What is bankruptcy?

Yes, you can travel outside of Canada while bankrupt. However, you must continue to meet all your bankruptcy obligations, such as providing monthly income reports and attending counselling sessions. If you are planning a lengthy trip or move, it’s important to inform your Licensed Insolvency Trustee (LIT) so they can ensure your duties are still fulfilled.

Generally, your GST credit may be redirected to your estate during your bankruptcy period, particularly in the year you file. However, the Canada Child Benefit is usually protected and will continue as long as you remain eligible.

Bankruptcy is a legal process that eliminates your unsecured debts, but you may lose some assets and have to make surplus income payments. A consumer proposal is a negotiated agreement to repay part of what you owe, allowing you to keep assets and avoid bankruptcy. While it remains on your credit report for a similar period, a proposal is often preferable if you have a steady income, since monthly payments are fixed and not impacted by increases in earnings.

No, you do not need a lawyer. Bankruptcy in Canada is filed through a Licensed Insolvency Trustee (LIT), who is federally regulated and licensed to administer the process. They will guide you through every step of the filing, court documentation (if required), and your duties.

If you receive an inheritance during your bankruptcy, it becomes part of your estate and must be surrendered to the LIT. This applies even if the inheritance is received late in your bankruptcy term. If you expect to receive an inheritance, it’s important to disclose it during your consultation.

Bankruptcy does not legally restrict you from renting a property, but landlords may perform credit checks. A bankruptcy on your credit report could impact your rental application, so it helps to provide references or proof of stable income to reassure potential landlords.

When you file for bankruptcy, your obligation to repay joint debts ends — but the other co-signer or joint borrower becomes solely responsible. This means they may be pursued by creditors for the full amount. It’s important to communicate with them before filing to avoid confusion or strain.

Failing to meet your duties — such as missing a counselling session or not submitting income reports — can delay or prevent your discharge from bankruptcy. In some cases, your LIT may object to your discharge, which could result in a court hearing or additional obligations.

There is no legal limit to how many times a person can file for bankruptcy, but repeat bankruptcies come with longer timelines and greater consequences. For example, a second bankruptcy typically lasts at least 24 months, and third-time bankrupts are not eligible for automatic discharge.

Your employer is not notified unless your wages are being garnished and need to be redirected. In most cases, bankruptcy is a private process and does not impact your employment unless you work in a position that legally requires financial disclosure or bonding.

You may be required to close your existing account, especially if you owe money to that financial institution. Your LIT will recommend opening a new account at a different bank to help you manage finances more clearly during the bankruptcy period.

Bankruptcy remains on your credit report for 6 to 14 years after discharge, depending on whether it’s your first or subsequent filing. While it may be more difficult to qualify for a mortgage right after discharge, you can rebuild your credit over time. Lenders often look for two years of re-established credit history post-bankruptcy.