Before going into specifics about who can and cannot file for bankruptcy, it’s important to understand the purpose and process of bankruptcy first. When you file for bankruptcy, you will work with a Licensed Insolvency Trustee to help sell off any assets you have available to pay off your creditors.
Rest assured that filing for bankruptcy doesn’t mean that you lose ever single asset you have to your name. In the province of B.C., registered investments like RRSPs, RRIFs and DPSPs are exempt from bankruptcy laws.
It’s a delicate matter, and while there are a few stops on the road to bankruptcy, don’t rule it out as an option. With that in mind, before you get too far down the path in your quest for more information, make sure you understand who can, and cannot, expect legal protection by filing for bankruptcy in Canada.
Who Can File for Bankruptcy
Bankruptcy can help protect you from legal actions that are launched in an effort to recover money that you do not have the ability to repay. A condition of bankruptcy is insolvency, whereby you owe at least $1000, and that debt exceeds the assets that could reasonably be used to repay it. If you meet these conditions, you may be able to file for bankruptcy.
Who Cannot File for Bankruptcy
Some perceive bankruptcy as an “easy” way out of debt. It’s actually a very complicated process that takes savings, debt, current income, and the ability to generate income in the future into consideration. Assets that enable you to work, like your car if you’re a delivery person or your tools if you’re a carpenter, need to be factored into those which may be sold to repay your debts.
Bankruptcy does not wipe the slate clean for everybody as there are obligations that are not covered under these proceedings. Some debts, like mortgages; loans from family and friends; recent student loans; spousal and child support payments; and judgements you have been ordered to pay in civil suits are not affected by bankruptcy filings.
When you are deciding whether or not filing for bankruptcy is your own way out of debt, we can help. Start off with a confidential, no-obligation consultation in one of our offices in Kelowna or Kamloops. If you’re unable to travel to our office, call 1-866-712-5353 from anywhere in B.C.