Bankruptcy Ontario

Bankruptcy Ontario
BankruptcyCanada.com

Table of Contents
• Page 3: Bankruptcy Ontario Information
• Page 7: How to File Bankruptcy in Ontario
• Page 11: How Long Will I Be in Bankruptcy?
• Page 16: Considerations in a Personal Bankruptcy
• Page 21: Guide to Filing Bankruptcy in Ontario
• Page 23: The Steps to Filing Bankruptcy in Ontario
• Page 29: Is Bankruptcy Right For Me?
• Page 32: Why You Should Use an Ontario Trustee

Bankruptcy Ontario Information
• Ontario Bankruptcy Trustees Can Provide You with
Bankruptcy, Consumer Proposal and other debt
relief Information.
• Bankruptcy Ontario laws are provided for those
debtors who are burdened with a hopeless debt
load. By going bankrupt you can receive a
discharge of your debts and begin on the road to a
fresh, stable financial life.

• Bankruptcy in Ontario is a legal and honest method for
Ontario residents to get out of debt. By visiting our website
you can learn about Ontario bankruptcy so if you are thinking
about filing bankruptcy you can make the right decision. You
can also learn about making an Ontario consumer proposal.
Proposals are good alternatives to bankruptcy. If you are
ready to discuss bankruptcy further can schedule a free, no
obligation evaluation meeting with a bankruptcy trustee by
calling one of our trustees listed above. If you read the
information on our website you can go to a consultation
meeting with a bankruptcy trustee with a knowledge of
bankruptcy and how bankruptcy in Ontario can help you.

• If you are a first time bankruptcy filer you can receive a
discharge of your eligible debts in as little as nine
months. Many people who file bankruptcy in Ontario
have no property that they will have to surrender to the
bankruptcy trustee. You can begin on the road to a
“fresh start” by filing Bankruptcy Ontario.
• In addition to bankruptcy, if you are struggling with
debts you can make a Consumer Proposal to your
creditors. When you make a consumer proposal you will
repay a portion of your debts over a period of 36
months to 60 months at a reduced interest rate.

• If you have questions about Ontario bankruptcy you
can schedule a free consultation meeting with one
of our trustees, or you can visit our Bankruptcy FAQ
page for answers to the most common bankruptcy
questions.
• If you are interested about filing bankruptcy but are
worried about what belongings you will lose, you
can look at the Ontario bankruptcy exemptions, to
see what assets you can keep when filing
bankruptcy or a consumer proposal in Ontario.

Bankruptcy Ontario:
How to File for Bankruptcy in Ontario
• Ontario residents who are overwhelmed with debt
might at one point or another contemplated filing
bankruptcy in Ontario. Bankruptcy in Ontario, however,
is only one option available to Ontario consumers in
debt.
• Other strategies that might be available for debtors
trapped in debt in Ontario:
• Consolidation loan;
• Settling your debt on your own;
• Or filing a consumer proposal.

Bankruptcy Ontario:
• Ontario bankruptcy is a legal process, and you must use
a Licensed Insolvency Trustee in Ontario (previously
known as a bankruptcy trustee in Ontario) in order to
file bankruptcy.
• The first step in the Ontario bankruptcy process is to
meet with a Licensed Insolvency Trustee in your area for
a free consultation to discuss your options. After you
have received the information from the Trustee you can
take your time to make a decision about what the
Trustee has told you.

Bankruptcy Ontario:
• If you decide that you would like to go ahead with filing
for bankruptcy, the Licensed Insolvency Trustee (LIT) will
ask you to fill out the necessary bankruptcy forms and
then the Trustee will submit these forms with the OSB
(Office of the Superintendent of Bankruptcy).
• Once the paperwork is filed with the OSB, you will be
“bankrupt.”
• This article will further explore the follow issues that a
debtor should consider in their decision making process
about filing for bankruptcy in Ontario:

Bankruptcy Ontario:
• How Long Will I Be in Bankruptcy?
• Considerations in a Personal Bankruptcy
• Guide to Filing Bankruptcy
• Is Bankruptcy Right For Me?

