Review your options to find the debt restructuring plan that is right for you to become debt free.

What Is Bankruptcy & How Do You Declare It?

Bankruptcy is a legal process administered under the Bankruptcy and Insolvency Act that provides you with immediate protection against any further collection or legal action by your unsecured creditors, including the Canada Revenue Agency for income tax and GST debt.

Once you declare bankruptcy, all action by your creditors for the recovery of a debt immediately stops, including telephone calls, collection action and legal action. Wage garnishments, bank account seizures and unencumbered asset seizures are immediately terminated.

The purpose of bankruptcy is to provide a debtor that is overburdened with debt an opportunity to start over and get a fresh financial start. When compared to other debt restructuring plans, bankruptcy is generally the most cost effective (least expensive) and quickest option to resolve your financial difficulty. A personal bankruptcy is often completed in as little as nine (9) months.

You must be insolvent to declare bankruptcy, which means that:

  • You owe at least $1,000; and
  • You are unable to make or you ceased making your regular monthly payments to your creditors as they become due; or
  • The proceeds from the sale of all your assets and property at fair market value is insufficient to pay all your debts or obligations in full.

When you file an assignment in bankruptcy or declare bankruptcy, you are voluntarily entering into a legal process that provides you with immediate protection against any further action by your creditors. Once you enter into the legal process known as bankruptcy, you must be discharged from bankruptcy or released from bankruptcy to receive your fresh financial start. It is important to understand that it is the discharge from bankruptcy that legally releases you from any further legal responsibility regarding your debts and not the assignment in bankruptcy.

To receive a discharge from bankruptcy, you are required to perform certain duties that include attendance at two (2) financial counselling sessions, the completion and filing of monthly income and expense statements throughout the period of bankruptcy, making your monthly payments to your Trustee and providing your Trustee with income tax information.

The length of a bankruptcy varies and is dependent on whether it is a first or second bankruptcy and whether your household income exceeds the guidelines established by the Superintendent of Bankruptcy and based on the number of members in your household, which is defined as surplus income in the Bankruptcy and Insolvency Act.

If you are declaring bankruptcy for the first time and have no surplus income, the length of the bankruptcy is nine (9) months. If you have surplus income, the length of the bankruptcy is twenty-one (21) months.

If you are declaring bankruptcy for a second time and have no surplus income, the length of the bankruptcy is twenty-four (24) months. If you have surplus income, the length of the bankruptcy is thirty-six (36) months.

A Faber Trustee will review your net monthly household income and calculate your surplus income during the initial consultation to determine whether your net monthly income is greater or less than the guidelines established by the Superintendent of Bankruptcy. This will allow us to provide an estimate of the length of the bankruptcy and the cost of the bankruptcy prior to your actually declaring bankruptcy.

Call Faber Inc. in Edmonton today to arrange your free, no-obligation consultation about personal bankruptcy. We can advise you about your options so you can determine whether a personal bankruptcy or a consumer proposal debt restructuring plan is right for you. We believe it is important that you explore all of your options and know all the facts before you select and commit to a final course of action that you may later regret.

introduction to personal bankruptcy

steps in filling a personal bankruptcy

advantages & disadvantages

comparison to consumer proposal



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