When you declare personal bankruptcy you surrender everything you own to a trustee in bankruptcy in exchange for the elimination of your unsecure debts. Personal bankruptcy is a legal process, governed by federal law (the Bankruptcy & Insolvency Act). To go into bankruptcy in Canada, a person must live or do business in Canada, and must be insolvent. To be insolvent means:
1. To owe at least $1,000.
2. Not to be able to meet your debts as they
are due to be paid.
Bankruptcies generally do not affect the rights of secured creditors, i.e., those who have a valid security against your property, such as a car or a house.
What Does a Bankruptcy Mean to You?
There is a required process you and your Bankruptcy Trustee must abide by in order to file for personal bankruptcy. During the bankruptcy, you will also be required to make payments to your trustee for distribution to your creditors. The trustee determines how much you will be required to pay. He or she calculates the amount by taking into account your total income, income standards issued by the OSB, and your personal and family situation.
At the end of the process, a first-time individual bankrupt is usually discharged from debts after nine months.
Why OCCA Offers a Better Solution for Debt Resolution than Bankruptcy
Depending on how many times it has been legally declared, a bankruptcy will remain on your credit report for a minimum of 6 years up to 14 years. Through a bankruptcy you may not be able to obtain credit again for up to 7 years. With a bankruptcy program, you do not have any flexibility on what you want to pay, nor can you prioritize or exclude any creditors. Furthermore, if you miss any payments the bankruptcy program will become null and void..