Questions

DebtQuestionWhat are the most frequently asked questions about getting out of debt?

We asked Trustees across Canada, and here are their answers.

 

If you cannot find your answer here, or wish to speak to someone directly about your situation, please contact us through our online form, and someone will be in touch with you to help.

Will the Creditors Stop Harassing me?

   Yes, they will.  All collection actions once documents are filed for a bankruptcy or proposal will cease (including garnishee orders).  You generally have four options.

  1. Debt Consolidation
  2. Negotiate a settlement or new payment with creditors
  3. File a proposal
  4. File a bankruptcy

Will my wages be garnished in a bankruptcy? 

  Most wage garnishes are stopped by Bankruptcy, however certain garnishments such as alimony & child support will continue.

Will everyone know if I file for bankruptcy? 

 Unless you are a prominent business figure, only your creditors will know you have filed bankruptcy.  The Trustee will not tell your employer you have filed.

How is my spouse affected by my debt problems? 

 Your spouse, whether married or common law will NOT be affected by your bankruptcy if he or she is not responsible for any of your debt.  If they have co-signed or made a joint application for credit, then they take ownership of those, however, their assets will not be affected by your bankruptcy.

 Can my bank refuse to let me open a bank account?

 No, they cannot.   Your bank cannot prevent you from opening an account due to a bankruptcy.  However, we do suggest you open an account at a bank to which you do not owe any money to prevent issues.

 What debts are erased in a bankruptcy?

  Most debts are erased by the bankrupt’s discharge except for the following:

  1. Fines imposed by a court  or
  2. monies awarded by a court
  3. Alimony or maintenance payments.
  4. Money owing for stolen goods
  5. student loans if bankruptcy is filed prior to or within seven years after the finish of studies.

What happens to Income Tax refunds, GST cheques and Child Tax credits from CRA if I file for bankruptcy?

Income Tax Refunds –  CRA will send refunds for the year of bankruptcy and years prior to bankruptcy to your Trustee for the benefit of creditors
GST cheques  – CRA will automatically send GST cheques to yourTrustee while you are in bankruptcy
Child Tax Benefits –  will continue to be sent directly to you.

Will I lose my house or vehicle if I file for a bankruptcy?

 Many people are able to keep their homes even though they file for bankruptcy.  The true answer to this question depends on a number of factors, including how much equity you have in your home and if the mortgage holder will allow you to keep the house and continue to make payments.   Everyone situation is different and important assets such as a family home will be thoroughly discussed with you at a consultation.
As for vehicles,  if your vechicle is financed then you will not lose it as long as you are up to date with payments and can continue to make payments.  If you own your vehicle, and require it for work purposes, you may keep it as long as it is worth $6500 or less.  If you own it, but it is worth more than $6500, then certain restrictions may apply.  In most cases you can still keep a vehicle. Contact a Trustee office near you for further information.

Will my credit rating be better if I use a credit counsellor instead ?

 No.  Using a credit counsellor will not give you a better credit rating faster.  In fact, you will likely take longer to re-establish good credit, and usually pay more if you use a credit counsellor rather than a qualified Trustee.   For more information on Trustees and how they can help you – refer to this page.

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