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Most people at some point in their life will experience financial problems. If you’ve been saddled with an insurmountable amount of debt and have creditors harassing you for payment, there is no need to feel embarrassed or ashamed. You are not alone.
Bankruptcy is a legal process that can provide relief to honest but unfortunate individuals who are unable to pay their debts.
In order to be eligible for bankruptcy, an individual must be insolvent. There are a number of factors to consider when determining whether an individual is insolvent which include, but are not limited to, the following:
Although some individuals may consider themselves as insolvent, there may be other options available to you besides bankruptcy. Your first step should be to meet with a Licensed Insolvency Trustee (“LIT”). The professionals at Crowe MacKay & Company will evaluate your financial situation and discuss the various alternatives that could help you solve your financial problems.
If bankruptcy is the option you choose, you will work with an LIT to complete the required forms. The LIT will file the forms with the Office of the Superintendent of Bankruptcy (OSB). Once the forms have been accepted by the OSB, you will be in bankruptcy.
As of your date of bankruptcy, the LIT will deal with your creditors directly on your behalf. You will stop making payments directly to your unsecured creditors. Any garnishments against your salary will stop. In addition, a stay of proceedings will be in place which prevents creditors from continuing or commencing any action against you.
With respect to your assets, your non-exempt assets will be assigned to the Trustee for realization for the benefit of your creditors. This may include property acquired during your bankruptcy. Certain assets may be exempt from seizure such as: clothing, tools of the trade, cars, RRSPs, and your principal residence.
Depending on your income level, you may be required to make payments to the LIT for distribution to your creditors during the term of your bankruptcy. These are called surplus income payments. Surplus income may arise if your household income exceeds the prescribed standard set by the Office of the Superintendent of Bankruptcy (OSB). This calculation varies depending on your family size and income.
Bankruptcy terms vary from individual to individual but typically range between 9 and 21 months for first time bankrupts depending on whether or not you have surplus income.
If you are considering bankruptcy, please contact the professionals at Crowe MacKay & Company. We can help you regain control of your finances and give you the tools to rebuild a better, more financially-secure future.