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Personal Bankruptcy Process

Personal bankruptcy in Ontario is a serious, complex legal action governed in large part by the Ontario Execution Act and the Bankruptcy and Insolvency Act. Bankruptcy should never be entered into lightly – and only after careful consultation with a Bankruptcy Trustee. By statute, all personal bankruptcies in Canada must be filed by a Licensed Bankruptcy Trustee.


Filing for Personal Bankruptcy in Ontario

The information presented here – provides a general overview of the personal bankruptcy process in Ontario. If you have specific questions concerning your own situation, please call the experts at David Sklar & Associates (Bankruptcy Trustees serving the Greater Toronto Area) for a Free Consultation.

Eligibility for Bankruptcy

If you are a resident of Canada, owe more than $1,000, are 18 years of age or older, and have explored all other debt repayment options you may be eligible to file for personal bankruptcy.

In general terms a ‘typical’ personal bankruptcy would proceed as follows:

Find Your Trustee – Find and meet with a Licensed Bankruptcy Trustee where you will review your current financial situation and discuss your debt repayment options. At the end of this initial meeting, your Trustee should be able to advise you if a bankruptcy is the preferred course for you – or if additional information is required. Both you and your Trustee need to agree on bankruptcy before filing.

Filing Bankruptcy – The Trustee will help you to fill in the necessary forms. The Trustee then files your bankruptcy with the Office of the Superintendent of Bankruptcy.

Once you are officially in bankruptcy:

  • You will no longer deal directly with your unsecured creditors (your Trustee will advise you on how to proceed with your secured creditors)
  • You will stop paying your unsecured creditors
  • You will make payments to your Trustee for disbursement as stipulated in your bankruptcy filing
  • Your creditors will stop all lawsuits and collections actions against you.

Sale of Assets – The Trustee will only sell your non-exempt assets and hold the proceeds for disbursement to your proven creditors. In many cases, Real Estate Property and RRSP’s may be yours to keep.

Depending on your situation, some assets may be exempt from seizure for sale by the Trustee. In Ontario – in accordance with the Ontario Execution Act (and a subsequent 2005 amendment) – some of these asset exemptions may include:

  • Clothing – (described as necessary and ordinary) now has no limit.
  • Prime residence items – furniture, utensils, equipment, food and fuel not exceeding the prescribed amount or, if no amount is prescribed, up to $13,150 in value.
  • Tools (those ordinarily used by you to earn your living) not exceeding the prescribed amount or, if no amount is prescribed, up to $11,300 in value. Note: farming tools are treated differently.
  • One automobile – not exceeding the prescribed amount or, if no amount is prescribed, up to $6,600 in value.

Notification of Creditors – All your creditors will be notified of your bankruptcy by the Trustee.

Creditors’ Meeting – If your creditors or the Office of the Superintendent of Bankruptcy requests a creditors’ meeting, you must attend. During the meeting, details of your bankruptcy; confirmation of the Trustee; directions to the Trustee from your creditors; and or other matters may be discussed and voted upon.

Examination of Bankruptcy – If the Office of the Superintendent of Bankruptcy (OSB) requests an examination of your bankruptcy by an officer of the OSB you must attend. This will be an examination (under oath) and will deal with such issues as your financial conduct; the causes of your bankruptcy; and how your property will be administered.

Debt & Credit Counselling – You will be required to attend two financial counselling sessions where you will discuss the circumstances that led to your insolvency, ways to avoid them in the future and how to manage your finances in the future.

Trustee’s Report – The Trustee will send a detailed report to the Office of the Superintendent of Bankruptcy and to your creditors, on your performance of the bankruptcy requirements, your current financial situation and recommendations as to whether or not you should be legally released from your debts (discharged from your debts).

If you or one of your creditors does not agree with the Trustee’s report in regards to payments/surplus issues, a formal mediation process is available. If a creditor disagrees with anything else, they may send a notice of opposition.

If the Trustee, any creditor, or the OSB opposes the discharge – the bankruptcy will then be dealt with in court.

Discharge Hearing – If there are no objections or irregularities, qualifying first-time bankruptcies can be given an automatic, absolute discharge 9 months after the initial filing of bankruptcy, without the need for a hearing.

If a creditor, the Trustee, or the OSB requests a hearing, or if you fail to quality for an automatic absolute discharge or this is not your first bankruptcy – a court hearing for the discharge will be held and your presence is mandatory.

If there is a hearing, the court will determine what type of discharge you will receive:

  • Absolute discharge – releases you from the requirement to pay those debts covered in your bankruptcy.
  • Conditional discharge – the court requires you to perform other actions and or make further payments to your estate before an absolute discharge is issued.
  • Suspended discharge – the court sets the date of your absolute discharge to a future date.
  • Discharge refused – the court can refuse you a discharge.

Bankruptcy Discharged – If you have received an Order of Absolute Discharge, you will be legally released from paying the debts covered in your bankruptcy.

Personal Bankruptcy Considerations

If you are considering filing a personal bankruptcy, call the bankruptcy experts at David Sklar & Associates or get started with our Quick Assessment Form to book a Free Consultation. With six convenient Greater Toronto Area offices – we are here to help you.

We Can Help

If your debt problems seem insurmountable – we can help. At David Sklar & Associates, our Licensed Debt ProfessionalsTM have the experience and knowledge to help you get out of debt. During your consultation, we will help you understand what your current financial situation is, how best to fix it, and how to move on to a better life. With six offices in the Greater Toronto Area – we are here to help.

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