Personal Debt Solutions Canada - Steps to Declaring Personal Bankruptcy

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What are the Steps to declaring Personal Bankruptcy?

Here is a quick reference guide to the steps necessary to file for personal bankruptcy in Canada.

Step #1 - Consultation with a Trustee
Find a trustee in your area and arrange for a Free Consultation. The trustee will evaluate your financial situation and discuss the benefits and ramifications of the various options available to help you overcome your financial problems. Bankruptcy may not be the only solution for you. Find out which options are available to you.

Step #2 - Complete Application Documents
Work with your trustee to complete the required forms. The trustee will be sure you are aware of all the key duties that must be performed to achieve your discharge from bankruptcy. Once all of the documentation is complete and signed by you, the trustee will file the bankruptcy documents with the Federal Government department of the Office of the Superintendent of Bankruptcy ("OSB"). The OSB office will review your documents sent to them by the trustee and issue you a bankruptcy number. At this point your official bankruptcy period begins.

Creditors cannot begin or continue legal actions against you once you have filed for bankruptcy. Any creditor or collections calls can be referred to your trustee.

Step #3 - Trustee Contacts Your Creditors
The trustee will mail the bankruptcy sign up documents to your creditors. These documents, called your Statement of Affairs, outlines your assets, liabilities and some personal information about you and the causes of your insolvency. From these statements, your creditors can determine if there is an expectation of any money coming to them at the end of the bankruptcy process.

Step #4 - Submit Monthly Budget Sheets
You will be required to submit a monthly budget to the trustee, which is a statement of your family income and expenses. You may be asked to provide copies of pay stubs and confirmation of some expenses including receipts for medical expenses, childcare costs or child support payments. You may also be asked to make payments to your trustee, the amount of which will vary depending on your personal situation.

Step #5 - Attend Two Counselling Sessions
You must attend two financial counselling sessions with your trustee in order complete the process and be eligible for your discharge from bankruptcy. The first session is usually scheduled within the first 60 days after you have declared bankruptcy and the second one is usually 3 to 5 months after that. As well, you must attend any other meetings or provide any information to the trustee that they request.

Step #6 - Trustee Review
Once you have completed all of you duties as requested by the trustee and met the minimum time requirements as set out under the Bankruptcy and Insolvency Act (usually between 9 and 24 months) you are eligible for a "Discharge" from the bankruptcy which will allow you to make a fresh financial start. If you haven't done all of your duties, your trustee may "object" to your discharge and then make recommendations to the Court as to what if any type of discharge would be appropriate in your individual circumstances.

Step #7 - Discharge!
You have now completed the process and discharged from the bankruptcy. Your trustee will send a Certificate of Discharge, to you, your creditors, the Court (when necessary) and the Office of the Superintended of Bankruptcy who will in turn notify Equifax and Trans Union, the largest of the Canadian credit bureaus. In most cases, 6 (six) years from the date of discharge, the record of your bankruptcy will be removed from your credit report