A Step by Step Guide to the Bankruptcy Process | Hoyes Michalos & Associates

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Personal bankruptcy is a legal process which allows you to be discharged from most of your debts.

Once filed, the property of the debtor is given to a trustee in bankruptcy who then sells it and distributes the money among the debtor’s creditors in settlement of the debt.

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  • A Step by Step Guide to the Bankruptcy Process | Hoyes Michalos & Associates

    1. 1. The Bankruptcy Process A Step-by-Step Guide www.hoyes.com
    2. 2. Table of Contents What is Bankruptcy? 3 Step #1: Contact a Trustee 4 Step #2: Forms and Documentation 6 Step #3: Filing with the Official Receiver 9 Step #4: Bankruptcy Duties 12 Step #5: Discharge from Bankruptcy 14 2
    3. 3. What is Bankruptcy? Personal bankruptcy is a legal process which allows you to be discharged from most of your debts. Once filed, the property of the debtor is given to a trustee in bankruptcy who then sells it and distributes the money among the debtor’s creditors in settlement of the debt. 3
    4. 4. Step #1: Contact a Trustee To start the bankruptcy process, the first step is to contact a bankruptcy trustee. The trustee will assess your financial situation and explain the options available to you, including bankruptcy and its alternatives. 4
    5. 5. Step #1: Contact a Trustee A Trustee in Bankruptcy is licensed by the federal government of Canada. Only a licensed bankruptcy trustee can file bankruptcy for you in Ontario. 5
    6. 6. Step #2: Forms and Documentation If you decide to file bankruptcy after discussing your options, the trustee will help you complete several forms which you will have to sign. You are considered a bankrupt only when the trustee files these forms with the Official Receiver. 6
    7. 7. Step #2: Forms and Documentation Filing bankruptcy in Ontario requires the completion of at least two forms: 1. Assignment In the assignment you state that you are handing over all of your property to the trustee for the benefit of your creditors. 2. Statement of Affairs In the statement of affairs you list your assets, liabilities, income and expenses. You will also answer several questions about your family, job and disposition of assets. 7
    8. 8. Step #2: Forms and Documentation Before you sign the forms, make sure you understand the legal documents that are part of your bankruptcy file. Although the trustee prepares them from the information you provide, they are your statements. You are responsible for the accuracy of their contents. Review them carefully before you sign. 8
    9. 9. Step #3: Filing with the Official Receiver Once you have filed the appropriate documentation with the Official Receiver, you are legally bankrupt. At this point, the bankruptcy process cannot be reversed without a court order. 9
    10. 10. Step #3: Filing with the Official Receiver In very rare cases (about 1 in every 1,000) a meeting of creditors will be held. Creditors or the Official Receiver may request one after you file bankruptcy. If a meeting of creditors is called, you must attend the meeting. Your trustee will prepare a report about your assets and liabilities for the creditors, and you may be asked related questions. The creditors will then vote to either confirm the trustee's appointment, or substitute a trustee of their choice. The creditors will then have an opportunity to vote for the appointment of inspectors. They may also give directions to the trustee with reference to the administration of the estate. 10
    11. 11. Step #3: Filing with the Official Receiver During the bankruptcy process, the Official Receiver may require you to appear for an examination under oath. You will be asked questions about: • The causes of your bankruptcy • Your conduct • The disposition of your property • The nature of your debts 11
    12. 12. Step #4: Bankruptcy Duties You are required to perform certain duties during bankruptcy including: surrender your assets and credit cards attend two credit counselling sessions provide proof of your income and expenses make payments including if required surplus income payments • provide information needed to file necessary tax returns • • • • 12
    13. 13. Step #4: Bankruptcy Duties There is a filing fee to be paid to the Superintendent of Bankruptcy, and the trustee is entitled to be paid. In general, you will pay a monthly contribution to your bankruptcy, and you will pay a surplus income payment based on your income. Contact us to review your situation and explain in detail the cost of your specific bankruptcy. 13
    14. 14. Step #5: Discharge from Bankruptcy There will be an automatic bankruptcy discharge for firsttime bankrupts nine months after they become bankrupt, unless the trustee recommends a discharge with conditions or it is opposed. Additionally, if you have surplus income of more than $200 per month, your bankruptcy will be extended to 21 months (in the case of a first bankruptcy). 14
    15. 15. There is hope. You can be debt free. View our Guide to Personal Bankruptcy in Ontario Or give us a call at 310-PLAN

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