Frequently asked questions :

Here is a list of the most frequently asked questions :

• Will my creditors stop tormenting me?
• Who will be informed of my bankruptcy?
• What goods can I keep (will not be seized)?
• If I declare bankruptcy, what will happen to my income tax reimbursements, and how will the production of my income tax return be affected ?
• What will happen to my employment income during my bankruptcy?
• When is a debtor discharged?
• Do I have to submit myself to the consultation sessions?
• What are my duties as a debtor?
• What debts are not eliminated by the bankruptcy?
• Does it cost anything to go bankrupt?
• Is my car seizable if I declare bankruptcy?
• What happens to my endorsers if I fill for bankruptcy or proposal?
• Do I have to file for bankruptcy if my spouse does?
• Would it be possible to clear my financial situation without losing my house and my car?

• Will my creditors stop tormenting me?

Yes, they will stop! By filing either for bankruptcy or for a proposal, you will be protected under the insolvency law. Then, every seizure or judicial proceeding is stopped except in these three instances:

1) Secured creditors (ie: mortgage), but this right is limited to the repossession of the sold goods and not a pursuit for money;
2) Seizure for unpaid alimony;
3) If the creditor has received a special permission from the court.

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• Who will be informed of my bankruptcy?

In a bankruptcy where the value of the assets exceeds $10,000, a notice has to be posted in a local newspaper to inform the creditors of the date of the first creditors assembly. If the assets are less than $10,000 the creditors are advised by mail only, so there is no publication in the newspaper.

Every document concerning the filing of bankruptcy is considered of public matter. So the Credit Reporting Agencies will have access to this information. This information will remain in your file for a period of 6 years, starting on the date of your discharge.

However, it does not necessarily mean that financial institutions will always refuse to make credit arrangements with you during this 6 year' period. Every demand's acceptance for new loans will be based on the evaluation of your situation at the time of the demand.

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• What goods can I keep (will not be seized) ?

- The furniture in the principal residence is not seizable to the extent it is used by the household, to a maximum of $6,000 of the fair market value;

- Tools and accessories needed to conduct the normal course of a professional activity;

- Given goods, goods that fall under non-seizability conditions, or under other special conditions;

- The employees' retirement savings plan to which the employer contributes; all other amounts declared non-seizable by a law that administrates such plans as well as any contributions done or accrued to the plan;

- Periodic disablement benefits paid in terms of a contract with an insurance company for protection against sickness or accidents. This also includes payments made by the C.S.S.T.

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• If I declare bankruptcy, what will happen to my income tax reimbursements, and how will the production of my income tax return be affected ?

If you decide to declare bankruptcy, the Federal income tax reimbursements from prior years, as well as the portion of the year prior to when bankruptcy is declared, will be kept by the trustee for the benefit of the creditors. However, all of the Federal post-bankruptcy portion reimbursements as well as both prior and post-bankruptcy Provincial reimbursements will be handed back to you. Regarding GST reimbursements, they will be kept for the period of your bankruptcy (until you are discharged) by the trustee to be later remitted to the creditors. However, all of the QST reimbursements will continue to be directly sent to you and you will be allowed to keep them.

In terms of your income tax declaration for the year of your bankruptcy, the trustee could take care of it. The fiscal laws require that two income tax returns be completed for the calendar year in which you became bankrupt for each government. The pre-bankruptcy return covers the period from the beginning of the year to the date of your bankruptcy. You will be required to provide your trustee with details and documentation to support this return. The post-bankruptcy return covers the period from the date of bankruptcy to the end of the calendar year.

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• What will happen to my employment income during my bankruptcy?

During the bankruptcy, employment income, such as salaries and commissions, belong to the debtor and the trustee generally does not intervene at that level. However, there are instructions from the bankruptcy superintendent, which state to the trustee what is the reasonable amount the debtor should contribute during his bankruptcy. These instructions are based on the number of dependants the debtor is responsible for as well as his personal situation.

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• When is a debtor discharged?

There will be an automatic discharge for first-time debtors nine months after their bankruptcy. This can change if the trustee recommends a discharge with conditions or if it is opposed by a creditor, the trustee or the superintendent of bankruptcy.

