What is a Bankruptcy?

Filing for a bankruptcy in Canada is a legal process that legislated under the Bankruptcy and Insolvency Act in Canada. To file for a bankruptcy, you would have to do so with a Licensed Insolvency Trustee (LIT). The LIT is an unbiased third party who ensures the laws and regulations of a bankruptcy are applied and held by both the debtor (the party borrowing money) and the creditors (the party lending money).

What does a Bankruptcy do?

A bankruptcy enables debtors who owe a considerable amount of debt to have a fresh start financially. One of the most appealing aspects of a bankruptcy for a debtor is that filing for a bankruptcy puts the debtor under legal stay. This means that the creditors can no longer pursue the debtor. This includes a halt on activities such as:

  1. Collection and creditor calls
  2. Wage garnishments
  3. Moving forward with legal proceedings, such as obtaining judgement to seize your assets.

Quick Facts about Filing Bankruptcy:

How long is a bankruptcy?

A bankruptcy repayment can extend anywhere from 9 to 36 months depending on your individual situation

How long does a bankruptcy stay on my credit report?

A bankruptcy stays on your credit report for 6 years after you have finished your repayment if it is your first bankruptcy, and for 14 years after you have finished your repayment if it is not your first bankruptcy.

Will I lose my home if I file bankruptcy?

“Will I lose my home if I file bankruptcy?” is one of the most common questions people ask when they are considering bankruptcy as an option. The answer is: no necessarily, but it’s not impossible. To learn more about how you can keep your home when filing bankrupt, click here (hyperlink).

Is a bankruptcy bad?

No! Bankruptcy is a loaded word that often has a negative connotation; but it shouldn’t be seen that way. Filing for a bankruptcy or even a consumer proposal is the first step in helping your financial situation and becoming debt free. We all make mistakes, and we would all like to handle these situations on our own, but sometimes we need help! There’s no shame in asking for help when you need it, and Debthelpers provides a safe and non-judgmental environment for you to seek help. Contact us today to see how we can help you become debt free!

How long does a bankruptcy stay on a credit report?

There are two major credit reporting agencies in Canada, Equifax and TranUnion. A bankruptcy can stay on a credit report for a varying amount of time dependent on if you have filed for a bankruptcy before. If it is:

  • Your first bankruptcy:
    • Stays on your credit report as an R9 for 6 years after you have finished your repayment.
      • Depending on your individual situation, your repayment period can vary from 9 months to 21 months.
  • Your second bankruptcy (or more):
    • Stays on a credit report as an R9 for 14 years after your repayment has finished.
      • Depending on your individual situation, your repayment period can vary from 24 months to 36 months.