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How to File for Personal Bankruptcy in Vancouver & British Columbia
Many people have questions about personal bankruptcy. The term is common enough that most have heard of it, but few are familiar with the details and understand what personal bankruptcy really means. Knowing this information is important and can help you make a decision if you are considering filing for personal bankruptcy in Vancouver or anywhere in British Columbia or Canada.
Bankruptcy is a legal process that can only be filed by a licensed trustee in bankruptcy. A trustee is a person who has been licensed by the Office of the Superintendent of Bankruptcy and is trained to administer bankruptcy and proposal estates under the Bankruptcy and Insolvency Act of Canada. Speaking with a trustee is the first step in the process of filing for bankruptcy.
The Process of Bankruptcy in Vancouver & British Columbia
The Bankruptcy and Insolvency Act is a federal act. The process of filing for bankruptcy is dictated by this act, meaning that it is a standard legal process that is the same across the country.
- You meet with a trustee in bankruptcy. Most trustees offer a free consultation. The trustee will review your financial situation and provide you with the debt relief options that are available to you. If you decide to file for bankruptcy, your trustee will assist you in completing the required forms and ensure that they are submitted to the government.
- At this point, your trustee will be responsible for all communication with your unsecured creditors. They will not be able to take any legal action against you (including wage garnishment) and any legal action or wage garnishment that has already started will be stopped by the bankruptcy process.
- A note will be placed on your credit report indicating that you have filed for bankruptcy. It will remain for at least six years.
- Your trustee will review your assets. When you file for bankruptcy, British Columbia allows you to keep certain assets. If you wish to keep other, non-exempt assets, you must compensate your trustee for their value.
- There may be a meeting of your creditors when you file for bankruptcy, however these meetings are only called very rarely.
- You will need to report and prove your income to your trustee each month. You may be required to make payments to the trustee who will then distribute them to your creditors. If this is required, your trustee will let you know.
- As part of the process, you will be required to attend two financial counselling sessions. These sessions will help you with budgeting, financial planning and money management.
- In most first bankruptcies, if you have performed all of your duties you will be automatically discharged after nine months and you will receive your Certificate of Discharge. You will need to mail or fax a copy of this certificate to the two major credit bureaus in Canada: TransUnion and Equifax.
- Most debts will be discharged by bankruptcy. Your trustee will discuss any exceptions with you.
- You can then start the process of rebuilding your financial life.
While the process of filing for bankruptcy is a federal process that is the same anywhere in Canada, there are differences in each province and territory when it comes to exempt assets.
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Exempt Assets in British Columbia
Contrary to popular belief, when a person files for bankruptcy, he or she does not lose all assets. It is understood that a person needs certain items and tools in order to live and to earn money. Each province declares different exempt assets.
If you file for personal bankruptcy in Vancouver, you will be entitled to keep assets that are considered exempt in British Columbia. In BC a bankrupt person is entitled to keep:
- Home equity up to $12,000 in Greater Vancouver or Victoria. Equity in a home up to $9,000 in the rest of the province.
- $5,000 in equity in a personal vehicle. This is reduced to $2,000 if the debtor is behind on child care payments.
- Household furniture and appliances up to a value of $4,000.
- Tools of the trade required to earn an income up to $10,000
- An unlimited amount of clothing and medical aids.
- Contributions made to an RRSP more than 12 months ago. Contributions made in the last 12 months are not exempt. This rule is the same across Canada.
- In most cases, pensions and life insurance are also exempt from bankruptcy. You will need to speak with your trustee for specifics on your particular situation.
Your bankruptcy trustee will review all of your assets and ensure that you receive all exemptions that you are entitled to receive.
If you are having financial difficulties and are unable to pay your debts as they become due, you may want to speak with a trustee in bankruptcy to determine if filing for bankruptcy is an option that you would like to pursue.