Understanding Bankruptcy in London, Ontario: A Beginner’s Guide
Understanding Bankruptcy in London, Ontario: A Beginner’s Guide
Bankruptcy is a legal process designed to provide relief to individuals and businesses that can no longer meet their debt obligations. In London, Ontario, as in the rest of Canada, filing for bankruptcy is governed by the Bankruptcy and Insolvency Act (BIA). This guide is intended to provide a foundational understanding of bankruptcy for those considering this step in the London area.
What is Bankruptcy?
At its core, bankruptcy is a process where, in exchange for the surrender of an individual’s or business’s non-exempt assets, a person is relieved of most types of debt. It’s a legal declaration that you are unable to meet your debt repayments. The process is overseen by a Licensed Insolvency Trustee (LIT), a professional authorized by the Superintendent of Bankruptcy in Canada.
Steps to Filing for Bankruptcy in London, Ontario
1. Assessing Your Financial Situation: The first step is an honest assessment of your financial situation. This involves listing all of your assets, incomes, expenses, and debts to understand the severity of your financial distress.
2. Consultation with a Licensed Insolvency Trustee: The next step involves consulting an LIT. In London, Ontario, there are many trustees available to assist. They will review your financial situation in detail and discuss all possible debt relief options, including bankruptcy and its alternatives.
3. Filing for Bankruptcy: If bankruptcy is deemed the most appropriate solution, your trustee will assist you in preparing and filing the necessary documents. The filing will put an immediate stop to most of your creditors’ attempts to collect their debts (this is known as a stay of proceedings).
4. Surrendering Non-Exempt Assets: You will need to surrender your non-exempt assets to the LIT, which may include property, investments, or luxury items. Ontario has specific exemptions to ensure you are not left destitute; for instance, essentials such as clothing, household furniture, and tools necessary for work are typically exempted.
5. Completing Duties and Discharge: During bankruptcy, you will have certain duties, such as attending two financial counseling sessions and providing monthly income statements. Once these duties are fulfilled and the bankruptcy period is completed, most of your remaining debts will be discharged, freeing you from them.
Consequences of Filing for Bankruptcy
While bankruptcy can offer a fresh start, it also comes with significant consequences. These include a negative impact on your credit score, which will make obtaining future credit difficult for a number of years. A note of your bankruptcy will remain on your credit report for a period of 7 years after discharge for a first bankruptcy. Additionally, certain debts such as alimony, child support, student loans (if it has been less than 7 years since you were a student), and fines imposed by the Court will not be discharged.
Alternatives to Bankruptcy
Bankruptcy should be considered a last resort. There are alternatives worth exploring:
- Debt Consolidation: Combining multiple debts into a single loan with a lower interest rate.
- Consumer Proposal: A legally binding agreement between you and your creditors to repay a portion of your debts over a specific period.
- Credit Counselling: Working with a credit counsellor to develop a debt repayment plan.
Conclusion
Deciding to file for bankruptcy is a significant decision that should not be taken lightly. It’s crucial to weigh this option carefully and consider all alternatives available. If you’re considering bankruptcy in London, Ontario, consulting with a Licensed Insolvency Trustee is a critical first step to understanding your options and making an informed decision about your financial future.
See if you qualify for debt relief
