How A Bankruptcy Advisor In Richmond Hill Can Help You Get Out Of Debt

A bankruptcy advisor in Richmond Hill can help you understand how the bankruptcy process works to help you get debt relief. A Licensed Insolvency Trustee or a LIT (formerly known as a bankruptcy trustee) can be this type of advisor. A LIT can give insightful, timely and practical advice, and orient you in the right direction as you face life-changing decisions dealing with a precarious financial situation.

Understanding How Bankruptcy Works

Bankruptcy in Canada is a legal proceeding managed in federal courts, following rules according to the Bankruptcy and Insolvency Act.

When a person can no longer repay outstanding debts, filing for personal bankruptcy can provide a fresh financial start. It does this by disposing of unsecured debts, such as credit card debt and medical bills, while giving the debtor immediate protection from creditor actions like harassing collection calls and legal threats, and at the same time, allowing some measure of repayment to the creditors using the individual’s assets to repay a portion of the outstanding debt. In theory, it’s a win-win agreement for everyone involved, the bankrupt person gets relief from crippling debt and creditors get a fair share of settlement for what they are owed.

When you complete several bankruptcy duties and requirements, you receive your discharge. The discharge from bankruptcy is what eliminates all debts declared in the bankruptcy filing.

Debts In Bankruptcy

Bankruptcy can eliminate most unsecured debts, including:

• credit card debt,

• medical bills,

• lines of credit,

• unsecured bank loans,

• tax debts,

• payday loans,

• unpaid utility bills such as electric and telephone bills.

Secured debts such as home mortgages and car loans that are guaranteed with an asset or collateral cannot be included in a bankruptcy.

These debts receive special treatment in a bankruptcy:

Student loans that are less than 7 years old (if student loans are between 5 and 7 years old, the trustee could appeal and make a hardship application to have them included)

• Child support payments

• Spousal support / alimony payments

• Court ordered fines and restitution payments

• Debts acquired from fraudulent activities

Richmond Hill Bankruptcy Exemptions

When you’re faced with overwhelming debt and simply do not have a way to repay your creditors, the first step is to talk with a licensed insolvency trustee. A LIT will assess your financial situation and help you decide if filing for bankruptcy is the best solution to your financial problems.

Measuring and evaluating your finances will include an assessment of -

• Your income and budget, because you will need to make a monthly payment into your bankruptcy based on government limits set in the Bankruptcy and Insolvency Act. If your income is above the limit, you are required to pay surplus income.

• Your assets that may be used to repay the outstanding debt.

Though your assets may be sold and used for repayment of debts, bankruptcy laws in Canada allow exemptions based on where you live.

If you declare bankruptcy in Richmond Hill you can keep -

• Personal clothing for you and your dependents

• Household furniture and appliances

• Equipment/tools that you use to earn a living worth up to $14,405

• All RRSP, RRIF and SPSP savings, except contributions made in the last 12 months before bankruptcy filing

• Car or truck or any motor vehicle worth up to $7,117

• Your home, if the equity does not exceed $10,783

If your home has an equity value over the exemption limit, your LIT can help you make arrangements with your creditors to buy back the asset by paying off the amount that exceeds the limit. Your LIT can also explore other debt relief options to keep your home while still dealing with your debt. Bankruptcy alternatives can include a debt management plan or a consumer proposal.

How Do You File Bankruptcy?

A licensed insolvency trustee will do all the paperwork and filing for you. After your initial consultation when you’ve reviewed all your options, and you decide that declaring bankruptcy is the right choice you will need to give more personal information to complete all of the required paperwork. Your trustee will also assist in the process of preparing a proposal or formal plan to your creditors.

Once all the documents are signed, the trustee will submit all the paperwork with the Office of the Superintendent of Bankruptcy (OSB) and send out a bankruptcy notice to all your creditors. At this point, you are considered legally bankrupt and this cannot be reversed without a court order.

Upon filing the bankruptcy, the automatic stay of proceedings immediately takes effect. This prevents creditors from continuing any collection actions against you. This stress relieving feature “stays” or stops annoying phone calls, wage garnishments, freezing your bank accounts, and taking legal action against you.

If creditors continue to harass you, the automatic stay gives you the legal protection to sue them and take them to court.

As a legally bankrupt individual, you are required to perform several bankruptcy duties. These duties include:

• make your monthly payments,

• attend two counseling sessions,

• report your income and expenses monthly to your trustee,

• provide necessary tax information,

• attend a creditors' meeting or examination, if required.

If a creditor’s meeting or examination with the Official Receiver is called during the bankruptcy process, you will receive a notice and will be required to attend to answer several questions under oath about your financial affairs. Your trustee will meet with you before the meeting or examination to go through several questions you are likely to be asked, and help you prepare for the examination.

An automatic bankruptcy discharge will apply after nine months for a first-time bankrupt. A creditor, your trustee or the Superintendent of Bankruptcy can oppose your discharge if you have not completed any bankruptcy requirement. Your bankruptcy can also take longer than nine months if you have surplus income. If you have successfully completed your bankruptcy duties, your discharge will not be disputed and you can begin a new life with a fresh financial start.

If you are thinking of eliminating unmanageable debt, talking to a bankruptcy advisor in Richmond Hill can help put things in perspective. A licensed bankruptcy trustee is the best advisor you can talk to as they are the only debt professionals licensed by the government to handle these legal proceedings. They can help you understand how bankruptcy will affect you and your family and guide you through alternatives that can also deal with your debt problems.