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How do I file for bankruptcy?
Bankruptcy is a legal process that you can only start with a Licensed Insolvency Trustee.
A Licensed Insolvency Trustee can:
- help you decide if bankruptcy will work for you
- talk to you about options other than bankruptcy
- guide you through the bankruptcy process
If you decide to file for bankruptcy, the trustee will prepare everything you need. You have to pay them for this service or sell your assets to cover their fees.
You might also have to answer questions from the Office of the Superintendent of Bankruptcy. They will ask why you want to file for bankruptcy and for information about your assets and debts.
The advantages of bankruptcy include:
- you get rid of most or all of your debts, and
- if it’s your first bankruptcy, you get a ‘fresh start’ after 9 months. But, the bankruptcy will stay on your credit report for 6 or 7 years after you are discharged from your bankruptcy. A bankruptcy on your report can make it harder to get loans or credit cards in the future.
The disadvantages of bankruptcy include:
- you lose all your credit cards,
- you may have to sell some of your assets, which could include your house or car, and
- there is a public record of your bankruptcy that anyone can find. A bankruptcy can make it harder to get a loan or credit card, or rent a place to live in the future.
Even if you file for bankruptcy, there are some debts you might have to pay after bankruptcy.
The trustee must tell your creditors and the consumer reporting agencies about your bankruptcy. A consumer reporting agency is a company that prepares and holds credit reports for people. The two main ones in Canada are TransUnion and Equifax.
If your assets are worth more than $15,000, a notice about your bankruptcy will also be included in the local newspaper or other news sources.
Anyone, such as a landlord or employer, can find out about your bankruptcy if they check your credit or call the Office of the Superintendent of Bankruptcy.