Resources for Debtors
Frequently Asked Questions
On this page:
- How will a bankruptcy or consumer proposal affect my credit rating?
- Does the bankruptcy release me from all my debts?
- Will all my assets be assigned to the trustee?
- How will my bankruptcy affect my spouse?
- What happens to my wages during a bankruptcy?
- Can you provide me with the name of a trustee in bankruptcy?
- I cannot find a trustee to file my bankruptcy. What should I do?
- I'm having a problem with my trustee. What can I do?
- I have large student loans that I am unable to repay. Should I declare bankruptcy?
- Will declaring bankruptcy eliminate my student loan debts?
- I didn't get my discharge from bankruptcy. How do I obtain one?
- A creditor is harassing me on a daily basis. What should I do?
- How will a bankruptcy or consumer proposal affect my credit rating?
Usually, once your level of debt becomes so great that bankruptcy or a proposal is required, your credit rating is already poor.
A person who declares bankruptcy is assigned the lowest possible credit rating score. A consumer proposal produces a similar result. Information that affects your credit score is usually removed from your credit report after a certain period of time. The length of time that information must stay in your report depends on the type of information and where you live.
Learn more about credit rating score
Your ability to obtain and use credit after discharge depends on convincing lenders of your personal financial maturity and ability to repay the debt. However, there are no guarantees — no one is required to give you credit.
To ensure that your credit record is updated, send a copy of the discharge order to the major credit-reporting agencies. Make sure that you keep all documents relating to your bankruptcy or proposal for reference by future lenders.
More information about credit ratings - Does the bankruptcy release me from all my debts?
Under the Bankruptcy and Insolvency Act, some debts are not discharged by bankruptcy. These include the following:
- alimony payments and child support;
- student loans, if it is less than seven years since you ceased to be a full- or part-time student; Learn more about student loans
- fines or penalties imposed by the Court; and
- debts arising from fraud.
In addition, bankruptcies generally do not affect the rights of secured creditors. If a creditor has a valid security against your property (e.g. a car or a house), consult with the bankruptcy trustee. If you can afford monthly payments, financial arrangements can be made with the secured creditor.
- Will all my assets be assigned to the trustee?
The only assets that are not assigned to the trustee for distribution to your creditors are those exempted by federal and provincial laws. For example, in certain provinces, vehicles up to a specific value are exempt from seizure by the trustee. (If you have any questions, discuss this matter with the trustee.)
Make sure that all of your assets are fully disclosed and properly valued. This includes all existing assets as well as those acquired prior to your discharge.
Once you have filed for bankruptcy, you cannot dispose of any assets assigned to the trustee. - How will my bankruptcy affect my spouse?
Your debts are your own. However, if you and your spouse incurred a joint (co-signed) debt, then a creditor can pursue your spouse for repayment. In addition, anyone who has co-signed a loan for you will still be responsible for making loan payments after you go bankrupt.
Only assets owned by the bankrupt are included in the bankruptcy. If assets are jointly owned with a spouse, then the bankrupt's portion may have to be sold and distributed to the creditors. It is important to make the trustee aware of joint assets so that each case can be reviewed individually. - What happens to my wages during a bankruptcy?
Wages are not affected by bankruptcy. However, you will be required to fill out an Income and Expense Form listing any income you may have. If your income exceeds certain standards established by the Office of the Superintendent of Bankruptcy (OSB), you will be expected to pay a portion of the surplus into the bankruptcy estate through the trustee.
Information on how a trustee calculates surplus income - Can you provide me with the name of a trustee in bankruptcy?
To find a trustee in your area, consult the Yellow Pages and search using the keywords Bankruptcy Trustees.
- I cannot find a trustee to file my bankruptcy. What should I do?
The Bankruptcy Assistance Program is designed to facilitate access to bankruptcy trustees.
You may be eligible for help if you
- have contacted at least two trustees who participate in the Bankruptcy Assistance Program and tried to obtain their services;
- are not involved in commercial activities; and
- are not in jail.
- I'm having a problem with my trustee. What can I do?
Contact the Office of the Superintendent of Bankruptcy at 1-877-376-9902 (toll free). The OSB can review and investigate your complaint and attempt to reach an acceptable resolution with your trustee.
- I have large student loans that I am unable to repay. Should I declare bankruptcy?
There are programs available to help those who are experiencing financial difficulty because of student loan debt. The federal government’s Repayment Assistance Plan helps borrowers manage student loan debt by paying back what they can reasonably afford. If you have a provincial or territorial government student loan, contact your provincial/territorial student financial assistance office to find out about their repayment assistance programs.
- Will declaring bankruptcy eliminate my student loan debts?
A discharge from bankruptcy will release you from your obligation to repay your student loans if you filed for bankruptcy at least seven years after you ceased to be a part or full-time student. The seven-year rule applies to both new filings for bankruptcy as well as to bankruptcies that were not discharged as of July 7, 2008.
However, the court can order a release from the obligation to repay a student loan as early as five years after the bankrupt has ceased his or her studies if repaying the student loan will result in the person continuing to experience major financial difficulty (undue hardship) and if the person has made efforts to repay his or her loans. The five-year rule is available to all bankrupts, including those whose bankruptcies were discharged prior to July 7, 2008.
- I didn't get my discharge from bankruptcy. How do I obtain one?
Contact the trustee who handled your bankruptcy. (If you do not remember the trustee's name, contact the Office of the Superintendent of Bankruptcy at 1-877-376-9902 (toll free) for more information.)
The trustee will inform you of the reasons why you did not obtain your discharge. For example, you may have to fulfill certain conditions.
The trustee may agree to process the discharge for a fee. In some provinces, if you cannot afford the fee, the Court offers a do-it-yourself kit containing all the necessary paperwork. Contact the Office of the Superintendent of Bankruptcy at 1-877-376-9902 (toll free) to find out if such help exists in your province.
- A creditor is harassing me on a daily basis. What should I do?
Although the regulations differ slightly across Canada, creditors or collection agencies usually have some limitations on what actions they can take. For example, a representative of a collection agency must not make telephone calls of such a nature or frequency as to constitute harassment of you or your family. In addition, there are certain times when a representative is not allowed to call you at all (these vary from one province or territory to another).
If you feel you are being harassed, contact either a trustee or a member of Credit Counselling Canada. Either can help you by serving as an intermediary between you and the creditor.
Find out more about how to protect yourself from aggressive debt collectors
Repayment Assistance Plan
Provincial/territorial student financial assistance offices
