Filing For Bankruptcy – An Immediate Debt Relief

Here at, we know that filing for bankruptcy is a hectic and sensitive decision to make, though it may be the right solution to have your life back (financially). You will need to file for bankruptcy if you:

  • what you are owing is way more than your earnings
  • are not able to make a regular payment of your debt on your loans or credit cards
  • are not able to pay your bills monthly
  • your wages have been confiscated

Advantages of Filing for Bankruptcy

If you are left with no other option than to file for bankruptcy, there is every likelihood you feel so neck-deep in debt. Nonetheless, there are some advantages attached to filing for bankruptcy. These advantages are stated below.

  • Your creditors will not be able to take up legal actions against you
  • You will be able to protect some assets that your creditors may be able to take away from you
  • You will be able to abate confiscation of your wages
  • You will be relieved of financial anxiety and be able to start your life back on a new track
  • You will be able to pay back most of your debts, if not all
  • You will be assisted on how to have a good future financial status

Important Facts about Filing for Bankruptcy

The important facts you should know about filing for bankruptcy include:

Not everything owned by you will be lost: Against the general belief, you will not lose everything should you file for bankruptcy. Bankruptcy and Liquidation Act works with federal and provincial legislation, to protect many personal assets, including your RRSPs, furniture and vehicle. These belongings are most times excluded from seizure by the representatives (trustees).

You are protected from threatening calls from creditors: With filing for bankruptcy, you will receive immediate protection from legal actions coming from collection agencies and your creditors. They will not be permitted to threaten you with calls.

It will mean a new start for you: You will get an immediate new financial start, and you can be set free from bankruptcy in as early as some 9 months’ time.

Many Canadians turn to filing for bankruptcy because it’s a legal process: Filing for bankruptcy is intended to release honest but unlucky debtors of their debt liability. During your period of bankruptcy, you have responsibilities to your creditors, which include checks and balances – just to ensure that bankruptcy is reasonably, based on your situations.

Additional Information on Bankruptcy

Costs associated with filing for bankruptcy


Though there are some costs associated with filing for bankruptcy, filing for bankruptcy is less expensive, compared to some other debt management options.

Your credit counsellor at Credence Credit will discuss everything with you, and make sure you understand the way bankruptcy costs are calculated.

Assets that are exempted when filing for bankruptcy Assets to keep and the ones to give up when filing for bankruptcy can be perplexing, they can likewise be different from one region to the other.
Filling for bankruptcy and your house If you file for bankruptcy, can you still keep your house? The thought of losing your house one’s house is not pleasant, so many individuals (debtors) are allowed to keep their houses if they pay the equity to the representatives (trustees).
Debts that are not added to bankruptcy Since it is not all debts that can be paid up; neither is it all debts that can be cancelled through bankruptcy, it is then important to know the debts and financial obligations that will not be cleared this method.
Filing for bankruptcy and divorce or child support Understand how filing for bankruptcy will affect divorce or alimony payment or child support.
Tax debt Do you owe some taxes to CRA (Canada Revenue Agencies)? If you do, know that unpaid taxes owed to CRA most times represent a great portion of the debt owed by those having financial problems.
Filing for bankruptcy alternatives Credence Credit will help you with a consumer deal (proposal) which will help you fix your debt – an alternative to filing for bankruptcy.




Your home is a place – your personal space where you feel secured, so it is only natural to feel so attached to this space. But now you are having some financial issues and you are worried whether you will still be able to keep your home. It is noteworthy to know that you do not automatically lose your house by filing for bankruptcy. Below are some judging factors.

  • What is the amount of equity (assets) that you have at home?
  • What is your cash flow like, and how are you able to manage payments related to your house (payments like; utilities, mortgage, taxes, etc.)?

How to Handle Equity within a Bankrupt Filing

Equity is the difference between the worth of your house on the market, and what you are owing on it. So as to keep your house while you file for bankruptcy, you will need to pay off all of your home equity to the representative (trustee). Consider the below example.

On the basis of a recent sales of look-alike houses in his neighborhood, Wilson estimated the selling price of his Ontario house to be $150,000. The trustee may need to verify the value as a process involved in bankruptcy process. Wilson’s remaining mortgage is $130,000 and he has on his property taxes $600. Wilson’s estimated equity is calculated below.

Present market value of Wilson’s home $150,000
Mortgage amount remaining $130,000
Property tax arrears $600
Total liens $130,600
Wilson’s estimated home equity* $19,400


From the above example, Wilson’s will have to pay the trustee $19,400 before he can file for and complete his bankruptcy process and keep his house. If his mortgage balance is more than his house’s value he will still be able to keep his house because of exemptions in bankruptcy stated for his region. Wilson should on the other hand make sure that he can maintain his home without putting the future of his financial status in jeopardy.

Is Your Equity too much to be filed for Bankruptcy?

