Frequently Asked Questions About Personal Bankruptcy in Ontario

Falling into debt is inevitable, and is even considered by many people in North America as natural. Many people are neck-deep in debt due to unemployment, medical bills, and overspending. There are debt consolidation companies, like Paddon + Yorke Inc., which provide financial solutions and consultation services. Below are some of the questions that may help people understand the facts behind personal bankruptcy in Ontario.

What is personal bankruptcy?

When a person can no longer pay his debts to his creditors, he can seek protection through a legal process called personal bankruptcy. The procedure is facilitated by a trustee, and referred to as an “Assignment”. This procedure enables an individual to obtain relief from most of his debts after a period of time and to allow him to start fresh. People can consult bankruptcy trustees and seek help in filing an assignment to obtain the relief they need.

When is filing an assignment necessary?

Several factors affect an individual’s finances. Debt can be caused by failure to pay bills, overspending, medical problems, marital separation, and unemployment. There are certain criteria to meet before a person can file for personal bankruptcy. A trustee in bankruptcy will look at the amount of debt, net family unit income and expenses, number of people in the family unit, among other things, in order to determine the best course of action in dealing with a person’s debt. There are also instances wherein a person’s debts exceed the value of his assets, which is a necessary requirement for filing a bankruptcy. When these situations happen, the debt can be too overwhelming, making it necessary to file for bankruptcy.

What are the duties of a bankrupt debtor?

Ontario debt consolidation companies require the debtor to perform tasks under the Bankruptcy and Insolvency Act. Some of those include the submission of a complete statement of assets and liabilities and disclosure of details about the disposal of assets during a specified period of time which preceded the bankruptcy. Likewise, the debtor needs to inform the trustee of any change regarding his financial status during the bankruptcy period (i.e. loss of employment, receipt of an inheritance, or a major increase in income, etc.).

What are the advantages of personal bankruptcy?

Personal bankruptcy can help people get relief from most, if not all, of their debts and improve their financial status. It can in many instances assist a person in overcoming a foreclosure, repossession, utility cut-off, and general collection of debts (i.e. wage garnishments or bank account seizures). It can also be regarded as a way to relieve stress and worry from financial problems. It allows people to be spared of persistent debt collectors and overwhelming financial obligations.

Filing for bankruptcy is usually the last resort of a financially-challenged individual. However, there is always the option of filing a consumer proposal to settle the debt, which is an alternative to filing for bankruptcy. What many don’t realize is that a person doesn’t have to be completely broke to file an assignment in bankruptcy. In addition, most people don’t realize that a person does not have to give up all of their assets, especially through a bankruptcy. Individuals who file for bankruptcy are allowed to keep certain things like a motor vehicle, and even “tools” necessary for self-employment. These are called asset exemptions and they vary from province to province. There are debt consolidation companies that offer financial solutions and consultation to people facing huge debts. Personal bankruptcy is a valid option to help individuals obtain relief from their financial obligations and start anew.