What Bankruptcy Options are available in Canada

In Canada, the bankruptcy law provides debtors with several opportunities to repay their debts as a result of which they may have all obligations deleted after the discharge. The following are the paths that debtors in Canada can pursue in order to eliminate their debt and silence the creditors.

Bankruptcy is a legal process designed for those who in a good faith have fallen on unfortunate circumstances. Under the bankruptcy protection, debtors are shielded from collection activities by creditors and from wage garnishments. This concerns unsecured creditors. Secured creditors, on the other hand, are those who have legally secured their interest and will recover their assets regardless of whether or not the debtor is under bankruptcy protection. Canadian debtors considering bankruptcy must contact a trustee who will help them assess their financial situation and, if approved, help them file an application with the Office of the Superintendent of Bankruptcy. As a result, all required payments will be made from the debtor to the trustee and from there to the unsecured creditors, thus eliminating the need for the debtor to communicate directly with these creditors. After all the steps are completed and the prescribed time passes, the bankruptcy case is discharged, and the consumer is no longer liable for the debts.

Consumer Proposals
This plan is available to debtors with less than $250,000 in unsecured debts. Again, a trustee will determine if this plan is the best for a given debtor. Under this plan, the debtor will make arranged payments to the creditors, and the amount will be considerably less than what was originally owed. The debtor does not get to keep his assets. In addition, all wage garnishments and collection activities must stop. Once all of the conditions are met, the debtor is released from the debts that the proposal included.

Division | Proposal
This option is available to any individual or business debtor, and the amount owed does not play a role. Like in all other plans, the debtor works directly with a trustee who creates a proposal which the creditors then accept or reject. The trustee then submits the proposal to creditors and holds a in which the creditors vote on the amount proposed. If the proposal is approved, the debtor will make payments in the agreed-upon amount through the trustee. The debtor keeps property (both his secured and unsecured). However, if the proposal is not approved, the debtor is immediately declared bankrupt.

At ESC we offer Bankruptcy Searches

A complete Bankruptcy Search includes Superintendent and Provincial Court Search.
A search conducted with the Office of the Superintendent of Bankruptcy Canada to determine all bankruptcies and proposals registered since 1978, all receiverships registered since 1993 and all recorded petitions.
A search conducted at the Provincial Court that includes bankruptcy petitions, receivership applications and Companies’ Creditors Arrangement Act Applications from 1998 to present for Ontario. For all other provinces, bankruptcy searches are completed on a five or ten year basis and must be specified at time of order.

Please contact us for further information.


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