Bankruptcy Ontario –
How Long Will I Be in Bankruptcy?
• Many Ontario consumers are concerned about how long it will
take them to get out of bankruptcy. A first time bankruptcy, where
the debtor has no surplus income, will be over in 9 months and
the bankrupt will receive their automatic discharge 9 months from
the date of their bankruptcy filing.
• The factors that will increase the time a person will be in
bankruptcy are:
• Surplus income payments required;
• A second time bankruptcy;
• Opposition to a debtor’s discharge from bankruptcy;
• The bankrupt’s decision to purchase non-exempt assets from the
Trustee.

• Surplus Income Payments Extend the Time of the Bankruptcy: If you file for
bankruptcy and your income is over a certain level set by the government for
living expenses based on your family size, then you will be required to make
surplus income payments to your Trustee for distribution to your creditors.
• If you are required to make surplus income payments you will be required to pay
50% of the amount over the threshold for surplus income payments.
• If you are a high earner, surplus income payments could add quite a lot to the
cost of your bankruptcy, and you will be in bankruptcy longer, therefore you will
be making larger payments for a longer period of time when you have surplus
income payments to make.
• When you are required to make surplus income payments, your bankruptcy will
be extended by 12 months. Therefore, a first time bankrupt with surplus income
payments will be in bankruptcy for 21 months (9 months for a minimum
bankruptcy + 12 month extension for surplus income requirements).

• A Prior Bankruptcy Filing Increases The Length of a
Second Bankruptcy: A first time bankrupt can receive a
quick and easy discharge from their bankruptcy,
especially if they do not have surplus income
requirements. However, a second bankruptcy is treated
more seriously and the minimum time in which a
bankrupt with a prior bankruptcy can receive their
discharge is 24 months. If you are filing a third
bankruptcy, you will have to go to Bankruptcy Court and
a judge will determine when you will receive your
bankruptcy discharge.

• Bankruptcy Ontario Discharge is Opposed: In certain
cases the bankrupt’s discharge from bankruptcy, which
is usually automatic, can be opposed. In almost all
cases, the debtor’s Licensed Insolvency Trustee will
oppose the discharge. The Trustee will usually oppose
the discharge because the bankrupt failed to comply
with their duties under the BIA (Bankruptcy and
Insolvency Act).
• Your creditors, and the OSB also has the ability to
oppose your discharge, although this is rare.

• Bankrupt Decides to Purchase Non-Exempt Assets From the
Bankruptcy Estate: A person filing bankruptcy in Ontario is
allowed to keep certain assets that are protected by the
Ontario bankruptcy exemptions. However, there are certain
cases where a debtor filing Ontario bankruptcy will lose
some of their non-exempt assets. It is not uncommon for a
bankrupt to purchase any non-exempt assets they would
lose from their Trustee.
• You are allowed to make installment payments to the Trustee
to cover the equity in the non-exempt assets that you would
like to purchase back from your bankruptcy estate.

Considerations in a Personal Bankruptcy
• A debtor with unsecured debt who is considering
filing bankruptcy in Ontario must take into account
the follow considerations, which we will explore in
further detail.

Not Everyone is Eligible for Ontario Bankruptcy
• If you are experiencing financial difficulty you might think that filing bankruptcy is
the right choice for you. However, not everyone is eligible for bankruptcy in
Ontario.
• In order to be eligible to go bankrupt, you must owe at least $1,000 in unsecured
consumer debt and you must also be insolvent. A person is considered
“insolvent” if they satisfy these two conditions as set out by the federal
Bankruptcy and Insolvency Act:
• Cannot meet your financial obligations as they are due for payment;
Your total debts outweigh your total assets.
• Debtors that are not eligible for bankruptcy because they are not insolvent often
do not meet the second requirement because they could pay their debts if they
sold their home, other real property or other assets. A debtor who has a large
amount of equity in their home are not eligible for bankruptcy or a consumer
proposal because they are not insolvent based on the fact their assets are larger
then their debts.

