In Canada, filing for bankruptcy is only possible through a Trustee in Bankruptcy. The Office of the Superintendent of Bankruptcy (OSB) grants a trustee in bankruptcy a license to oversee the bankruptcy procedure. When filing for bankruptcy in Canada, the first step is to schedule a consultation with the Trustee in Bankruptcy. You will discuss your financial situation and your available options to debt relief. The trustee will evaluate your circumstances to determine if you qualify for bankruptcy. If you are determined to be eligible for bankruptcy, the trustee will explain both the advantages and disadvantages of filing.
If you are a candidate for bankruptcy and you and your trustee have discussed the details, you will work with your trustee to complete the necessary bankruptcy forms. The trustee will then register for bankruptcy, which includes submitting the necessary paperwork to the Office of the Bankruptcy Superintendent. After filing for bankruptcy, you are formally declared insolvent. After declaring bankruptcy, the trustee will deal directly with your creditors.
Once the petition has been lodged, the trustee will liquidate your assets, excluding those exempted by federal and provincial law. The sale proceeds are held in trust until they are distributed to the creditors. During the period of bankruptcy, you will also make payments to the trustee, which will then be distributed to your creditors. The amount you will be required to pay will be calculated by the trustee, who will also determine the payment schedule. The payment quantity is determined by incorporating your income, the OSB's income standards, and your personal circumstances. In addition, you will be required to attend two counseling sessions in order to learn the cause of your bankruptcy, how to avoid it in the future, and how to manage your finances in the future in order to prevent you from falling into debt again.
If you have met the specific discharge conditions, you will be automatically discharged nine months after filing for bankruptcy, regardless of whether this is your first bankruptcy, your discharge is not opposed by the Office of the Superintendent of Bankruptcy, the trustee, or a creditor, you have attended all counseling sessions, and you are not required to pay a portion of your surplus income into the bankruptcy estate. If an automatic discharge is granted, the trustee will notify you and provide a copy of the discharge. It is essential to understand that a discharge does not affect or relieve the liability of a person who guaranteed or co-signed a loan on your behalf.
You will be released from all legal obligations to repay the debts you had at the time you were declared insolvent, with a few exceptions. You will be on your way to beginning a new existence debt-free and prepared to become a more financially responsible person.
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