Has the value of house increased significantly? There’s another way out. Consider the example below.

On the basis of a recent sales of look-alike houses in his neighborhood, Mark estimated the selling price of his Ontario house to be $200,000. The trustee may need to verify the value as a process involved in bankruptcy process. Mark’s remaining mortgage is $100,000 and he has on his property taxes $1,000. Mark’s estimated equity is calculated below.

Present market value of Mark’s home $200,000
Mortgage amount remaining $100,000
Property tax arrears $1,000
Total liens $101,000
Mark’s estimated home equity* $99,000


From the above example, Mark’s will have to pay the trustee $99,000 before he can file for and complete his bankruptcy process and keep his house. For people like Mark who have too many home equity, this method won’t be viable.


Confiscation is a legal arrangement that is used for money collection on a debt. It makes it possible for a creditor to collect a quota of your wages before you even receive the wages. Below is an example of wages confiscation situation.

Jade works at a warehouse company. When it is pay time, she’s given a pay cheque. But she has an unpaid amount she’s owing on her credit card that she’s been ignoring. If she is taken to court by the credit card company and a judgment is passed in favor of the credit card company, a portion of her wages can be intercepted and paid to the court. The curt in turn will send the money to the credit card company (creditor).

Truths about Wage Confiscation

  • A lawsuit has to be filed, judgment must be passed in favor of the creditor before your wages is confiscated.
  • There are some income type that can’t be confiscated
  • Money can only be paid to the court first, then to the creditor (direct payment to the creditor is not allowed) – except for some credit unions that have be charged with the assignment of wages, or the CRA- these are the bodies that can confiscate your wages without any order from the court.
  • If a voluntary wage assignment has been signed by you with a payday loan lender, your wages can be confiscated as well (if you wish to, you can withdraw your signed voluntary wage assignment though).
  • Confiscation rules differ from on region to another, though the law generally limits a confiscation order to 20% of a debtor’s wages.
  • If you have some spousal or child support obligations, confiscation may be up to 50%, all depending on the number of dependents you have and on your income level.


How to Prevent the Confiscation of Wages

  • Pay back what you owe
  • If the percentage of confiscation placed on you is too high and it is greatly affecting your financial status, appeal to the court to release the confiscation and let you pay up your debt by installments – contact the court where the judgment was passed to book an appointment to be allowed a hearing before the registrar
  • You can file for bankruptcy to prevent all legal actions
  • Tender a formal deal (proposal) to your creditors to stop every legal action so that bankruptcy can be prevented


When you are released from bankruptcy, you will be freed from the debts that existed at the date of filing. The whole of your debt must appear the documents for your bankruptcy. There some debts that are not discarded when you are released from bankruptcy – meaning you are still under obligation to pay off these debts.

Debts that are not discarded on the release of your bankruptcy include:

  • Secured debts that assets collateral are used to obtain the loans
  • Child or ex-spouse support
  • Debts that came about as a result of fraud and embezzlement
  • Students loans
  • Fines imposed by the court, restriction orders, bail bonds
  • Penalty or fine levied against by the court
  • Debts that resulted from acquiring properties through fraud

Co-signers or Guarantors on  Credit Lines and Loans

The liability of the person who has co-signed or guaranteed a loan on your behalf is not affected when you go bankrupt, but the two of you (guarantor and debtor) will have to pay up the liabilities you have incurred.


What Does Discharge From Bankruptcy Connotes?

Filing for bankruptcy is done for the purpose of receiving a bankruptcy discharge. It is a legal document which confirms that your debt has been lawfully and permanently canceled, meaning you no longer have to pay up the debts contained in the bankruptcy application.

What Is The Length Of A Bankruptcy Period?

There are factors that determine the length of a bankruptcy period. These factors are based or whether a debtor has surplus of income, or whether he is filing for bankruptcy for the second or for the third time.

First bankruptcy: If a debtor is filing for bankruptcy just for the first time, he does not have to make surplus income payments. After a debtor has finished all of his bankruptcy duties, he will then be entitled to an automatic release from bankruptcy after 9 months. But if you have surplus income, you will have to be in the bankruptcy for a time frame of 21 months.

Second bankruptcy: If you have gone bankrupt before and has no surplus income payments, you will be entitled to an automatic release from bankruptcy in a period of 24 months. If you have surplus income the time frame will be extended to 36 months.

Third bankruptcy: If your filing for bankruptcy is for a third time, you will not be entitled to an automatic release. Your representative (trustee) will apply to the court of law to listen to your request for release, then the court will review your file, which will fix certain conditions for your release. These conditions could involve a bankruptcy period of not less than 24 months (if no surplus income exists), or 36 months if surplus income exists.

You will receive a release and can start up a new life after periods of bankruptcy has elapsed. Expertise at CREDENCE CREDIT will help you plan your budget, finance, and debt management tactics to keep you on the road to financial liberty.

