How to Declare Bankruptcies in Canada as a First-Time Bankrupt?

Many unfortunate situations might render you penniless. Losing a job, emergency medical bills, and bad business situations are to name a few. So what is the next best option, financially?

When debt is your root cause of stress, filing for bankruptcy might be the only viable option. If you cannot pay off your credit card bills, debt repayments, and regular expenses, bankruptcy filing in Canada will slowly but steadily help you return on track. 

According to the Government of Canada, the number of bankruptcies in Canada in October 2022 dipped by 3.4% compared to September 2022. Now, this shows that more businesses and individuals have become money-conscious. 

However, sudden situations might render you financially helpless. So to prepare you for these moments, let us deep-dive through how to declare bankruptcy in Canada.

A Bankruptcy Trustee helps you throughout the process to understand each step carefully. Stress, worries, and fear are familiar in such situations. But with professional help, filing for bankruptcy and discharge is less intimidating.

#1 Recognize Your Current Debt Situation

Try not to file for bankruptcy immediately after realizing you cannot pay off your credit card bills, rent, or debt settlements. Contact a credit counsellor first to see if you have alternative solutions. 

A credit counsellor aids in identifying your money problems that need bankruptcy filing, such as:

• Your credit card is at the limit.

• The collection agencies have your credit account now.

• Your loan payments are due.

• Your rent has been unpaid for the last few months.

A professional credit counsellor assesses these situations and suggests alternative options, like debt consolidation, management programs, consumer proposals, etc., to settle your financial liabilities.

But of course, if the situation seems dire, your only option will be to file for bankruptcy. 

#2 Contact a Licensed Insolvency Trustee

After your credit counsellor assesses your situation, they will ask you to contact a licensed insolvency trustee. These are professionals with licenses from the Canadian Superintendent of Bankruptcy. 

And since it is mandatory to work with a trustee during your bankruptcy and consumer proposal periods, choose someone:

• You trust with your information.

• Holds a legitimate license from the Superintendent of Bankruptcy

• Who is ready to clarify the bankruptcy process for you and will answer your doubts. 

A professional insolvency trustee will help you with your paperwork and ensure that you are up-to-date with your:

1. Monthly income status

2. Assets

3. Debt amount unpaid

4. Credit card issue

5. Current financial situation

All of these are crucial information to keep at hand as it helps your Trustee to:

• Check if you have any alternatives to declaring bankruptcy

• Offer your complete guideline for filing, lest there are no alternatives.

• Ensure you do not face any legal troubles by keeping you on track.

#3 Declare Bankruptcy

Your Trustee will help you finalize if you want to file for bankruptcy. Keep in mind that once you declare bankruptcy, there is no going back. 

No need to worry about paperwork because those are your Trustee's responsibilities. All you have to do is share detailed information on

• Your creditors

• Your assets

• Your name, birth date, and legal address

• Current living condition

Your Trustee uses this information to complete the necessary legal paperwork to send to the court. And when the court accepts your filing, you are legally unable to pay off your debts. And this means debt collectors cannot come after you or take legal action. 

Conclusion

As a bankrupt individual, you have responsibilities to oblige to, such as attending credit counselling sessions and sharing your income details with your Trustee. The faster you adapt to a better spending habit, the quicker you will again land on your feet. 

And your Trustee will ensure you put your best effort into restarting life with a clean slate. So check out bankruptcy filing processes today and stay up-to-date with your finances.