Understanding Bankruptcy in Saskatchewan: A Guide

Understanding Bankruptcy in Saskatchewan: A Guide

Bankruptcy is a legal process designed to provide relief to individuals and businesses that can no longer meet their debt obligations. In Saskatchewan, as in the rest of Canada, bankruptcy is governed by the Bankruptcy and Insolvency Act (BIA). This guide aims to shed light on the key concepts, processes, and implications of bankruptcy within this jurisdiction.

What Is Bankruptcy?

Bankruptcy is a formal procedure in which a person (referred to as the debtor) who cannot pay their debts as they become due, surrenders their non-exempt assets to a Licensed Insolvency Trustee (LIT). The LIT then liquidates these assets to pay off creditors. This process provides the debtor with an opportunity to eliminate most, if not all, of their debts and make a fresh financial start.

How to File for Bankruptcy in Saskatchewan

To initiate bankruptcy proceedings in Saskatchewan, an individual first needs to consult with an LIT. This professional will evaluate the debtor’s financial situation, provide advice on available options—such as debt consolidation, consumer proposal, or bankruptcy—and guide them through the bankruptcy process if it’s deemed the best solution.

The process officially begins once the debtor signs the necessary documents prepared by the LIT, who then files these with the Office of the Superintendent of Bankruptcy (OSB). Following the filing, an automatic stay of proceedings comes into effect, providing immediate relief by halting most debt collection actions against the debtor.

Exempt Assets in Saskatchewan

Bankruptcy does not mean losing everything. Saskatchewan has specific laws that protect certain assets from seizure by creditors. These exemptions typically include items considered essential for living and working. As of the latest legislation, this includes, among others, necessary clothing, some household furnishings and appliances, a personal vehicle (up to a certain value), tools of the trade (up to a certain value), and certain types of pensions and insurance policies. It’s crucial to consult with an LIT for the most current list and values of exempt assets.

Life During Bankruptcy

Upon declaring bankruptcy, the debtor’s financial life will undergo significant changes. They may be required to make monthly payments to their LIT based on their income and family size, known as surplus income payments. Moreover, the bankrupt must attend two credit counselling sessions aimed at financial rehabilitation.

The duration of bankruptcy varies but for first-time bankrupts without surplus income, it can be as short as nine months. The bankrupt’s conduct, level of income, and adherence to their duties are all factors that influence the length of the bankruptcy.

Discharge from Bankruptcy

Discharge is the legal process that releases the debtor from the obligation to repay most of the debts they had when the bankruptcy was filed, excluding certain types of debts such as student loans (under certain conditions), alimony, and child support obligations. The timing and conditions of discharge vary depending on several factors, including whether it’s a first-time bankruptcy and the debtor’s compliance with their duties.

Conclusion

Bankruptcy can offer a way out of overwhelming debt, but it’s not a decision to be made lightly. It has long-term financial and legal consequences and affects one’s ability to obtain future credit. Anyone considering bankruptcy in Saskatchewan should seek advice from a Licensed Insolvency Trustee to explore all available options and understand the implications fully.