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It is now going to take longer to get out of bankruptcy and it will cost more. It is estimated that the harsher laws will affect 25% of the people who file bankruptcy.
If you are one of the persons affected you should seriously consider making a proposal.
- 9 month automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have excess income. e.g. less than $3,062.00 a month take home pay for a family of 3. (Note: 1)
- 21 months (or more at the court's discretion) for 1st. time bankrupts who fulfill all their duties. and who have excess income. e.g. more than $3,062.00 a month take home pay for a family of 3. (Note: 1)
-24 months for 2nd time bankrupts who do not have excess income.. e.g. less than $3,062.00 a month take home pay for a family of 3. (Note: 1)
-36 months for 2nd time bankrupts who have excess income. e.g. more than $3,062.00 a month take home pay for a family of 3. (Note: 1)
-Bankrupts with personal income tax debt of $200,000.00 or more representing 75 percent or more of total unsecured claims, are not eligible for an automatic discharge. They must go to court for an adjudication.
Note: 1 Surplus Income Standards for 2009/10
The government has imposed a stiff penalty if your non bankrupt spouse refuses to divulge his or her income to the trustee.
If your spouse works and is not going to file for bankruptcy, the trustee is obligated to base your monthly payments on family income including the income of the non-bankrupt spouse. The non-bankrupt spouse can refuse to divulge his or her income to the trustee, in which case the trustee will calculate the monthly payments excluding the non-bankruptcy spouse from the calculation but only allowing 50% of the applicable Superintendent’s standards corresponding to the number of person in the family unit, including the spouse who would not divulge his or her income.
If you wish to see how this affects the monthly payments you will be obliged to make, you can get a close approximation by using the Personal Bankruptcy Predictor at www.BankruptcyCanada.com
The major purpose of consumer insolvency is to give a person, hopelessly burdened with debt, the opportunity of a fresh financial start. A person going into bankruptcy is usually out of bankruptcy in nine months. All his debt with some exceptions are erased upon his discharge.
A debtor can also file a proposal to his creditors thus avoiding bankruptcy. Proposals allow only a portion of the debt to be repaid. Proposals are almost always accepted by creditors.
There are two types of professional a debtor can get help and advice from; an insolvency lawyer and a trustee in bankruptcy. Every debtor who files bankruptcy or a proposal must deal with a trustee in bankruptcy as only trustees are licenced by the federal government to administer bankruptcies and proposals.
A debtor should seek advice from an insolvency lawyer if he has complicated issues or if a considerable amount of money is involved. Trustees are trained to recognize complicated issues that debtors have and often refer debtors to an insolvency lawyer when the trustee feels a conflict of interest may arise.
Businesses can be petitioned into bankruptcy or placed into receivership by the financial institute or lender who has security. The lender, when he has evidence to suggest the business is in serious financial difficulty, will take this action in order to cut his losses and to realize on his security. Lenders use insolvency lawyers to ensure they are acting within the law and to preserve their rights to pursue the principal personally for any shortfall.
A principal of a business often has compelling reasons for placing the business into bankruptcy or convincing the lender to place the business into receivership:
By acting in a timely fashion the business assets may be sold for sufficient money to pay off the creditors or get as much as possible for the secured creditor and priority creditors so the principal's personal guarantees and statutory obligations are not called upon;
The principal may simply be exhausted from the stress and pressure of fighting a losing battle trying to save the company and want someone to take over the winding up;
The principal may want a professional to liquidate the business so the creditors are paid out in an orderly fashion in accordance with the security and priorities they enjoy.
The principal may want a professional to liquidate the business so that the creditors will know that the funds have been paid out correctly and that a report will be made to the creditors so they know that no funds were diverted by the principal.
More businesses "go under" or fail than is necessary! Very often a business
can be "saved" if caught in time. Even if a company is insolvent
it may be possible to save the company by using a provision under the Bankruptcy and Insolvency Act to file a Proposal, (an arrangement)
with the creditors of the company.
The way a Proposal works is that a company, through a Trustee in Bankruptcy, files the Proposal ("offer"), to the company's creditors asking them to accept less than the monies they are owed in order that the company might survive.
The trustee works with the owners of the company in drafting a Proposal that presents a "win - win" situation for both the company and the creditors. Typically, the creditors are asked to give up rights to the monies they are owed in exchange for an offer by the company to pay so many cents on the dollar (say, 25 or 50 or 75 cents) over time. Sometimes the company pays back 100% of what it owes but it is granted a period of time, say 6 months or a year, in which it makes no payments.
In a successful Proposal the company wins because it survives. The creditors win because they retain a customer and also because they get some of their money whereas in a bankruptcy they probably would get nothing.
As was the case, above, with consumer insolvency there are two types of professional a debtor can get help and advice from; an insolvency lawyer and a trustee in bankruptcy. Every debtor who's business goes into bankruptcy, receivership, or files a proposal must deal with a trustee in bankruptcy as only trustees are licenced by the federal government to administer bankruptcies and proposals.
A debtor should seek advice from an insolvency lawyer if he has complicated issues or if a considerable amount of money is involved. Trustees are trained to recognize complicated issues that debtors have and often refer debtors to an insolvency lawyer.
Bankruptcy Predictor - Measure the financial strength of your company!
CCRA (Revenue Canada) - Yes! They Will Make a Deal on Taxes Owed!
Business Proposals - Saving a Company from Bankruptcy!
A Proposal Story - An Article from the CGA Magazine
Business Bankruptcies/Receiverships - What Happens?
Directors' Liability/Statutory Debt - What happens?
Insolvency Prediction. - Formulas that predict whether a business will fail!
Creditor Proofing - Protection in a litigious world!
The
#1 Canadian Bankruptcy Site
If you have a severe financial problem you may find solutions at the following sites:
Saskatchewan
Manitoba
Newfoundland Bankruptcy Information;
Ontario Bankruptcy Information;
Ontario Bankruptcy Trustees;Quebec Bankruptcy Trustees;
NB & PEI Bankruptcy Information;
Nova Scotia Bankruptcy Information;
Canadian Trustee Websites.
Canadian bankruptcy law, Insolvency, proposals, commercial insolvency. 
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