What Debts are Eliminated by Filing Bankruptcy?
• Before you make any decision about bankruptcy in Ontario you should have a
complete understanding of what debts are eliminated by filing bankruptcy. It is
important to understand that not all debts can be discharged in bankruptcy.
There are three different types of debt and how each type is handled by
bankruptcy is different.
• Secured debt in bankruptcy: A debt in which your creditor has collateral in, such
as a mortgage or car loan, is a secured debt. Personal bankruptcy in Ontario will
not eliminate or discharge any of your secured debt.
• Unsecured debt: Unsecured debt is any other debt that is not secured by an asset
or other collateral. Your unsecured debt will be eliminated when you receive your
bankruptcy discharge.
• Non-dischargeable debt: Even unsecured debt that falls into the non-
dischargeable category won’t be discharged or eliminated in bankruptcy. Non-
dischargeable debt includes court fines, student loans if you have not been out of
school for at least 7 years, judgements and debt arising from fraud, and child and
spousal support payments.

You Might Lose Certain Assets in a Bankruptcy
• When you go bankrupt you will be required to
transfer any of your non-exempt assets to your
Trustee. Ontario lists assets that you are able to
keep under the bankruptcy exemptions, but if your
equity is over the limit you are allowed to keep, you
must surrender the asset to the Trustee. If you are
not able to keep your asset, you can purchase the
equity from the bankruptcy estate from your
Trustee.

Can I keep my Car in Bankruptcy?
• In many cases a bankrupt can keep their car, because Ontario has a
motorvehicle exemption of $6,600, which means if your vehicle is
less than $6,600 you are able to keep your car when going
bankrupt.
• If your car is worth more than $6,600 then you can still keep your
car if you pay the Trustee the difference in the equity from what
you are allowed to keep to the value of the equity in the vehicle.
For example, if your car is worth $9,000 you can pay $2,400 to the
Trustee – the difference between the value of the car and the
$6,600 exemption for a motorvehicle.
• Subsequently, if you were to surrender your vehicle and the
Trustee was to sell it for $9,000 he would give the debtor the
$2,400 difference.

Guide to Filing Bankruptcy in Ontario
• The bankruptcy process is a legal process that
follows certain steps. Usually a person will consider
bankruptcy after they have received a garnishment
notice, have been sued by a creditor, have gone
over the limit on their credit cards, have started to
receive collection calls, or have lost their job. There
are many reasons why a person might consider filing
Ontario bankruptcy.

Only a Licensed Insolvency Trustee
Can File Bankruptcies
• In order to file for bankruptcy in Ontario you need to
use the services of a Licensed Insolvency Trustee; only a
Trustee can file bankruptcy with the Office of the
Superintendent of Bankruptcy. You cannot file
bankruptcy on your own, or use the services of any
other debt relief expert.
• There are a number of organizations and individuals that
offer to provide debt assistance, but only a Licensed
Insolvency Trustee can provide a full range of debt relief
options. Some consumers meet with a debt relief
“professional” who charges a fee just to refer you to a
Trustee.

The steps to filing bankruptcy in Ontario
are as follows:
• Initial Meeting With an Ontario
Licensed Insolvency Trustee
• The first step in the bankruptcy process is to meet with
a Trustee to discuss all of your options and possible
bankruptcy alternatives. In many cases the Trustee can
help you avoid bankruptcy by filing a consumer
proposal, but if the Trustee recommends that you file
bankruptcy you can feel confident that is the best
solution for you as all Ontario Trustees are bound by a
strict set of professional ethics.

are as follows:
• Second Meeting With the Trustee
• Once you are sure that you would like to proceed with filing bankruptcy,
your Trustee will provide you all the necessary paperwork to fill out.
• You should bring a number of documents with you such as proof your
name, copy of your income tax return, copy of a recent paystub and
copies of your bank account statements.
• The Trustee will help you fill out this paperwork, which should take about
an hour. Once the paperwork is complete you will sign it.
• The cost of filing bankruptcy is approximately $1,800 in Ontario in most
cases, which can be paid at $200 a month for 9 months.
• During this meeting the Trustee will ask you to surrender your credit
cards, which you cannot keep in a bankruptcy.

