are no liens on it, you’ll have the choice of either surrendering the car to your bankruptcy trustee or remitting to the trustee the value of the vehicle to be disbursed to your creditors. If your car is worth less than $5,650 and you don’t owe money on it, you’ll be permitted to keep it without further payment; if it’s worth more, you’ll remit the difference.

The potentially bad news is that if you do owe money on the car, i.e. there’s a lien on it so you don’t have “clear title,” it gets a little more complicated.

The lender who helped you buy the car will likely be able to prove to the trustee that they have first priority over any other claims on it, and your trustee will likely “release” the car to them; that is, acknowledge that they have the right to the car if you fail to make your payments. The lender will then be able to make arrangements with you to keep

making your regular payments, or seek payment of the fair market value if your loan is more than the car’s worth, or seize and sell the vehicle. If the difference between what you owe and the car’s value is significant, it may be in your best interest to simply surrender the car to the lender; the shortfall will then be added to your bankruptcy.

If the value of your vehicle is actually more than the remaining loan amount, instead of releasing your car to the lender, your trustee will determine the difference between the market value and what you owe, and you will pay that amount to the trustee as well keeping up your payments, or the trustee will seize and sell the car. Usually, you’ll be able to make arrangements to pay the difference over the course of your bankruptcy.

The rules about vehicles in bankruptcy can get confusing, so your best bet is to discuss your particular situation with your credit counsellor or bankruptcy trustee.