If the debtor or a creditor does not agree with the trustee's recommendation, mediation may be requested, as long as there is no other ground for opposition.

For those who have already filed for bankruptcy before or who do not qualify for the automatic discharge, the trustee is required, within one year, to apply to the court for a hearing of the application for a discharge. The court official has several options to choose from.

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• Do I have to submit myself to the consultation sessions?

Yes. In order to be eligible for an automatic discharge after nine months, you have to submit yourself to at least two consultation sessions, as prescribed by the law, in order to be eligible for an automatic discharge. At Jolin, Turcotte and Ass. Inc., the consultation sessions are done on an individual basis to provide a more personalized approach to the matter.

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• What are my duties as a debtor?

- Provide updates on address information as soon as you move
- Inform the trustee of your revenue and expense
- Provide information on any changes in your family situation (dependants)

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• What debts are not eliminated by the bankruptcy?

The debtor is released from most debts. However, some debts are not released, such as an award for damages in respect to an assault, a claim for alimony, spousal or child support, a debt arising out of fraud, any court fine, or debts or obligations for student loans when the bankruptcy occurs while the debtor is still a student or within ten years after he has ceased to be a student.

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• Does it cost anything to go bankrupt?

Yes. There is a filing fee to be paid to the superintendent of bankruptcy. In addition, the trustee is entitled to be paid. These fees are prescribed by the Bankruptcy and Insolvency Rules which may be consulted on the OSB's Website at: http://osb-bsf.ic.gc.ca At Jolin, Turcotte and Ass. Inc. we offer our services starting from $1,200 (taxes not included) in the simplest cases.

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• Is my car seizable if I declare bankruptcy?

That is one of the most often asked question. In order to effectively answer, we must first determine if it is a rented car or if it was bought, bound to a garanteed loan, or if the car is entirely paid.

The car is rented:

Your car will not be considered as a seizable asset since you are not the owner of the car. However, the lessor, in case of bankruptcy, has the right to repossess the car, because filing for bankruptcy constitutes a default to your lease contract.

The possible solution in such a case would be to contact your lessor in order to inform him of your intention to file for bankruptcy, and ask him if it would be possible to keep the car if you continue your rent payments. By experience, we know that lessors are open to this alternative.

If the car is bound to a loan with a financial institution:

In this situation, the trustee must determine if the value of the car exceeds the remaining balance of your loan. If the car is worth more than the remaining balance, then the car will be seized to be later sold. The proceeds from the sale will be used to repay the financial institution at first, and the remaining amount will be divided among the other creditors following the usual order of priority. If the car is worth less or is of equal amount to your loan's remaining balance, then the creditors will not request that your car be seized. If this is the case, you have a chance to keep your car by contacting your financial institution before filing for bankruptcy, and asking them if they would agree to let you keep the car if you continued making your payments. However, if you do not communicate with your financial institution before filing for bankruptcy, they could request that the car be remitted to them since filing for bankruptcy constitutes a default to the terms of the loan.

If your car is paid in totality:

There are four possible alternatives in this case:

- If your car is an absolute necessity for your work, you can make a request to keep the car as a non-seizable good. Obviously, such a request is disputable by your creditors. If disputed, you can present your request to the court, which will decide whether or not it is in fact a non-seizable good.

- If your car has a negligible value, (almost impossible to sell) then you could keep the car.

- If your car is valuable and you wish to keep it, then the trustee and the creditors could request you make compensation payments to the bankruptcy in order to buy back your car.

- If the creditors object against you keeping your car, then you will have to remit it to the trustee.

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• What happens to my endorsers if I fill for bankruptcy or proposal?

Your creditors will have the right to request payment of their due to your endorsers.

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• Do I have to file for bankruptcy if my spouse does?

Not necessarily, only if you are responsible for one or more of his/her debts, which would give the right to your spouse's creditors to request payment from you. In such a case, it would be favourable for you to also file for bankruptcy.

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• Would it be possible to clear my financial situation without losing my house and my car?

Yes, it is possible! Consult our Possible Solutions page to see the different alternatives available. It is just a question of finding the right one. You could also fill and submit the online form that will allow us to conduct an anylisis of your financial situation and provide you with a prompt answer. Please do not hesitate to contact us.

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