Frequently Asked Questions on Bankruptcy and Debt
Why should I declare bankruptcy?
Bankruptcy allows you to start anew. This solution cancels the majority of your debts (even your tax debts). In other words, you will no longer need to pay your creditors. Bankruptcy protects you against many of the proceedings that could be initiated against you by your creditors, such as seizures or lawsuits. It also protects you from having your utilities cut such as essential public services, and allows you to keep your furniture, and in some cases your home and your car.
What happens to my creditors after I declare bankruptcy?
After declaration of bankruptcy or after establishing a consumer proposal, creditors will immediately cease any lawsuits or form of harassments against you.
Which debts are not released through bankruptcy?
- Child support arrears
- Penal fines (eg. traffic tickets)
- Debts or liabilities arising out of fraud, misrepresentation, etc.
What about student loans?
Bankruptcy does not release the student from its debts if the student loan is guaranteed by the Government or if the debtor declares bankruptcy while still being a student or within 7 years after graduating.
Are my RRSPs seizable?
In the vast majority of cases, RRSPs are exempt from seizure. In some cases, contributions made to your RRSP during the 12 months preceding your bankruptcy are seizable.
What is a consumer proposal?
Consumer proposal is an alternative to bankruptcy. The new contract between you and your creditors allows you to pay down your debts by monthly installments established within your ability to pay. This contract spreads over a maximum period of 5 years.
This proposal is for individuals whose total debts do not exceed $250,000, excluding mortgage debt. Groupe Serpone can help you with this procedure.
What are the advantages of a consumer proposal?
- Bankruptcy is avoided
- Creditors cease harassment, legal procedures and attempts to seize property, furniture and wages
- You make only one payment per month, within your budget
- You keep all your assets (house, car, etc.)
- You are protected from service interruptions by utilities (telephone, electricity, gas, etc.)
- Interest ceases upon the filing of the proposal
- Trustee fees are included in your monthly payment.
For more information, call us!