Personal Debt Solutions Canada - Personal Bankruptcy
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What is Personal Bankruptcy?
Bankruptcy is the legal process that a person, either an individual or a legal entity such as a corporation, can enter into which will allow them to absolve themselves of their debts. In Canada, the Canadian bankruptcy system is governed by a federal act, so it is the same in all provinces, called the Bankruptcy and Insolvency Act. ("BIA") The BIA outlines a system that allows the "honest but unfortunate debtor" the ability to go through a process, to be able to rid themselves of insurmountable debt, and then come out the other side and make a fresh financial start.
What is the Bankruptcy and Insolvency Act. ("BIA")
The BIA outlines the rights and duties of debtors, creditors, the federal government department who oversees the Canadian bankruptcy legislation, as well as trustees in bankruptcy. A trustee in bankruptcy is the only one in Canada who has legislative authority to deal with personal or corporate bankruptcy, or administering the proposal process where a debtor can offer to settle with creditors for less than the amount of debt outstanding.
Being bankrupt is a legal state, such as being married. "Insolvent" on the other hand is a term used to describe the situation where someone cannot pay their debts as they come due. Being insolvent is akin to being "in love" while being "bankrupt" is the like the legal status of being "married".
Are you Insolvent?
If you are insolvent you have many options to help you through the process, not just bankruptcy. Some people find that if they cut corners or live more frugally, they can manage the debts that they have. Others need the assistance of a more formalized process.
If you find that your financial situation is desperate and that no matter what you do you will never be able to get out of debt, than bankruptcy may be an option.
We have listed below general bankruptcy topics that you may find helpful in understanding the bankruptcy system in Canada.