bankruptcy assistance in victoria

Nobody takes on debt with the intention of never paying it back. We have hope that we will be able to repay a large spend over a longer period of time. The student gets into debt with the hopes of a better job in the future. The average working-class person gets into debt in the hopes of providing a better life for themselves and their family. Sometimes unforeseen things like illness or death of a spouse force you to get into debt. You hope that you can pay it back but by now you are beginning to realize you can’t manage it. It’s probably time to seek help.

In Canada, filing for bankruptcy can eliminate most of your debts. It is a comprehensive debt help solution. It is a fail-safe provided by the government to help debtors in distress. It is designed to give debtors a clean slate to restart their lives.

Misconceptions About Bankruptcy

There are many people who believe that they will lose everything when they file for bankruptcy. This is not true! By law, most of your belongings are exempt from seizure. In many cases, it is even possible to keep your house and car through your bankruptcy proceedings.


Bankruptcy has some great advantages for anyone looking to get out of debt. Let’s discuss what they are:

Immediate Protection from Creditors

Have the harassing calls started? Are you facing wage garnishment? Well, the most important advantage of bankruptcy is the immediate and automatic ‘stay of proceedings’. This prevents creditors from going after you to collect what you owe. This stops your creditors from starting, continuing or enforcing any legal action against you.

That means that creditors must stop:

  • Any attempts to contact you i.e. the harassing phone calls and letters looking to recoup.
  • All wage garnishments with the exception of child and spousal support.
  • Any new lawsuits that were to be filed against you and any lawsuits that were previously started.
  • The freeze that they placed on your bank accounts. Filing for bankruptcy means that your bank accounts will be released.

Taking Care of Unsecured Creditors

If you decided to use a different debt help solution, your unsecured creditors have the option to ‘opt out.’ For instance, if you had a debt settlement or a debt management plan. If your unsecured creditors opt out then you would be required to repay the full amount that you owe them. However, with a bankruptcy proceeding, they do not have that option.

A bankruptcy proceeding can cover all your bases. Unsecured creditors include lenders that do not require collateral, like credit card companies, personal and student loan lenders, utilities, landlords etc.

Freeze on Interest

Another advantage of bankruptcy is the fact that once you file, your debts stop accumulating interest. This prevents your debts from continuing to grow during the bankruptcy proceeding.

Quick Process

A bankruptcy proceeding can be started immediately and completed in as little as nine months. If it is your first time filing for bankruptcy, you have no surplus income and you fulfill all of your bankruptcy obligations then you can be discharged from bankruptcy in nine months.

The obligations you must complete to ensure a quick and smooth procedure are as follows:

  • Surrender all non-exempt assets and credit cards.
  • Attend no less than 2 credit counselling sessions
  • Report your income and expenses to your trustee each month so that they can calculate any surplus income.
  • Provide any and all information required to file your bankruptcy
  • Make your monthly payments:
    • Payments to cover the cost of administering your estate
    • Payments to your creditors of any surplus income
  • Provide your trustee with any further financial information that they may request

Low Costs

Bankruptcy is one of the lowest cost options when it comes to debt help and insolvency proceedings. Many debt help solutions like debt consolidation and debt management plans require you to pay back the full amount plus interest. A bankruptcy, on the other hand, relieves you of most, if not all of your debts.


Also be aware of the disadvantages of bankruptcy before making your decision:

Doesn’t Discharge All Debts

A bankruptcy proceeding doesn’t eliminate every type of debt. Some debts such as, secured debts that you choose to continue paying (like mortgages or car loans), some student loans, alimony, child support and court fines will survive a bankruptcy. Speak with a Licenced Insolvency Trustee (LIT) to find out which of your debts will not be cleared by your bankruptcy.

Asset Loss

During your bankruptcy proceeding, you are allowed to keep basic possessions which are exempt from seizure. Some of these include:

  • Household goods worth up to $4,000.
  • Tools of the trade worth up to $10,000.
  • A motor vehicle worth up to $5,000.
  •  House equity up to $9,000 ($12,000 in Victoria).
  • Various pension plans, life insurance policies and most RRSPs.

However, anything in excess of this must be surrendered to your LIT. The surplus assets will then be sold and redistributed to your creditors. Also, any tax returns that you would receive during this time will also be seized.

Impact on Credit Score

Like similar insolvency proceedings, bankruptcy will negatively affect your credit score. A record of bankruptcy will stay on your credit score for six years after you complete your bankruptcy proceeding.

Employment Options

There are some jobs where filing for bankruptcy may affect your employment. For instance, any job where you are in charge of money or trust funds. Additionally, you cannot be a director of a limited company during the bankruptcy proceeding.

At a base level, everyone just wants to be able to live a decent life. Bankruptcy is a tool that can restore your quality of life and allow you to live with dignity. Bankruptcy may not be the solution for everyone but in many cases it makes sense.

Do you feel like you have gotten into a financial hole and don’t know how you will get out of it? Bankruptcy may be a great option for you. You will require a Licensed Insolvency Trustee, licensed by the Canadian government, to administer your bankruptcy. For bankruptcy assistance in Victoria contact one of our LITs for a consultation. They will tell you if bankruptcy is the right choice for your life.

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