Complete Guide to Bankruptcy In Ontario
Licensed Insolvency Trustee
Consult an LIT
Bankruptcy is an insolvency option used in Ontario, as well as the rest of Canada, to place an honest but unfortunate debtor on a new financial standing. In bankruptcy, you are released from the obligation to repay all unsecured debts. As a result, it’s a fresh start just like you’re getting started anew in your independent financial life. This is crucial in the process of evaluating your options. Find out if you should file for bankruptcy, how to apply and file for bankruptcy, and whether credit counselling or a consumer proposal would be a better option.
In a bankruptcy, a Licensed Insolvency Trustee assists you in calculating your income, expenses, assets, and debts so that a bankruptcy plan can be devised.
The Personal Bankruptcy Process
If you decide to file for bankruptcy, you will work with the LIT to complete the necessary paperwork. Following that, the LIT will file this paperwork with the OSB (Office of the Superintendent of Bankruptcy), and you will be declared bankrupt. The LIT will then deal directly with your creditors on your behalf from that point on. You will cease making payments directly to your unsecured creditors, wage garnishments will stop and any legal actions brought by your creditors against you will be halted.
Once you’ve been declared bankrupt, the LIT will sell your assets, including any acquired during your bankruptcy. This sale excludes assets that are exempted by Ontario and federal laws. Ontario exemptions are discussed more in depth later on this page. The money obtained by the sale will be held in trust by the LIT for distribution to your creditors.
The LIT will inform all of your creditors about your bankruptcy after you file for bankruptcy. A creditors’ meeting is sometimes needed or requested. This conference will provide creditors with information regarding the bankruptcy, ratify the appointment of the LIT, appoint up to five inspectors to oversee the administration of your estate, and allow creditors to give instructions to the LIT. You will be obligated to attend a meeting if one is called.
A representative of the OSB may question you under oath after you apply for bankruptcy. The objective of the interview is to ask you questions about your behaviour, the reasons for your bankruptcy, and the disposition of your assets.
You will be expected to attend two financial counselling sessions as part of your bankruptcy. The goal of these sessions is to help you understand why you filed for bankruptcy and how you can better manage your finances in the future.
Surplus Income Payments
Additional payments to your LIT for distribution to your creditors may be necessary. You must submit a copy of your pay stubs and proof of additional income to the LIT every month during the bankruptcy process. Your surplus revenue is then calculated by the LIT. Surplus income is the portion of your earnings that exceeds the amount of money a family requires to live comfortably. The OSB determines this sum each year. The more dependents you have, the more you are permitted to keep, the more money you earn, the more you must contribute.
A discharge relieves you of your legal obligation to repay the debts you had as of the day you filed for bankruptcy. Except for certain types of obligations that are specifically prohibited by law such as Alimony and child support payments, college loans from within 7 years, court-ordered fines or penalties, and debts incurred as a result of fraud.
A first-time bankruptcy filer without any surplus payments is eligible for discharge in 9 months. How long your discharge takes is a factor of how many times you have filed for bankruptcy and if you have surplus payments. Your LIT will provide you of all necessary discharge information. If you are not eligible for an automatic discharge, the LIT will request that the court hear your discharge application. After that, the court will set a date for the discharge hearing.
Ontario Bankruptcy Exemptions
With the help of a Licensed Insolvency Trustee, Ontario residents can confidently go through the process of debt resolution, knowing they’re on the path to rebuilding a sense of financial stability in their lives. One of the reasons it’s crucial to speak with a Licensed Insolvency Trustee about your bankruptcy in Ontario is because each Canadian province and territory has its own set of bankruptcy exemptions. This is a list that specifies how much money you can keep in assets or specific things if you file for bankruptcy.
Exemptions are in place because bankruptcy is an opportunity to start over financially, not a punishment. As a result, leaving a person impoverished and without a place to live or the instruments of their trade would be counterproductive. When you declare for bankruptcy in Ontario, the Execution Act and Regulations, which are amended every five years, stipulate what you can keep. You may keep the following items under existing legislation as of 2021:
- Clothing for you and your loved ones (dependents)
- Up to a total value of $14,180 in household furnishings
- Your tools and personal property used to make a living, up to a value of $14,405 and $31,379 if your primary occupation is farming, including animals and tools.
- One vehicle with a value of up to $7,117 and your property with a value of up to $10,783 in equity
- Medical devices and aids for yourself or your loved ones
- As regulations change and some are open to interpretation, it’s a good idea to talk to a Licensed Insolvency Trustee before deciding whether or not to file for bankruptcy.
Ottawa Licensed Insolvency Trustee
Our Ontario Licensed Insolvency Trustees at Lazard and Associates are debt settlement professionals in the province. They are federally licenced and specialise in both bankruptcy and bankruptcy alternatives, such as Consumer Proposals. Residents of Ottawa and Ontario can comfortably go through the debt settlement process with the support of a Lazard and Associate Licensed Insolvency Trustee, knowing they’re on their way to regaining financial stability. Contact us to discuss your pathway to regaining financial control.