Can A Release From Bankruptcy Be Rejected?

Is it possible that your creditors rejects your release, or your trustee, or the Inspector of bankruptcy? Yes it is a possibility if you fail to fulfill the following responsibilities:

  • If the required payments are not settled
  • If you committed a crime related to your bankruptcy
  • If you fail to attend necessary credit counselling sessions
  • If your bankruptcy is a result of gambling
  • If you engaged in some excessive financial transactions before you went bankrupt

Note: Should your release be rejected, attend a trial in court to find out the conditions for your discharge.


Spousal or child support claim cannot be discharged in a bankruptcy or consumer deal, neither is suspension of payments possible. This implies that if you have spousal or child support obligations, you will still have to fulfill these obligations even if you file for bankruptcy – you cannot be discharged from these duties.

And if you are the one receiving financial support and you are having pending payments to receive from your financial supporter but these supporters have filed for bankruptcy, you may submit a claim for the money you are owed – making yourself a creditor. These are significant claims under the laws governing bankruptcy.

Note: It is advised that you speak with your lawyer or the trustee in charge of your supporters’ bankruptcy filing – ask them about what you can claim what you are owed.


CREDENCE CREDIT strives to ensure that any question related to bankruptcy are answered. This will help you in your decision making as to either file for bankruptcy or not.

What if you have further questions after filing for bankruptcy? Below are some important questions you might want to find answers to.

Q: If I go bankrupt, will my spouse/partner be responsible for my debts?

Ans: Since it is an individual that goes bankrupt, so far your spouse/partner did not stand in as your guarantor on your debts, he/she will not be affected by your bankruptcy; except in determining family income and the calculation of surplus income. Though we recommend that both spouses/partners visit CREDENCE CREDIT to discuss their options on how to get over their financial issues.

Q: Am I going to lose everything I have if I go bankrupt?

Ans: No, you are not going to lose everything if you go bankrupt. Every region has assets that are protected against seizure or confiscation.

Q: If someone co-signed on a loan and I am now bankrupt, what happens?

Ans: If someone co-signed or stood in as a guarantor in obtaining a loan on your behalf, the co-signer together with yourself (guarantor and debtor) will have to pay up the liabilities you have incurred.

Q: If I go bankrupt, how will my credit rating be affected?

Ans: If you have serious financial issues and you are thinking of filing for bankruptcy, your credit rating has been affected already. But filing for bankruptcy can really help you to clear up your credit rating within a time frame.

Q: Filing for bankruptcy, what is its cost?

Ans: The cost varies from individual to individual, all based on your financial condition. During your primary free consultation, a reliable representative (trustee) in bankruptcy will explain the costs of filing for bankruptcy to you, before you are charged for any payment. – meaning you do not have to make a pledge until you feel contented.

Q: Can I go bankrupt while having an outstanding student loan debt?

Ans: It is possible to go bankrupt, but there are options to dealing with your student loan debt. If you stopped your appearance at school within the 7 years, it is possible that your student loans will not be released.

Q: What does discharge or release from bankruptcy mean?

Ans: A release from bankruptcy, simply put, means that you do not owe debt you owed at the start of the bankruptcy process anymore. Nonetheless, you will still be owing the money until you receive the discharge.

Q: If I file for bankruptcy, will I be able to keep my home?

Ans: Of course! It is possible for you to keep your house after filing for bankruptcy.

Q: if I go bankrupt, am I still under the obligation to pay for child support?

Ans: of course! Spousal or child support claims are not exempted by bankruptcy law.

Q: If I go bankrupt, is it possible to obtain a credit card?

Ans: You will be required to submit all credit cards you have possession of to the trustee when you sign your bankruptcy papers. Nonetheless, you will get back your credit card(s) back after you are officially tagged as bankrupt. All you will have to do is to disclose your bankruptcy to the creditor. Note though that you may have to deposit some fees before a credit card is issued to you.

Q: Will the general public know about my bankruptcy?

Ans: Bankruptcy is a public procedure legally, meaning people may be able to know about your bankruptcy status, but your creditors are officially notified. If your assets that are available for dispersal to creditors do not go beyond $15,000, your bankruptcy status does not have to appear in the newspaper. But if it goes beyond $15,000, bankruptcy law requires that notice should be placed in the newspaper by the trustee. Should you have more questions, have a discussion with the trustee before you progress.

Q: What is the length of a bankruptcy period?

Ans: You will have to stay in the bankruptcy process until you receive a release. Typically, your bankruptcy period may last for some 9 – 36 months, depending on the depth of your financial troubles.

Q: If I do not wish to file for bankruptcy, do I have alternatives?

Ans: Normally, filing for bankruptcy should be the last option, and it should be considered, only after you have exhausted all other feasible options for debt management. Feel free to check on our information on consumer deals (proposals) for alternatives to controlling your debts without having to go bankrupt.