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Answers to Bankruptcy Questions From Your Local Burlington Experts

Receive help and get answers to your bankruptcy questions from our Burlington and Oakville trusteeship offices. This topic provides information to help you gain a better understanding of the bankruptcy process.

Bankruptcy is a legal proceeding that is available to help a person to cope with a financial crisis. One of the main purposes of bankruptcy legislation is to afford the opportunity to a person, who is burdened with debt, to free him or herself of the debt and start over. To file for bankruptcy a person has to be insolvent, which means:

  • A person shall owe at least $1,000
  • Not be able to meet debts when they are due to be paid

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The bankrupt person must keep the trustee informed as to where they are living and also must respond to the trustee’s requests, assisting him as required and providing whatever information is requested. The bankrupt person must also provide the trustee with reports as to their earnings and living expenses, as well as any change in the bankrupt’s family situation.

The trustee will provide the appropriate forms to be filled in, which will provide the trustee with the necessary information. A meeting of creditors is not required unless requested by the Superintendent of Bankruptcy, or by creditors with an aggregate of at least 25% of the proven claims. These meetings are usually held at the office of the trustee.

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In a bankruptcy, where there are free and clear assets over $15,000, a notice is placed in the “legal” section of the newspaper notifying creditors of the date of the meeting of creditors. If there are minimal assets less than $15,000, the creditors are notified by mail only – there is no advertisement in the “legal” section of the newspaper.

From this documentation, the Credit Bureau is notified and the bankruptcy is recorded and will remain on your credit record for 7 years. This does not mean that you cannot obtain credit during this time. Any granting of credit is the responsibility of the creditor to approve.

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Yes, they will! By law, all actions against a bankrupt must cease once the documents are filed. This does not apply to secured creditors such as banks holding, for example, a lien on a car, or a mortgage on a house.

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Your spouse, whether common law or married, will not be affected by your bankruptcy if he or she is not responsible for any of your debt (did not sign an agreement or contract for any of your debt). If they have a supplemental credit card they are probably responsible for that debt. Your spouse’s credit rating will not be affected by your bankruptcy and any assets in the spouse’s name will not be part of the bankruptcy.

If your spouse is responsible for any of your debt, or has his/her own debt, then the spouse may have to file bankruptcy too.

The property exempt from seizure is set by the Province of Ontario is as follows:

  • Personal Belongings – No Limit
  • Household Goods – $14,180.00
  • Tools of the Trade – $14,405.00
  • Farmers – $31,379.00
  • Motor Vehicle – $7,117.00
  • Home – Principal Residence $10,783.00
  • Certain Life Insurance Policies
  • Most Pensions and all RRSPs (except the amounts contributed in the last 12 months)

In a bankruptcy, assets in excess of your allowed personal exemption, such as real estate, automobiles, and boats which are the property of the bankrupt, as at the date of bankruptcy, and anything that the bankrupt acquires during the bankruptcy, vests in the trustee for the benefit of the creditors of the bankrupt.

This would include inheritances received, or to which the bankrupt might become entitled, by the death of someone during the time of the bankruptcy. It also includes such things as lottery winnings and anything that the bankrupt might accumulate, such as assets bought with any surplus income.

Tax refunds outstanding, as at the date of the bankruptcy, also vest in the trustee for the benefit of the creditors. Income Tax law requires a bankrupt person to file two tax returns for the year of the bankruptcy. The first (pre-bankruptcy tax return) covers the period January 1st through to the date of bankruptcy. The second (post-bankruptcy tax return) covers the period starting with the date of the bankruptcy and ending December 31st. Tax rebates vest in the trustee for the benefit of the creditors.

There are two ways a person can go into bankruptcy. The first, and more common way, is to have the person make an assignment in bankruptcy (voluntarily go into bankruptcy). The second, and rarely used way, is for creditors to ask the Court to make an Order that a person is bankrupt. In both these cases a Trustee in Bankruptcy is required to administer the bankruptcy.

Earnings of a bankrupt after the start of a bankruptcy, such as wages and salaries or commissions, belong to the bankrupt person and are not interfered with by the trustee in the ordinary course of events. There are standards supplied to the trustee by the Superintendent of Bankruptcy which instructs the trustee to collect funds, for the benefit of creditors, from any earnings above what is reasonable for the number of people in the family and the bankrupt’s personal situation.

