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Financial Proposals Canada - FAQ
Are there different types of proposals?
Yes, there are two types: consumer proposals and proposals under Division 1 of the Bankruptcy and Insolvency Act.
Who can make a consumer proposal?
An insolvent person whose debts are less than $75,000, not including their home mortgage.
What are the fees in a consumer proposal?
The fees are set by the government and are the same across Canada.
How is my consumer proposal accepted by the creditors?
Your creditors have 45 days in which to respond to your proposal. If no creditors respond or your creditors vote yes, your proposal is approved pending Court approval. However, if more than 25% of your creditors vote no a meeting must be held in which your creditors vote whether or not to accept your proposal.
What happens if my proposal is not accepted?
You will no longer be protected by the Bankruptcy and Insolvency Act and your creditors will be able to take legal steps to recover their debts from you. The option of filing an Assignment in Bankruptcy is still available.
What if I owe more than $75,000?
You may file a proposal under Division 1. If this proposal is rejected by your creditors, automatic bankruptcy results. The fees are based on the Trustee's time charges as opposed to a fee set by the Government.
Are my spouse's assets or debts included in my bankruptcy or proposal?
No. Only assets owned by you are included. If assets are jointly owned, then your portion may have to be sold. If most of your assets and debts are joint with your spouse, then it may be appropriate for a joint bankruptcy or consumer proposal to be made.
Do I require a lawyer if I go bankrupt or make a proposal?
Generally, you do not require a lawyer to go bankrupt. If you feel the need for legal advice and cannot afford a lawyer, legal aid may be available.
What about my secured creditors if I go bankrupt?
In most cases, bankruptcies and consumer proposals do not affect the rights of secured creditors. If a creditor has a valid security against your property (i.e., car or house), and if you can afford monthly payments, financial arrangements may be made with the secured creditor to keep the property and continue paying for it.
Bankruptcy Canada - FAQ
Who can file bankruptcy or make a proposal?
You can file bankruptcy or make a proposal if:
Your company, partnership, or business may also file bankruptcy or make a proposal if it meets the above requirements.
You should be aware that any unsecured creditor to whom you owe more than $1,000 could try to force you into bankruptcy. This is called a petition in bankruptcy. In this case, the creditor must prove that you have committed an act of bankruptcy, such as not paying your bills as they came due. The court reviews the facts and, if the petition is allowed, issues a receiving order which places you in bankruptcy with a trustee selected by the petitioning creditor.
Will bankruptcy get rid of all debts?
Most debts, but not:
What is the bankruptcy fee?
The fee is dependant on your particular circumstances. It will be explained to you by a trustee once your situation has been reviewed. All fees are set by the government and are the same for all trustees across Canada.
Do I have to pay the fee up front?
No, there are a number of ways to pay the fee, such as monthly payments or by having a third party pay the fee for you.
Can my creditors continue to harass me after I file bankruptcy?
No, they may call you, but you should direct their questions to us.
Will I be able to keep my vehicle?
Alberta Provincial law allows a person filing bankruptcy to keep the equity in a motor vehicle not exceeding $5,000.
Can my wages be garnished or my assets seized after I file bankruptcy?
Normally, all legal proceedings against you stop at the date of bankruptcy.
If I file bankruptcy, can I still pay my family and friends?
No, while you are in bankruptcy you are only responsible for paying your ongoing living expenses. All payments to any of your unsecured creditors stop.
Will you tell my employer that I filed bankruptcy?
No, that is your business.
Do I still handle my own money?
Yes, you continue to receive your income and you can have a bank account if you wish.
What happens to my credit cards?
Your credit cards must be given to the Trustee, except in certain, extremely rare cases.
Will I be able to get credit in the future?
That will depend on your earning and repayment ability and will be between the lender and you.
Do I have to be living in Canada to file bankruptcy?
No, as long as you lived or carried on business in Canada in the last 12 months you may file bankruptcy.
What if I win a lottery or receive an inheritance while in bankruptcy?
Any "windfall" must be given to the Trustee to distribute to your creditors. If there is any money left over, it will be returned to you.
Can I file bankruptcy more than once?
Yes, but it may be harder to get out of bankruptcy after the first time.
What happens to my R.R.S.P. and/or pension plan?
Depending on the type of plan you have, it may be protected from seizure by Provincial law. If not, it must be paid over to the Trustee to distribute to your creditors.
Will I lose everything in bankruptcy?
In Ontario, what you are entitled to keep is determined by the Civil Enforcement Act. In summary, you are generally able to keep the following property:
Federal Legislation also allows you to keep: