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Frequently Asked Questions about Debt in Ontario
Since 1952, D. & A. MacLeod Company Ltd.
D. & A. MacLeod Company Ltd. has compiled some of the most frequently asked questions our clients often ask. The information on this page is offered as a general resource and we do encourage you to contact our team in Ontario for more specific information on your particular financial situation.
Can I go bankrupt with only certain debts?
When you file bankruptcy, all debts must be listed, including those you owe to your family and friends. Your bankruptcy will be listed on your credit history and all creditors will have access to the information. You will continue to pay only for secured loans.
Do I qualify for personal bankruptcy?
To qualify for bankruptcy, you must meet certain conditions. These are:
· You are over the age of 18.
· You owe $1,000 or more.
· You are unable to meet your required payments as they become due.
· You do not own sufficient property to pay all your debts.
How does a proposal to creditors work?
A proposal to creditors offers your creditors a debt repayment plan, often less than you owe and without interest, over an extended period of time. You make one monthly payment to the trustee for all of your creditors.
How long will I be bankrupt?
If you are a first-time bankrupt, you will be automatically discharged nine months after the date of bankruptcy if you have no surplus income. You will be automatically discharged after 21 months after the date of bankruptcy if you are required to make surplus income payments to the estate. For a second bankruptcy, you will automatically be discharged after 24 months after the date of bankruptcy if you have no surplus income and 36 months after the date of bankruptcy if you are required to make surplus income payments to the estate.
Bankrupts with personal income tax debt in an amount of $200,000 or more representing 75% or more of total unsecured claims, are not eligible for an automatic discharge.
How will a bankruptcy affect my credit rating?
If you have filed a bankruptcy for the first time, and have completed all of your duties, you can receive a discharge from your bankruptcy in 9 months. As a first time bankrupt and receiving your discharge, it will remain on your credit report for 6 years after receiving the discharge. If, you are filing as a second-time bankrupt, it will remain on your credit rating for 14 years after you receive your discharge.
Individuals who may be facing a second bankruptcy may wish to consider, and pursue if possible, a consumer proposal to creditors as this will restore your credit rating more than 7 years sooner than it would in a second bankruptcy.
How will a proposal to creditors affect my credit rating? Should I be concerned?
If you file a proposal to your creditors and it is accepted, the filing of the proposal will stay on your credit report for 3 years after you have completed the proposal. Often, there is a concern with respect to the credit rating itself when the most important factor to yourself is your ability to handle the debts that you now have. Many individuals have an excellent credit rating despite the fact that they are in a financial crisis. A proposal will not only resolve your situation in many cases, but will restore your credit rating in the time period set out above.
What will a proposal to creditors cost?
As part of your proposal to creditors, the cost will be incorporated into your proposal payments.
What will bankruptcy cost?
It depends on your income and your particular financial situation. At D. & A. MacLeod Company, we will set monthly payments that you can afford.
When will creditors stop calling me?
Creditors are statutorily required to stop calling or writing to you demanding payment or continuing with any court actions (legal actions) once you have filed an assignment in bankruptcy or filed a consumer proposal or more complex proposal known as a Division 1 proposal. It will, however take some time for creditors to update their records before the calls or letters stop.
Which documents do I need to bring to an appointment
You should bring the following documents to your appointment as they will assist our team in evaluating your specific financial situation:
1. Proof of Identity / Photo Identification (one of the following):
Driver’s License
Ontario Photo
Identification Card
Passport
Citizenship Card
Permanent Resident Card
2. Proof of Legal Name in Canada (one of the following):
Birth Certificate
Citizenship Card
Permanent Resident Card
3. List of Who You Owe Money to and How Much is Owing Along with:
Current Statements
Collection Letters
Mortgage Agreements / Mortgage Year-End Statements
Purchase Agreements
Lease Agreements
4. List of Your Assets along with:
Copy of the Deed for Any Properties You Own, Realty Tax bills, Any Appraisals and Related Items
Ownership/Registration for Vehicle
Life Insurance Policy
RRSP / Investments Statements
Annual Pension Plan Statements
5. Proof of Your Monthly Income, Including:
Paystubs
Bank Statements
Cheque Stubs
6. Make a list of Your Regular Monthly Expenses.
7. For people who are self-employed, it will be helpful if you bring with you, along with the documents listed above, the following items:
Business and Income Expense Statements
Business’s Bank Statement
Copies of Current Year Invoices
8. Any other information which may be relevant to your financial situation.
*Please note: It is not mandatory to bring with you all of the documents listed above to your first appointment. Having these documents may simply help make the most effective use of your time during your initial visit. Following our meeting, we may give you a list of additional information and / or documents we would need to thoroughly assess your financial situation.
Will declaring bankruptcy eliminate all of my debts?
When you declare bankruptcy, all of your debts will be eliminated with the following exceptions:
· Alimony, maintenance or support payments
· Fines or penalties imposed by the courts
· Debts arising from fraud, embezzlement or misrepresentation
· Student loans less than seven years old
· Default on bail bond
· Damages for assault or sexual assault
If you have pledged an asset as collateral and you wish to keep it, you must continue paying that loan. Please note that declaring bankruptcy may not stop a secured creditor from taking an asset used as collateral against a loan. In addition, if someone has co-signed a loan for you and you file bankruptcy, that person will be responsible for the loan and must continue paying for that loan.
Will I lose all my possessions?
Ontario - Exempt Property:
· All necessary clothing – no specific limit and subject to a reasonable claim (changed from previous exemption of $5,650.00)
· One motor vehicle (needed for occupation) –up to $6,600.00
· Health aids: none
· Household furnishings & appliances – up to $13,500.00
· Tools of trade used to earn a living –up to $11,300.00
· Farming exemption for Debtor engaged in farming – up to $29,100.00
· Equity in principal residence -- $10,000 (as of December 1st, 2015)
· Most pension plans, life insurance policies, and certain RRSPs.
The Ontario statute on exemptions can viewed at http://www.ontario.ca/laws/statute/90e24
Exemption amounts for Ontario bankruptcy have changed a number of times over the last few years. Please contact D. & A. MacLeod Company Ltd. to review your personal situation and determine what you can keep if you file for bankruptcy in Ontario.