For those people who have not been bankrupt before, an automatic discharge will take place after nine months or twenty one months if you have surplus income according to the guidelines for Bankruptcy. You won’t be discharged if the creditors, Superintendent of Bankruptcy, or trustee have opposed your discharge, or if you have not received two counseling sessions. Occasionally, creditors do object and the matter goes to court to be heard before a Registrar or a Judge.

In the event that you have been bankrupt before, your discharge will be automatic in 24 months, or 36 months if you have surplus income according to the guidelines for Bankruptcy. You must again attend two counseling sessions in order to obtain the automatic discharge.

If a person has the ability to make a proposal (i.e. he or she has surplus income according to the standards set out by the government), then he or she should consider making a proposal. If any person files for bankruptcy when he or she has the ability to make a proposal, the Trustee or a creditor could oppose the bankrupt’s discharge. In this case, the bankrupt may be in bankruptcy up to an additional 12 months beyond the usual 9 months. The bankrupt will be required to make payments in each of these months.

You must attend 2 counselling sessions in order to be eligible for an “automatic discharge.” The counselling sessions are done one-on-one, with a qualified counselor in a stress-free environment.

Alimony or maintenance payments are not affected by bankruptcy. These payments must be kept up to date. A bankruptcy does not stop any actions for collection.

If the date of bankruptcy is more than seven years after the finish of studies, the debt will be wiped out upon the bankrupt’s discharge.

A discharge from bankruptcy does not release a student loan if the bankruptcy occurs within seven years after finishing studies. A Court can order the discharge from a student loan at any time after ten years of ceasing to be a student, and after being discharged from bankruptcy, if the person has acted in good faith and the person will continue to experience financial difficulty in paying the student loan.

  • Fines imposed by a Court.
  • Money owing for things stolen.
  • Things obtained by misrepresentation.
  • Alimony or maintenance payments.
  • Award of damages by a Court for intentionally inflicting bodily harm or sexual assault.
  • Student loans if bankruptcy is filed prior to or within seven years after the finish of studies.

Trustee fees, filing fees, and counselling fees are regulated by the government. The trustee normally is paid out of the funds arising from the liquidation of the bankrupt’s assets. If the bankrupt has no assets available, then the trustee will require a retainer or require the bankrupt, over time, to pay the trustee’s fees and disbursements.

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How Bankruptcy Can Help You

Contact the experts for information about how bankruptcy applies to you.

How Does Bankruptcy Affect My House?

One of the most common concerns people have when considering bankruptcy is whether or not they will lose their home. This topic discusses how bankruptcy affects the house, for residents of Toronto and other Canadian municipalities.

In most cases, you do not lose your house when you file for bankruptcy. To explain why, we will look at two case studies.

Case Study #1

The Jones’ owe three hundred thousand dollars on their home and together they are considering bankruptcy. A real estate appraiser estimates that their home is worth about three hundred and ten thousand dollars. However, when you deduct real estate commissions, outstanding property taxes, and other selling costs, it turns out there would be nothing left over if they sold their house today. That means that there would also be nothing left for the creditors if their trustee were to try to sell their home. In this case, the Jones’ won’t lose their home.

Because there is no equity in their home, as long as they are able to keep up with their mortgage payments, the Jones ‘can continue to live in their home and build equity for their future – even if they go bankrupt.

Case Study #2

Susan Smith also owns a home with a mortgage. The trustee estimates that if Susan sold her house, paid the commissions and selling costs, and paid off her mortgage, she would be left with eight thousand dollars. To keep her home if she goes bankrupt, all Susan has to do is pay the trustee eight thousand dollars.

But what if Susan doesn’t have eight thousand dollars, or can’t get it from her family, or a bank?

Not to worry. Susan could talk to her trustee about filing a consumer proposal. She could offer to pay her creditors a little more than eight thousand dollars, spreading out her payments over a maximum of five years. If the creditors agree, Susan can keep her house and avoid bankruptcy.

couple using laptop

Information Gained

The point of these stories is that you do not automatically have to lose your house just because you filed bankruptcy. You have options to keep your home as long as you are able to pay your mortgage payments on time. When you meet with Joel Easter or Peter Pichelli, they will help you determine if your house has equity and subsequently help you explore your housing options.

mother and son

Do I Lose My Car in a Bankruptcy Proposal?

