Defensive Bankruptcy in Ontario: On Easing Debt

According to the Office of the Superintendent of Bankruptcy in Canada, a total of 23,236 consumers in Ontario filed for bankruptcy in 2012. To put things in perspective, this means that almost a third of the nation’s 71,495 bankruptcy cases filed by consumers last year were from Canada’s most populous province.

Unresolved debt problems can make it hard to make ends meet and keep up with one’s monthly payment obligations. Such a situation likely won’t sit well with creditors. As such, a lot of folks opt to file for bankruptcy in Ontario with guidance from trustees like Paddon + Yorke Inc. to move forward.

Filing for bankruptcy begins with seeking a trustee licensed by the federal government. Some trustees will offer free consultations to assess whether or not bankruptcy is the right solution for specific clients. Once the trustees have confirmed the client’s eligibility to declare bankruptcy, they will ask the debtor to sign legal documents which voluntarily assigns them into bankruptcy.

During this time, the debtor will have to turn his remaining assets over to the trustees, who will then decide how the collected assets are to be realized and distributed among each of the creditors. This doesn’t mean that debtors will be left with completely nothing; as the law provides for these debtors to keep possessions that don’t exceed a particular value through provincial exemptions. Things like household furniture, clothes, and even modestly-priced cars are thus exempted.

Contrary to popular belief, personal bankruptcy in Ontario will not completely erase one’s debt woes. Certain secured debts, like mortgages, alimony, car loans, and even student loan debts will not be cleared even after successfully filing for bankruptcy. As an alternative, those who wish to avoid the bankruptcy route may want to try other options such as filing a consumer proposal that lets the debtor work out more affordable payment terms through a settlement, subject to approval by creditors.

Ontario’s high number of bankruptcies should serve as a fair warning that heavy indebtedness can afflict anyone. While there should be no shame in filing for bankruptcy, every consumer must nevertheless learn how to handle their finances responsibly. Those who find themselves in a tight financial corner may want to seek the advice of reputable trustees like Paddon + Yorke Inc. before forging ahead with any debt solution.