Questions and Answers

 
Can I be put in jail for owing money?

No, not for just owing money. You may have heard a lot about "being taken to Court". This is just to do with the legal process that your creditors were following and has nothing to do with going to jail.

Is my spouse responsible for my debts?

No, not unless they have guaranteed or co-signed your debts in writing.

What happens to the taxes I owe to the Government?

They will be dealt with in the bankruptcy or the proposal just like other debts.

Will bankruptcy eliminate all my debts?

Most debts, but not the following:

• secured debts (e.g. a mortgage or car loan)
• child support, maintenance, alimony
• Court fines, penalties and traffic offences
• student loans, if less than ten years since leaving university or college
• debts obtained by fraud or fraudulent misrepresentation
• civil claims arising from personal or sexual assault

Can anyone file bankruptcy or make a proposal?

• You, as an individual, can file bankruptcy or make a proposal if:
• you are not presently in bankruptcy and;
• you owe at least $1,000 and;
• you are not able to meet your regular payments as they become due; or
• you would not be able to pay all of your debts from the money that would be received from the sale of your non-exempt assets (see exemptions below)

Your company or partnership may also file bankruptcy or make a proposal if it meets the above requirements.

How much will this cost me?

The fee is dependent on your unique circumstances. The payment you have to make will be explained to you by a trustee once your situation has been reviewed. Most bankruptcy fees are set by the government in the Bankruptcy and Insolvency Act and are the same for all trustees across Canada.

Do I have to pay all the fees up front?

Not usually. There are a number of ways to pay the fees such as monthly payments, by the sale of assets or by having a third party pay the fee for you. This will be fully discussed with you.

Can my creditors continue to harass me after I file bankruptcy?

No, they may call you, but you should direct them and their questions to us.

Will I be able to keep my vehicle?

Alberta Provincial law allows a person filing bankruptcy to keep the equity (difference between value of vehicle and any secured debt) in a motor vehicle, not exceeding $5,000.

Can my wages be garnished or my assets seized after I file bankruptcy?

Normally, all legal proceedings against you stop at the date of bankruptcy. One exception would be in relation to Maintenance Enforcement.

If I file bankruptcy, can I still pay my family and friends?

Strictly speaking, while you are in bankruptcy you are only responsible for paying your ongoing living expenses. All payments to your unsecured creditors stop. However, if you have paid the amount due to the estate (trustee), you are not prohibited from making gifts from your remaining income for that month and these payments may be to family and friends.

Will you tell my employer that I filed bankruptcy?

Not unless you want us to. This might happen if the is a garnishee order.

Do I still handle my own money?

Yes, you continue to receive your income and you can maintain or open a bank account.

What happens to my credit cards?

Your credit cards must be given to the Trustee for destruction unless an issuer has agreed (in writing) that you can keep one. This happens only rarely.

Will I be able to get credit in the future?

Depending on your earning, the assets you have kept or built up and your repayment ability, you will find that gradually your ability to get credit improves over time.

Do I have to be living in Canada to file bankruptcy?

No, as long as you lived or carried on business in Canada in the last 12 months you may file bankruptcy. However, not being resident in Canada will increase the cost of the process.

What if I win a lottery or receive an inheritance while in bankruptcy?

Any "windfall" received while you are in bankruptcy must be given to the Trustee to distribute to your creditors. If there is any money left over, it will be returned to you.

Can I file bankruptcy more than once?

Yes, but it will be harder to get out of bankruptcy after the first time.

What happens to my RRSP and/or pension plan?

Depending on the type of plan you have, it may be protected from seizure by Provincial law. If not, it must be paid over to the Trustee to distribute to your creditors.

Will I lose everything in bankruptcy? (Exemptions)

In Alberta, the Civil Enforcement Act states what you are entitled to keep. Here is an extract from the current regulations:

• Food required by you and your dependents during the next 12 months.
• Necessary clothing up to a value of $4,000
• Household furnishings and appliances to a value of $4, 000
• One motor vehicle not exceeding a value of $5, 000
• Medical and dental aids required by you and your dependents.
• The equity in your principal residence, including a mobile home, up to a value of $40,000. If you are a co-owner of the residence, the amount of the exemption is reduced to an amount that is proportionate to your ownership interest.
• Personal property (i.e., tools, equipment, books) that you require to earn income from your occupation up to a value of $10,000.
• There are special provisions for farmers and fishermen

For further information or to get assistance contact us by phone at 403 266-6665, email or come in for a free consultation.