Many individuals looking at their financial recovery options want to know whether you can keep your car during bankruptcy in Ontario. This topic details information pursuant to this inquiry, and further explains the ramifications of bankruptcy proceedings on personal vehicles.

Many people who file for bankruptcy in Ontario own or lease a car and need their car for work or personal reasons. The good news is, in Ontario if you own a vehicle, and it is worth six thousand six hundred dollars ($6,600.00) or less, you get to keep it. Even if it’s worth more, you can still keep your car by paying the difference to the trustee.

If you have a lease or a car loan, you can still keep your vehicle as long as you can keep current on your payments. Although it doesn’t happen often, sometimes people decide that their car payments are just too much. If you want, you can give your car back to the lender and let bankruptcy eliminate any balance you have owing.

When you meet with Joel Easter or Peter Pichelli, they will explain how your car, and any other assets, are affected by filing bankruptcy.

How Does Bankruptcy Affect My Future

For this topic we discuss the impacts of proposals, and how bankruptcy affects your future when filing in Canada.

smiling family of four

How Does Bankruptcy Impact My Life?

One big fear surrounding the prospect of filing for bankruptcy is the uncertainty of how a bankruptcy will affect your future. I’ve met with people in my office in the past who have said they don’t want to go bankrupt because they’ve heard that it stays with you for the rest of your life, and that you can never get credit again. This is not the case.

When filing for bankruptcy you are required to attend two credit counselling sessions. These sessions are free and act as a chance for you to get some individually tailored advice as to what steps to take in the future to help minimize the negative impact of a bankruptcy. You will review budgeting techniques, shopping habits, money management, warning signs for debt, credit rebuilding, and formulating a plan to help you achieve your financial goals. In these sessions you will also learn tips to help put you back on track to recovery after a bankruptcy. Some simple steps you can take include the following:

Recovering from bankruptcy is not impossible. It’s not a quick fix, and it will require some patience along the way, but the benefits of getting a fresh start make it all worthwhile. Learn more about the new bankruptcy surplus limits for 2019.

One key step on the road to recovery is understanding different budgeting techniques. You’ll want to have a firm grasp on how to plan financially for the future so that you can monitor, on a regular basis, what monies are coming in and what’s going out.

Now that you’re not juggling debts, consider using a cash budget. Some fixed bills like mortgage payments or car insurance are easy to set up as direct withdrawals from your bank account, but try using cash for all other things like groceries, toiletries, and gas for your car. It’s amazing how much you think about spending and saving when you hand cash to someone as opposed to plastic.

Utility companies don’t normally report to the credit bureau unless your payments are late. Don’t damage your credit rating further by getting behind on utility bills.

Check your credit report on a regular basis. Make sure that the information pertaining to your bankruptcy is accurate and that anything new you’re trying to re-establish is there as well. If you don’t check its accuracy, no one else will do it for you. You don’t want to find out when it’s too late that there’s incorrect information being reported.

Possibly the fastest, and most common, way to rebuild credit after a bankruptcy is to put a deposit down on a secured credit card. Be careful since it’s a secured card and not a pre-paid card, as they sound similar.

It’s easy to get lured in by lenders offering credit to anyone. Signs that read “all applications approved” are too good to be true. Just because they’ll give you the financing, does not make it a smart choice if they charge 30% interest rates! Unfortunately, one of the most common reasons why we see people filing second bankruptcies is because they signed up for a high interest rate car loan after the first bankruptcy was over.

Prove to the banks that you can be responsible with your finances by investing money into Tax Free Savings Accounts and RRSPs. Putting money into RRSPs can also lead to bigger tax refunds. These can then be used for further savings and large purchases so that you don’t have to borrow funds.

Beware of companies (particularly on the internet) that offer credit repair services. Only you can repair your credit and paying someone a fee does nothing to speed up the process.

