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A first time bankruptcy, where there is no surplus income (see description below) and when there is no opposition to the discharge, will be discharged after nine (9) months. If there is surplus income, but no opposition to the discharge, the bankruptcy procedure lasts twenty-one (21) months.
If you declare bankruptcy a second time, but face no opposition to the discharge, the bankruptcy lasts between twenty-four (24) and Thirty-six (36) months depending on whether there is surplus income or not.
The duration lengths mentioned above only apply if there is no opposition to the discharge. In the rare case of opposition, bankruptcy will last longer.
Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. This amount is set by the office of the Superintendent of Bankruptcy Canada annually.
It is strongly recommended to create a detailed budget in order to establish the monthly household income and basic necessary expenses. Once this exercise has been completed, you will be able to determine if there is a surplus of income, and if this will allow you to file a viable proposal. We can help you with this budgetary analysis during our first consultation and offer your our professional recommendations based on the results.
A suitable solution can only be suggested once a detailed monthly budget has been completed and a deal with your creditors has been reached.
In bankruptcy law there is a distinction between unsecured debts and loans and bursaries. Although these are not guaranteed by any assets, bankruptcy law differs for these types of loans.
In the event of a bankruptcy, student loans can be released if the last class was taken 7 (seven) years before declaring bankruptcy. The law does not distinguish between full time students and part time students in this context.
However, it is possible to include student loans for courses that were taken five (5) to 7 (seven) years prior to declaring bankruptcy in the event where you are able to prove that these debts will cause you financial hardship in the future and if you have made efforts to repay them. You will need a court order to include student loans of 5 (five) years in your bankruptcy.
Please be aware that 7 (seven) years need to pass without taking a class. Even if only 1 (one) course has been taken, the count restarts, even if you did not get a loan for the class in question. This Act was implemented for all declared and ongoing bankruptcies after July 7, 2008.
For more information do not hesitate to contact us at (514) 315-1359 to speak to our Licensed Insolvency Trustee or one of our insolvency professionals.
Your salary will not be affected by bankruptcy. However, you will be required to fill out an Income and Expense Form (form 65) listing any monthly household income and expenses you may have. If your income exceeds the norms established by the Office of the Superintendent of Bankruptcy, you will be expected to pay a portion of the surplus into the bankruptcy estate through the trustee.
We will explain how surplus income is calculated at the time of our first meeting.
As per the Bankruptcy and Insolvency Act, most debts are releasable in the case of bankruptcy. There are debts which are not releasable and they are:
- alimony payments and child support;
- student loans, if it is less than seven years since you ceased to be a full or part-time student;
- fines or penalties imposed by the Court;
- debts arising from fraud.
Furthermore, bankruptcy generally does not affect the rights of certified creditors. Please contact us if a creditor has taken the security to your assets (ex: your house or vehicle). If you are able to make the monthly payments, you may be able to reach a financial agreement with the certified creditor.
However, you can give back the asset when declaring bankruptcy to longer have to repay the debt if you wish.
You must provide a copy of your bankruptcy discharge certificate to each credit bureau to ensure that your credit report is up to date. Make sure to keep all the documents related to your bankruptcy or proposal for future reference for your fututre creditors.
If you are already considering declaring bankruptcy or filing a proposal, chances are your credit has already been greatly affected. Individuals who declare bankruptcy often have a similar credit rating to those who are considering doing so.
If it’s not already the case, you will be assigned a low credit rating once you declare bankruptcy. A consumer proposal will have a similar effect on your credit. This rating goes into effect the moment you file for bankruptcy. André Gabbay and Associates Inc. Licensed Insolvency Trustee can offer advice on how to quickly raise your credit score following your discharge from bankruptcy.
However, the bankruptcy or proposal will be removed from your credit report after some time. The time between your bankruptcy or proposal and its exclusion from your credit report depends on your place of residence and on the circumstances associated to your case.
You can start to get credit again following your release, but as no one is required to give you credit, you will need to convince the person or institution to grant it to you. In the event of a proposal, you can get credit during the bankruptcy but again it depends on your ability to convince an individual or an institution to grant you a loan.
For more information about the effects of a bankruptcy or proposal on your credit rating, please call André Gabbay and Associates Inc. Licensed Insolvency Trustee at (514) 315-1359.