are as follows:
• Second Meeting With the Trustee
• Bankruptcy Forms are Submitted to the Office of the
Superintendent of Bankruptcy
• Once your LIT (Licensed Insolvency Trustee) has all of the
necessary information and documents they will submit your
paperwork with the Bankruptcy Court.
• The two documents submitted to the Bankruptcy Court are
the Statement of Affairs and the Monthly Income and
Expense Statement.
• The Statement of Affairs will include information about your
creditors and the amount that is owed to each creditor.

are as follows:
• Creditors’ Notified of the Bankruptcy
• Once the bankruptcy has been confirmed by the Bankruptcy Court,
the bankrupt is officially bankrupt and the stay of proceedings
goes into effect. The stay of proceedings stops all wage
garnishments, lawsuits and collection calls from the unsecured
creditors included in the bankruptcy.
• The Trustee will also notify the debtor’s creditors that they have
file bankruptcy. The Trustee has 5 days to notify all of the
unsecured creditors included in the bankruptcy. Your creditors
have the right to object to your bankruptcy, although this is
incredibly rare at this stage. Creditors that oppose a bankrupt’s
discharge usually oppose the discharge later in the bankruptcy
process.

are as follows:
• Bankrupt’s First Counselling Session
• As part of the bankrupt’s duties he must attend two
counselling sessions to learn about money
management and budgeting skills. The first of such
meetings will occur after about 4 weeks from the
bankruptcy filing.

are as follows:
• Second Counselling Session
• The second counselling session will occur approximately two
months before the bankrupt is to receive their discharge.
After this meeting has occurred, the Trustee will submit a
report to the OSB advising them of the bankrupt’s actions
during the bankruptcy, and if the bankrupt’s discharge is
opposed. If the bankrupt’s discharge is opposed, the Trustee
will include a note about who is opposing the debtor’s
discharge from the bankruptcy.
• In most cases a discharge will be opposed because the
debtor did not complete all of their duties.

Is Bankruptcy Right For Me?
• For some consumers in Ontario facing a severe debt
situation bankruptcy could be the ideal solution for
them to get a fresh financial start. However, for
other consumers their unique circumstances means
that filing personal bankruptcy is not the ideal
solution for their debt problem.

• Ontario Bankruptcy is ideal for individuals who:
Have substantial unsecured debt;
Have an income of less than $35,000 a year;
Do not own shares in a corporation;
Do not have professional status;
Do not have a large amount of assets;
Have large student loan debts and have been out of
school for at least 7 years.

• Ontario Bankruptcy is not the ideal solution for
individuals who:
• Have a high income;
Have significant assets;
Have shares in a corporation they must retain;
Have a professional designation or employment
status that would be affected by bankruptcy;
Wish to operate a business.

Why You Should Use an Ontario Trustee in Bankruptcy
• Bankruptcy Cost: A bankruptcy is more affordable than
using other Canadian debt relief professionals because
Ontario trustees have their costs regulated by the
federal government.
• Trustees Offer Many Forms of Debt Advice: In addition
to helping people who have debts they cannot repay file
for bankruptcy, bankruptcy trustees also can provide
credit and debt counselling, help you negotiate with
your creditors and can help you with making a
consumer proposal; if you file a consumer proposal you
can avoid bankruptcy.

• Relief from Creditors: Bankruptcy trustees can
guarantee that your creditors will stop contacting you
and attempting collection actions against you if you file
for bankruptcy, and they are the only debt professionals
who can guarantee your creditors will stop harassing
you.
• Ethics: Ontario Bankruptcy trustees may refer you to a
lawyer if you need legal advice, and in many cases will
advise people who come to see them that they can get
out of their debts without having to file bankruptcy or
make a consumer proposal. Trustees have the most
stringent code of ethics they must follow.

• Bankruptcy Trustees Are Professionals: Before a
bankruptcy trustee can receive their trustee license
they must pass a three year bankruptcy and law course
and be investigated by the police. In addition to their
university degree many trustees also have accounting
certification.
• Rebuild Your Credit Score Faster: By filing an Ontario
bankruptcy or making a consumer proposal with the
help of a trustee you can often rebuild your credit rating
faster than if you use a credit counsellor.

Bankruptcy Ontario

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