If you do need to borrow again, try to remember this golden rule: The amount you borrow should not be any more than what you earn in a month. For example, if you are paid $2000 per month, don’t have debt of more than $2000 at any given time.

Recovering from bankruptcy is not impossible. It’s not a quick fix, and it will require some patience along the way, but the benefits of getting a fresh start make it all worthwhile. Learn more about the new bankruptcy surplus limits for 2019.

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What Is a Licensed Insolvency Trustee?

In this topic we discuss information related to Licensed Insolvency proceedings in Ontario, pursuant to Canadian law. Many individuals who are seeking to return to financial wellbeing pursue insolvency as an option, under the purview of a professional, federally regulated, Licensed Insolvency Trustee.

A licensed Insolvency trustee is a federally-regulated professional who provides financial advice and trustee services to individuals and businesses with debt problems. At Scott Pichelli & Easter, we are familiar with the process, having helped countless individuals and businesses manage their financial struggles through reliable provision of economic advice.

Our licensed insolvency trustees will help you make an informed choice when dealing with your financial difficulties, so that you can begin to move forward. Whether you are pursuing assistance for your personal finances, or with business matters, there is a solution to help return your finances to a state of normalcy.

Why to Consult a Licensed Insolvency Trustee?

Receive professional assistance from the Oakville and Burlington based Licensed Insolvency Trustees at Scott Pichelli & Easter. This page discusses the benefits of allowing a trustee to act on your behalf, so as to improve success when navigating your financial matters.

senior couple laughing together

Why You Should Consult a Licensed Insolvency Trustee (LIT)

Licensed Insolvency trustees are the only professionals authorized to administer government-regulated insolvency proceedings that allow you to be discharged from your debt, such as consumer proposals and bankruptcy. For those individuals who are in significant financial difficulty, these options may be the best solution.

A LIT Deals Directly With creditors on Your Behalf

Once a proposal, or personal bankruptcy, is filed the LIT will deal directly with creditors on your behalf. In addition, unsecured creditors cannot continue or initiate any collection action or legal proceeding against you anymore.

A Licensed Insolvency Trustee Is Federally Regulated

LITs are subject to ongoing oversight by the OSB and must adhere to federal standards of practice, including the Code of Ethics for Trustees.

A Licensed Insolvency Trustee Is Qualified

It is very important to ensure that you get financial advice and trustee services from a qualified professional. When you choose a Licensed Insolvency Trustee, you can be confident that you are dealing with someone who has demonstrated they have the knowledge, experience, and skills to be granted a license from the Office of the Superintendent of Bankruptcy (OSB).

The LIT’s Fee Is Federally Regulated

The fees charged by an LIT for consumer insolvencies are regulated by the federal government. Typically, LITs do not charge for the first consultation.

Learn How to Repair Credit From the Oakville & Burlington Experts

Discover simple methods on how to repair credit from your local Oakville professionals, serving the community through the provision of sound financial advice.

How to Repair My Credit

It is important to repair any negative information on your credit report. If you owe a creditor, and they have filed a negative credit report with the credit bureau, repay the creditor and ask them to remove the negative credit report from your credit record. If a debt is legally owing, the debt must be paid or discharged before it can be removed from your credit report.

Pay Off Debt

Even if your credit report indicates that you have made all of your regular monthly payments, a potential lender may look unfavorably on high levels of debt. The solution is to pay off as much of your existing debt as possible before applying for a new loan.

We recommend that you pay off your highest interest debts first, so pay the 18% interest credit card off first, and then repay the 16% interest credit card.

The lower your debt, the easier it will be to obtain a loan. Your monthly budget should include specific repayment amounts for each of your debts.

Take Other Action

If you have more debt than you can possibly repay, your credit report will only improve by formally dealing with your debts. If you find yourself in this predicament please call a representative of Scott and Pichelli today for a free consultation.

Tips on Maintaining a Good Credit Record

  • Check your credit file every 2 years and correct errors, if any
  • Send a written request to Equifax or TransUnion
  • There is no charge for mailed requests, only if you want to receive it on the web
  • Always pay your bills promptly
  • Try to pay off debts quickly
  • Never sign a blank form
  • Understand the total cost of your purchase

Get Started With a Free Consultation

Discover how our trustee services can help your finances recover.