Bankruptcy Frequently Asked Questions (FAQs)
Do I lose all my property in a bankruptcy?
No. In Ontario, a bankrupt is able to retain the following property:
- Household furniture up to liquidation value of $11,300.00
- Personal effects up to $5,650.00
- Tools of the trade up to $11,300.00
- A vehicle up to $5,650.00
- Life insurance policies with specific designated beneficiaries
- RRSP’s held with a life insurance company that meet certain restrictions
- RRSP’s (except contributions in the preceding twelve months)
How long am I bankrupt?
An individual filing bankruptcy for the first time is usually discharged from the bankruptcy and thus cleared of the majority of their debts within nine months. If they are required to make monthly surplus income payments, a first time bankrupt will be discharged in 21 months.
A second time bankrupt will be discharged in 24 months if there is no surplus income obligations, and 36 months if they are required to make surplus payments based on their monthly family income.
An opposition to your discharge by a creditor, or failure to comply with duties will delay the above time frames.
How much does a bankruptcy cost?
The Trustee’s fees and filing costs are set by tariff under the Bankruptcy and Insolvency Act. We can arrange for payment terms that fit your financial situation.
How is my credit rating affected?
A bankruptcy will remain on your credit rating for 6 years from discharge for a first time bankruptcy and 14 years for a second time bankruptcy. A consumer proposal will stay on your credit rating for 3 years from completion of the proposal.
Will bankruptcy eliminate all my debts?
The following debts survive a bankruptcy meaning you will still have to pay the creditor after your discharge:
- Fines or penalties imposed by a court;
- Award of damages with respect to intentional bodily harm, sexual assault or wrongful death;
- Alimony and child support;
- Debts arising from illegal activity such as fraud, embezzlement, misappropriation, etc.;
- Debts incurred by fraudulent misrepresentation or false pretenses;
- Dividend for creditors not disclosed to the trustee; and
- Student loan debts where you have attended school within the last seven years.
Can I continue to pay my car lease/loan or mortgage in a bankruptcy?
The Trustee will determine if there is any value to the secured asset over and above the secured loan. If the amount owing on your car or house is greater than the value of your car or house then the Trustee does not seize your asset, and you can make arrangements directly with the secured party to continue to pay their debt. In most instances, as long as your payments have been current, the bank will allow you to continue the loan and keep the asset.