Step by Step Guide on How to File Bankruptcy in Ontario

Only a Licensed Insolvency Trustee (“LIT”) can file an assignment in bankruptcy for an individual in Canada.   The steps to file an assignment in bankruptcy are as follows:

1. Reach out to a LIT to schedule an in-person or virtual consultation to review your assets, liabilities, income and expenses, co-signors of your debt, and any transfer of your assets.
2. The trustee explains solutions for debt relief, and you decide which solution is best for your circumstances.
3. Statutory documents are prepared by the trustee and signed under oath as being a true statement of your affairs.
4. Documents are filed with the Office of the Superintendent of Bankruptcy (“OSB”), which issues a Certificate of Appointment confirming your bankruptcy, and a stay of proceedings is implemented, which stops your unsecured creditors from taking legal action against you. The bankruptcy filing can stop a garnishment of your wages by an unsecured creditor.
5. Assets that have a realizable value vest in the trustee to realize for the benefit of your creditors. This means the trustee will collapse any non-exempt investments (TFSA, GIC, etc.), collect amounts owing to you from any other party, and realize on equity in your house or other assets.
6. Monthly Income and Expense forms must be submitted to determine if you are required to pay surplus income payments. If your income exceeds a threshold set by the OSB, 50% of any surplus must be paid to the trustee for the benefit of your creditors.
7. Tax returns for the year of bankruptcy will be prepared by the trustee, and any refund will go to your trustee.
8. Creditors could request a meeting of creditors to ask you questions on your financial situation and disposition of assets.
9. You must attend 2 counselling sessions on budgeting, money management and rebuilding credit.
10. A first time bankrupt will be discharged (relieved from their debt) in 9 months if you are not obligated to pay surplus income payments. The discharge is extended to 21 months if you are obligated to make surplus payments and 24 months if you were bankrupt before (36 months if you are obligated to make surplus income payments).
11. The bankruptcy will be reported on your credit rating for 7 years from your discharge (14 years for a second bankruptcy).
12. You will move forward free from your unsecured debt with financial tools to provide your future financial success.

If you are struggling with debt and considering bankruptcy, reach out to our trustees for a free consultation.  We are ready to walk you through the above steps to a fresh start.