How do I start the personal bankruptcy process in Canada?

Process: the first step is to contact a Licensed Insolvency Trustee. You can find a trustee in your area by simply performing a Google search or looking in an online directory such as YellowPages.ca or 411.ca.

A word of caution – when selecting a trustee, you should investigate two things:

The person in question is actually a licensed bankruptcy trustee. Here is a link to a directory of Licensed Insolvency Trustees at the website of the Office of the Superintendent of Bankruptcy (“OSB”). The OSB is the division of the Government of Canada that both licenses trustees and oversees their activities.

The trustee you have in mind hasn’t been the subject of any disciplinary action for professional misconduct. Here is a link to professional conduct decisions on the OSB’s website. You can search for the trustee’s name  on this webpage to confirm whether or not her professional conduct has ever been an issue.

Once you’ve selected a trustee, get in touch with her to set up a consultation meeting. Most trustees will provide a free initial consultation to review your financial situation and determine if filing for personal bankruptcy is the right option for you.

Depending on your personal situation, you’ll be asked to bring the following items with you to the consultation meeting:

  • Photo ID, like a driver license or passport
  • Your creditor statements so the trustee can make a list of your debts
  • Recent proof of income like a paystub to verify your income
  • Your most recent notice of assessment from the Canada Revenue Agency for your personal income taxes. The trustee will want to ensure that your personal income taxes have been filed up to date before proceeding to file a bankruptcy
  • If you are self-employed and are required to collect GST/HST, your most recent notice of assessment  from the Canada Revenue Agency for your GST/HST account. The trustee will want to ensure that your personal income taxes have been filed up to date before proceeding to file a bankruptcy
  • Your vehicle ownership and certificate of insurance. In most provinces, you are able to keep a personal use vehicle up to a certain dollar amount; i.e., the exemption limit. Therefore, the trustee will need to verify what type of vehicle you own to determine if it’s within the exemption limit
  • If your vehicle is leased or financed, the trustee will need to review your lease or financing agreement and will also need the current balance owing on your lease/loan
  • If you have any financial assets such as RRSPs, RESPs, TFSAs, work pension, life insurance, mutual funds, brokerage accounts, etc., you’ll need to bring with you the most recent statements
  • If you own a home, the title deed and property tax bill as well as the most recent mortgage statement. The trustee needs these documents to verify your ownership interest in the home as well as the current mortgage balance

At the meeting, the trustee shall examine the above documents and will ask you certain questions related to your financial circumstances in order to review your debts, your assets, your household income and household expenses. By reviewing these items, the trustee will be in a position to inform you if filing for personal bankruptcy is the best option for you and the consequences of doing so with respect to: (i) what you’ll be required to pay; (ii) the impact on your assets (if any); and (iii) your credit rating.

Once the trustee has explained everything to you and you’ve made the decision to proceed with the bankruptcy, the trustee will schedule a “signup” meeting with you. At this meeting, you will be required to sign the legal documents necessary to voluntarily file for personal bankruptcy.

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