Personal Bankruptcy FAQs
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Personal Bankruptcy FAQs
D. Thode & Associates Inc. wants to help you find debt solutions that last, and we have provided this FAQ page on common personal bankruptcy and proposal issues to help you make educated decisions.
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How does bankruptcy impact my assets?
Each Province in Canada allows you to keep certain assets when you file bankruptcy. In British Columbia, the assets that are exempt from seizure are:
- Household goods valued up to $4,000 (liquidation value not replacement)
- Equity in a vehicle valued up to $5,000*
- Home equity valued up to $12,000 in Greater Vancouver and Victoria and a value of up to $9,000 elsewhere in BC
- RRSPs except for contributions made in the 12 months prior to the bankruptcy filing
- Clothing and medical aids
- Tools used to earn a living valued up to $10,000
*amount is reduced to $2,000 if you are in arrears on child support.
Assets that fall outside of these exemptions are subject to seizure (sold by the Trustee) or redeemed (the bankrupt pays in funds overtime to keep the asset).
Examples of assets that could be seized or redeemed are:
Value of assets in excess of the exemption limits noted above
- Contribution value in your Children’s RESP
- Tax-Free Savings Accounts or other cash assets
- Tax refund in the year of bankruptcy and previous years if not previously filed
A windfall, such as a lottery win or inheritance that is received during the bankruptcy, is subject to seizure by the Trustee and the funds paid to your creditors. In the case where the windfall is more than what you owe, you will receive the remaining amount.
Does bankruptcy affect my employment prospects?
In most cases, employment prospects are not affected. The main exception is if a potential career requires you to be bonded. In some cases, this may be problematic. Your trustee at D. Thode & Associates Inc. can provide you with details pertaining to specific companies you are considering applying to.
Does entering into bankruptcy impact my credit rating?
Credit reporting agencies can obtain information about your bankruptcy since bankruptcies are entered into the public record. This may affect your credit, although the exact impact varies from case to case. For more information about how your personal credit will be affected, contact D. Thode & Associates Inc.
Are there alternatives to bankruptcy?
Yes, there are alternatives to bankruptcy, the most popular being a consumer proposal. When you have your consultation with D. Thode & Associates Inc. all your alternatives will be explained to you so you can make an informed choice on the best option for you.
Note: The following questions will be placed in the drop-down box
How does bankruptcy affect my co-signer?
Entering bankruptcy only removes your responsibility to the debt. Your co-signer or guarantor will continue to be responsible for the payment of the debt in full.
Will garnishments be stopped?
When you declare bankruptcy, you receive an immediate stay of proceedings from collection actions by your creditors, including those who are garnishing your wages except in the case of garnishments for a child or spousal support.
Do my debt payments stop?
Once you declare bankruptcy, no further payments are made to your creditors except in the case of ongoing child and spousal support.
Will my creditors stop calling?
Once your creditors are notified of the bankruptcy the harassing phone calls and emails will stop and if they don’t, your Trustee should be notified. You have rights and deserve to have them upheld.
How does bankruptcy impact my credit rating?
Your bankruptcy will be noted on your credit report and will remain for a period of 6 years from the date of your discharge, in the case of a first time bankrupt. For those who have previously filed for bankruptcy, the bankruptcy information remains for 14 years.
How does bankruptcy affect my spouse?
If your spouse hasn’t co-signed or guaranteed your debts, then your spouse will not be impacted by your bankruptcy filing. If they have co-signed, guaranteed or are joint on any of your debts, your spouse may also want to file bankruptcy, otherwise, they will be responsible to pay the debt in full.
Can bankruptcy help if I owe tax?
Income tax, GST and director’s liability for GST or source deduction debts up to the date of bankruptcy are dischargeable in your personal bankruptcy.
Will my student loan be included?
The stay of proceedings will stop your student loan from taking collection action during the bankruptcy; however, if you ceased to be a full or part-time student less than 7 years prior to filing your bankruptcy, your student loan will survive the process and interest will continue to accrue on the debt during the process. If you ceased to be a full or part-time student more than 7 years prior to filing your bankruptcy, your student loan will be discharged by your bankruptcy.
Can I get credit again?
Once you are discharged from bankruptcy, you are free to apply for credit and rebuild your credit rating. Most start by obtaining a secured credit card whereby you give a security deposit in return for being extended credit.
What Would You do if You were Me?
As Licensed Insolvency Trustees, we are asked this question all the time. We help you clearly lay out all of the options available to ensure you understand how each option would impact you. At this point, we can provide you with guidance on the options so that you can feel comfortable making the ultimate decision to take care of yourself and your family.