Three Frequently Asked Questions About Personal Bankruptcy

Three frequently asked questions about personal bankruptcy


Bankruptcy can be scary and raise many questions. 

Here are the answers to three questions that consumers frequently ask themselves.

Does bankruptcy erase all debts?

Jean-Simon, 35, mechanic from Brossard, wants to know if it is true that a bankruptcy discharges all debts.

Answer: Both consumer proposal and bankruptcy effectively release a person from the vast majority of their debts.

“Non-dischargeable ones are the exception rather than the rule. In principle, you can free yourself from credit cards and lines of credit, personal loans, amounts owed to the government for taxes and duties, and even loans secured by property (a car, for example) if you want to return the property to the creditor. », explains Pierre Fortin, licensed insolvency trustee and president of Jean Fortin & Associates.

On the other hand, one cannot be released from alimony, fines, student loans (if the proposal or bankruptcy was filed less than seven years before the end of studies) and any debts resulting from a misrepresentation or fraud. 

During Jean-Simon's first meeting with a trustee, the analysis of his debts and that of the context in which they arose are two important steps.&nbsp ;

“As far as possible, the role of the trustee is to avoid unpleasant surprises. If there is any doubt as to whether or not they are releasable, our role is to notify the person so that they can consult a lawyer if necessary,” emphasizes Pierre Fortin. 

Who will know that I went bankrupt?

Normand is 62 years old and lost his wife three years ago. He had a lot of difficulties to overcome this ordeal. He is employed in a printing press, but has been off work for several months. Because of the decline in his income, he accumulated debts. He knows that he has no other solution than bankruptcy and he has resigned himself to it. However, he wonders if his three children will know that he has gone bankrupt, because he would prefer that no one knew. 

Answer:The facts relating to Normand's file, as in the vast majority of insolvency files, do not require opening a file in court. Consequently, the information will only circulate between him, his trustee, his creditors and the Office of the Superintendent of Bankruptcy (OSB). His employer, his family and those close to him will not be informed of his bankruptcy. 

Be aware, however, that the BSF maintains a register which can, for a fee, be consulted by the public. Despite this, bankruptcy remains a relatively private act that can be undertaken with confidence. 

In addition, Normand was able to conduct the preliminary interview with the licensed insolvency trustee by telephone and sign his file using his cell phone without having to leave his home. 

“In addition to reducing costs and loss of time, not having to come to our office has given him greater discretion,” says Pierre Fortin.

Bankruptcy can- does it affect my spouse?

Anne-Sophie, 44, has been in a relationship for three years. She has unpaid debts behind her and believes that bankruptcy is inevitable. She would like to know if this gesture could affect her lover's finances and credit rating. She doesn't want to hurt him for debts that aren't hers. 

Answer: Anne-Sophie has balances of $32,000 on her cards and lines of credit for more than six years. His salary of $43,000 gross will never be enough to repay them.

The only two possible avenues are the consumer proposal or bankruptcy. In both cases, there will be no impact for the spouse. In fact, whether you are married, in a civil union or de facto spouse, everyone has their own credit report, assets and debts. Even if Anne-Sophie's spouse had been guarantor or co-borrower for one of her debts, her credit file would not have been affected insofar as he would have repaid it to the creditor under the same terms of the loan. . 

During the analysis of the situation, the trustee explained to Anne-Sophie the impact of bankruptcy and a proposal on each property. Her furniture has little liquidation value, so she could keep it without a problem. The same goes for his personal belongings (clothing, souvenirs, etc.) which the law protects. Since the value of her vehicle is not greater than the amount she owes on her car loan, she will be able to keep it if she continues the monthly payments.

Can you transfer property to your spouse? to “protect” them in the event of bankruptcy? 

“No, we can't. If you are unable to pay all your debts, creditors have a say in what will be done with your assets,” says Pierre Fortin.

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