Filing Bankruptcy With No Assets

When you file an assignment in bankruptcy, your assets that are not exempt from seizure or fully encumbered, vest in the trustee to realize on for the general benefit of your creditors.  This means that the trustee will cash in your TFSA, will sell your house or car to realize the equity or you can make an offer to purchase them back from the trustee.  If you do not have any assets, there is nothing for the trustee to take.

In the year of bankruptcy, your trustee will file your personal income tax return and any refund for the year of bankruptcy or any prior year will be forwarded directly to your trustee as property of your estate.

Depending on your net monthly income and family size, you may be obligated to make surplus income payments to your trustee.   The Superintendent of Bankruptcy has issued a directive as to what they think is necessary to cover reasonable living expenses, and if your income exceeds this threshold, you must make surplus income payments to your trustee for the benefit of your creditors.

When there are realizable assets, the trustee’s fees can be paid from the assets realized.  If you have no assets and are not required to make surplus income payments, then you will be obligated to pay the trustee a minimum fee for them to administer your estate.  The amount of the fee varies depending on if it is a first, second or third bankruptcy.  The minimum fee that Taylor Leibow charges for a first-time bankruptcy is 9 monthly payments of $200 per month.  We understand that if you are considering filing bankruptcy, the minimum fee may seem unmanageable, but you will no longer be making payments to your unsecured creditors.

You can also consider a proposal to your creditors if you have excess funds available monthly to offer a compromise to your creditors.

Stop struggling alone with overwhelming debt.  Reach out to our Licensed Insolvency Trustees today to explore all potential debt relief solutions at a free consultation.