TOP 5 Bankruptcy Questions

How do I know if I qualify for bankrupty?

To qualify for bankruptcy you need to reside or carry on business in Canada and have liabilities of at least $1,000 or more above the total amount of your assets and;

• Be unable to meet their obligations as they generally become due; or

• Have ceased making payment obligations in the ordinary course of business, as they generally become due; or

• The total of all personal property sold at fair market value, would not be sufficient to pay all debts;

Can I keep my car in a bankruptcy?

An individual filing for bankruptcy is entitled to keep one vehicle below the exemption limit which varies by province. In a joint bankruptcy, each filer qualifies for one motor vehicle (up to the exemption amt) if the vehicle is registered in that person’s name. If you have multiple vehicles, or other assets that you would like to keep, speak to a licensed insolvency trustee in your province about your options to retain other vehicles.

What happens to my wages in a bankruptcy?

You do keep your wages in a bankruptcy, but you will be required to submit proof of income and expenses on a monthly basis, to your trustee. Your trustee will use this to determine your average net income for the purposes of calculating “surplus income”. If your income exceeds the government set threshold limit, you will be required to make surplus income payments during your bankruptcy.

What happens to my tax refund in a bankruptcy?

Once you file for bankruptcy, any income tax refunds owing to you for any years up to the year you filed bankruptcy will be sent directly to the trustee by Canada Revenue Agency. This includes any tax refunds for any years prior to your bankruptcy, resulting from your pre-bankruptcy return and from your post-bankruptcy return.
Although you do lose income tax refunds in a bankruptcy, you keep HST and child tax benefits.

How does bankruptcy affect my credit rating?

The fact of bankruptcy will remain on an individual’s public record for up to 7 years although most credit bureaus remove reference to a first-time bankruptcy after only 6 years.

The credit rating associated with bankruptcy is R9 and is the same credit rating used if your debts have been put into collection, your debt is more than 120 days past due and considered as bad debt, or you moved and did not provide a new address.