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Frequently Asked Questions
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Bankruptcy is a legal process that gives individuals in financial difficulty and opportunity to have a fresh start. To qualify for bankruptcy, an individual must owe at least $1,000 and not be able to meet his or her financial obligation as they become due.
Please click on any questions below to view aswers, or click on Show All, below, to view all questions and answers.
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What does bankruptcy cost?
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Trustee fees and disbursements are regulated by the government. The fee charged however varies between Trustees, call (604) 540-1920 for a no obligation quote. Our fee includes all filing fees, disbursement costs, taxes, and the two required counselling sessions. This fee can generally be paid in installments over the term of the bankruptcy.
We encourage individuals to shop around, as the cost may vary by hundreds of dollars.
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Will my creditors stop calling me?
What about garnishee orders?
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YES! Typically as soon as they are notified of the bankruptcy, creditors will cease their collection actions including harassing telephone calls. Creditors then have to deal directly with the Trustee. This includes garnishee orders, which are lifted upon bankruptcy.
However, secured creditors, such as a mortgage on a house, deal outside the bankruptcy and still have the ability to act.
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Who will know?
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In a typical bankruptcy, your creditors are informed. There is no requirement to contact your employer. The bankruptcy does however become a matter of public record and can be accessed. The bankruptcy will also be reflected on your credit report for 6 years from the date of your discharge. This does not mean you cannot obtain credit, as granting credit is the responsibility of the entity issuing the credit.
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What can I keep?
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In British Columbia certain property is exempt from seizure:
- Equity in a home in Greater Vancouver and Victoria = $ 12,000. In the rest of the province = $ 9,000;
- Equity in Household items = $ 4,000;
- Equity in a Vehicle = $ 5,000; The vehicle exemption drops to $ 2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
- Equity in work tools = $ 10,000;
- Equity in essential clothing and medical aids is unlimited
Any other assets may be sold by the Trustee for the benefit of the creditors of the bankrupt. This would include shares, RRSP's which are not locked-in, recreational equipment or other assets which have market value.
Tax refunds outstanding, as at the date of the bankruptcy, also vest in the trustee for the benefit of the creditors. Income Tax law requires a bankrupt to file two tax returns for the year of the bankruptcy. The first (pre bankruptcy tax return) covers the period January 1st through to the date of the bankruptcy. The second (post bankruptcy tax return) covers the period starting with the date of the bankruptcy and ending December 31st. Tax rebates vest in the trustee for the benefit of the creditors.
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What is counselling?
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You must attend two counselling sessions in order to be eligible for an "automatic nine month discharge". Counselling was introduced to avoid future financial difficulties. At Bottom & Associates, all counselling is done on an individual basis. The first counselling session must be held between 10 and 60 days following bankruptcy; the second counselling session must be held no later than 210 days following the date of bankruptcy.
At Bottom & Associates the cost for this is included in the fee quoted for the bankruptcy.
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When is bankruptcy completed?
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A first-time bankrupt is eligible for an automatic discharge at the end of nine months if no opposition is received from the creditors, the trustee or the Superintendent of Bankruptcy. If the discharge is opposed then a hearing is set before a Judge or Registrar.
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What if I have been bankrupt before?
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Where there is a previous bankruptcy there is no automatic discharge and the discharge will be heard before the Registrar.
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What do I need to do during the bankruptcy?
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During the nine months you are required to:
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Attend two counselling sessions
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Complete monthly income and expense statements
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Provide information to complete the necessary tax returns
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Keep the trustee informed of your current address
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Where applicable, pay excess income into the estate
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What about alimony and child support?
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Current alimony and child support payments must be made. Any arrears amount is a claim provable in bankruptcy and although collection on this amount will be stopped during bankruptcy, the amounts will not be discharged by the bankruptcy.
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