Who Can Declare Bankruptcy?
Some several reasons and circumstances can lead to someone declaring bankruptcy.
- Inability to pay debts as they come due within a reasonable amount of time
- Cannot reach a settlement or an informal agreement with your creditors
- Garnished wages or bank accounts
- Constant calls from creditors
- Loss of employment
- Deteriorating health
However, even with these circumstances in place, not everyone can file for bankruptcy.
To do so, you must:
- Have some property and conduct business within Canada
- Have liabilities of over $1,000.00 to creditors, according to the BIA (Bankruptcy and Insolvency Act) – and meet one of the following conditions:
- Are unable to meet current financial obligations as they become due
- You have stopped paying the current obligations
- Current financial obligations exceed the fair market value of your property
How Does Declaring Bankruptcy Work?
Generally speaking, there is a 10-step process you can expect to follow for declaring bankruptcy:
- Scheduling a consultation with a licensed bankruptcy trustee
- Reviewing the current financial situation with your trustee
- The trustee thoroughly explains the bankruptcy process and applicable laws
- Reviewing how bankruptcy will work for you considering all your debt obligations
- Further reviewing of bankruptcy laws, you must follow during the entire process
- Assessing the duties, you must follow as the applicant
- Discharging your debt upon completing the required applicant duties under the Bankruptcy and Insolvency Act.
- At this point, you will be debt-free
- Bankruptcy remains on your credit bureau score for six years
- During the six-year window, you can start rebuilding your credit score (Learn more about credit scores and how they work in this post.)