If you have never been bankrupt before, the minimum time set by the court to be bankrupt is nine months. This means that the court will either give you relief from your debts or discharge you from them in nine months from the date you declare bankruptcy. This is all conditional as there are certain duties that you need to complete prior to being discharged. The result is the debts you had in your bankruptcy are discharged and you get a fresh start. Keep the bankruptcy process as smooth as possible by following these five steps:
#1 Open Book Policy
Report your income or household income to your trustee each month. They will take that report and calculate whether or not you have something called surplus income. When you report your income, remember to keep any medical receipts or childcare costs as they reduce your income for the surplus calculation.
#2 Report Surplus Income
Surplus income provides a threshold of monthly income you can make. Your income cannot exceed the threshold without you increasing your payment amount. The surplus amount is based on family size and you can estimate what your payments might be using our surplus income calculator. If you consistently exceed their threshold throughout the first nine months of your bankruptcy, the bankruptcy itself will be extended to 21 months.
A bankruptcy is a process that allows you to eliminate or discharge your debt, to get relief from debts you just can’t repay. You must also disclose, and in some cases surrender, any assets to the trustee for the benefit of creditors. Certain assets are exempt from seizure such as most household goods (e.g. bed and sofa) if worth less than $13,150, most personal items (e.g. clothing), and a car if you own it and it is worth less than $6,600;
#4 Freedom from Creditors
Open up a new bank account, at a bank you have no debt with, prior to filing bankruptcy. You should redirect all income to this new account. A bankruptcy is a legal process and thus creditors cannot pursue you for your debts whilst you are in bankruptcy. Therefore a garnishment is stayed or stopped when you file for bankruptcy, as long as you provide your trustee with the garnishment paperwork to stop it.
#5 Back on Track
You have to complete two mandatory in-person counselling sessions; one on budgeting and one on rebuilding your credit. There are specified time frames between sessions that must be followed to give you time to digest the information from these sessions. If you’re looking for steps on how to rebuild your credit, read our blog post on bankruptcy and new credit.
If you’re looking for professional advice on your situation, contact a Bankruptcy Ontario trustee today. All Ontario trustees listed on this site provide an initial consultation free of charge.