Bankruptcy in Ontario

In 2010 there were approximately 66,000 residents of Ontario that filed bankruptcy in Ontario, or a consumer proposal.  That’s a small decrease from 2009, but it’s obviously still a very high number, due to high levels of debt and the continued weak economy.

If you have more debt than you can hope to repay, and if you are worried about wage garnishments or court action, here’s what you need to know about bankruptcy in Ontario:

First, bankruptcy is not your only option.  A consumer proposal may be a better option.  With a proposal, you have one monthly payment to deal with all of your unsecured debts.

Second, to file bankruptcy you require the services of an Ontario bankruptcy trustee to review your situation, advise you on your options, and to manage the process.  Your trustee will meet with you, gather information about your debts and your budget, and then prepare the bankruptcy paperwork.

You will be required to make payments to your trustee, as discussed in our article on How much does it cost to go bankrupt in Ontario? You will be bankrupt and making payments for a minimum of nine months, and perhaps longer, as described in our article on How long will I be bankrupt in Ontario?

Your bankruptcy will discharge most of your unsecured debts.  It will not discharge secured debts like a mortgage or a car loan, unless you surrender the house or car to the lender.  Other debts not discharged include child support, spousal support, and court fines.

At the end of your bankruptcy you are discharged, and your debts are officially eliminated.  There will be a note on your credit report for a minimum of six years after you are discharged, but you can begin to take steps to repair your credit immediately.

Whether or not bankruptcy is the correct option for you will depend on your circumstances.  We recommend that you contact a licensed Ontario bankruptcy trustee to arrange for a no-charge, no-obligation initial consultation to review your options.