What is personal bankruptcy?
Personal bankruptcy is a legal process administered under the Bankruptcy and Insolvency Act. Personal bankruptcy provides you with immediate protection against any further collection or legal action by your unsecured creditors, including the Canada Revenue Agency for income tax debt or goods and services tax debt. The purpose of personal bankruptcy is to provide an individual that is overburdened with debt an opportunity to get a fresh financial start. When compared to other debt restructuring plans, personal bankruptcy is usually the least expensive and quickest option to eliminate your debt, taking as little as nine (9) months to complete.
Once you file for bankruptcy, all action by your unsecured creditors for the recovery of your unsecured debts will immediately stop, including telephone calls, collection action and legal action. Wage garnishments, bank account seizures and unencumbered asset seizures will also be terminated immediately. To file a personal bankruptcy, you must:
- owe at least $1,000;
- be unable to make or stopped making your regular monthly payments to your creditors as they become due; or
- have an insufficient amount of proceeds from the sale of all your assets and property at fair market value to pay all your debts or obligations in full.
When you file for or declare personal bankruptcy, you are voluntarily entering into a legal process that provides you with immediate protection against any further action by your creditors including the Canada Revenue Agency for income tax or good and service tax debt. Once you enter into bankruptcy, you will need to be discharged from bankruptcy or released from bankruptcy to be able to officially start over. Your discharge from bankruptcy will release you from bankruptcy and any further legal responsibility regarding your unsecured debts.
If you are filing 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 filing 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.
Thank you all for making a not so happy time a positive learning experience.Kelvin & Deb J.