Saskatchewan: SK Bankruptcy FAQs. Questions about Bankruptcy and Proposals.

This section of our site should answer most of your questions about bankruptcy and proposals.

Is bankruptcy my only option?

How do I file personal bankruptcy?

Will my spouse be affected?

What do I do if I have Canadian debt but now live in a foreign country?

How much does it cost to declare bankruptcy?

If I go bankrupt, will I lose everything?

Will my creditors stop harassing me?

What happens if someone co-signed a loan for me?

What happens to my wages during a bankruptcy?

Will I still owe income taxes after I declare bankruptcy?

What debts are erased in a bankruptcy?

What About my Student Loans?

How long will I be in bankruptcy?

Who will find out that I have declared bankruptcy?

What happens during the bankruptcy?

Can a bankruptcy help alleviate the terrible stress I am under?

What if I have the cash flow to make a proposal?

Will I end up with a better credit rating if I use a credit counsellor?

Will I ever get credit again?

How do I prepare for my initial consultation with the Trustee?

Is bankruptcy my only option?

OptionsIn many cases there are options other than bankruptcy, including:

  • Proposals,
  • Credit counselling,
  • Third party settlements with creditors,
  • and refinancing.

How do I file personal bankruptcy?

In Canada you can only file bankruptcy through a trustee in bankruptcy.

PowerPoint Presentation: The steps in filing a personal bankruptcy.

In Canada you can only file bankruptcy through a trustee in bankruptcy. Trustees are regulated by the Superintendent of Bankruptcy and are highly trained professionals with stringent codes of ethics.

You can also view our PowerPoint slide presentation on   How to Prepare for your Meeting with the Trustee.    (Approximately 125 seconds)


How much does it cost to declare bankruptcy?

In most cases the cost of a bankruptcy is less than $200 a month for nine months.

In a bankruptcy, the costs are set by the government. In most cases the cost will be less than $200 a month for each of nine months. Payment terms can be arranged.

Bankruptcy Discharge Rules:

- 9 month automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have excess income. (Required monthly payment of less than $100.00 per month)

- 21 months (or more at the court's discretion) for 1st. time bankrupts who fulfill all their duties. and who have excess income. (Required monthly payment of $100.00 per month or greater)

-24 months for 2nd time bankrupts who do not have excess income. (Required monthly payment of less than $100.00 per month)

-36 months for 2nd time bankrupts who have excess income. (Required monthly payment of $100.00 per month or greater)

-Bankrupts with personal income tax debt of $200,000.00 or more representing 75 percent or more of total unsecured claims, are not eligible for an automatic discharge. They must go to court for an adjudication.

If I go bankrupt, will I lose everything?

ExemptionsNo, you will not lose everything. The Saskatchewan government has bankruptcy and proposal exemption laws which allow you to keep equity in certain assets.

 

The property exempt from seizure applies to the equity in the asset.

Equity is the excess that the value of an asset has over any charges or encumbrances against that asset.

For example, if you have tools used in your trade or profession worth $10,000 and there is a $6,000 secured debt against them then the equity in the tools is $4,000. In Saskatchewan the exemption for tools used in your trade or profession is $4,500 so in this example you are entitled to the equity of $4,000 and the unsecured creditors cannot this.


For Non-Farmers:

  • Household furniture and personal effects to a value of $4,500 per person;

  • Tools of the trade to a value of $4,500;

  • A motor vehicle, if required in the conduct of an individuals business, occupation or profession

  • Equity in personal residence to a value of $32,000 ($64,000 if jointly owned) to a maximum of $128,000 if held by four parties;

  • Certain life insurance policies;

  • RRSPs, RRIFs and DPSPs are exempt from seizure.

For Farmers:

  • The farmer's  furniture and appliances to a value of $10,000

  • The farmer's personal items

  • The farmer's homestead (home quarter)

  • All livestock, farm machinery and equipment, including one car or truck, necessary for the next twelve months operations;

  • One motor vehicle, if required for business or profession, but not in addition to the one above;

  • Tools and equipment to a value of $4,500 used by a farmer in his trade or profession;

  • Equity in personal residence to a value of $32,000 ($64,000 if jointly owned) to a maximum of $128,000 if held by four parties;

  • Seed grain equal to two bushels per acre of land under cultivation;

  • RRSPs, RRIFs and DPSPs are exempt from seizure;

  • certain life insurance policies.

  • Cash equivalent of crop equal to:

    • unpaid harvesting costs;

    • living expenses to next harvest;

    • necessary costs of farming until next harvest

 

Will my creditors stop harassing me?

By law, all actions against you must cease once the bankruptcy or proposal documents are filed.

Yes, they will! By law, all actions against a bankrupt must cease once the documents are filed. That means most lawsuits and wage garnishments against you will stop. This does not apply to secured creditors such as banks holding, for example, a lien on a car.

Will my spouse be affected?

Your spouse will not be affected by your bankruptcy if he or she is not responsible for any of your debt.

Your spouse, whether common law or married will not be affected by your bankruptcy if he or she is not responsible for any of your debt (did not sign an agreement or contract for any of your debt). If they have a supplemental credit card they are probably responsible for that debt. Your spouse's credit rating will not be affected by your bankruptcy and any assets in the spouse's name will not be part of the bankruptcy.

If your spouse is responsible for any of your debt or has his own debt then the spouse may have to file bankruptcy too.

What do I do if I have Canadian debt but now live in a foreign country?

World MapCanadians living abroad can go into bankruptcy or file a proposal for their Canadian debt in the following ways:

  • They can go bankrupt in their country of residence.  This will free them of the Canadian debt so long as they live in that foreign country.  If they return to Canada that debt will have survived and  they will still owe that money.
  • They can re-establish residency in Canada and then go bankrupt or file a proposal in Canada.
  • They can go bankrupt or file a proposal under Canadian law while still living in that foreign country if:
    • They have property in Canada (re: definition of "insolvent person")  "Property" includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable; 
    • or if they have carried on business in Canada in the preceding year (re: definition of "insolvent person" and definition of "locality of a debtor").

Note: 

If you think you qualify to go bankrupt or file a proposal while living in that foreign country the next step would be to contact us if you used to live in Saskatchewan.

What happens if someone co-signed a loan for me?

cosignerAnyone who has co-signed a loan for you will be responsible for making loan payments after you go bankrupt.

What happens to my wages during a bankruptcy?

WagesYou will still continue to receive your wages.


Will I still owe income taxes after I declare bankruptcy?

Tax debt is erased in a bankruptcy.

Tax arrears and most debt is erased in a bankruptcy.


What debts are erased in a bankruptcy?

Debt FreeAll debt is erased, upon the debtor being discharged from bankruptcy, except for the following:

  • Fines imposed by a Court;
  • Money owing for things stolen;
  • Things obtained by misrepresentation;
  • Alimony or maintenance payments.
  • Award of damages by a court for intentionally inflicting bodily harm or sexual assault.
  • Student loans if bankruptcy is filed prior to or within seven years after the finish of studies.

What About my Student Loans?

CSL LogoStudent Loans can be erased in a bankruptcy if the student was in school 7 or more years ago. This amendment will apply where the debtor obtains his or her discharge on or after July 7, 2008 (PROVIDED that at the time they filed they had ceased to be student for the required seven years) or the debtor had or becomes bankrupt on or after July 7, 2008. 

The amendment that will reduce to five years the period a bankrupt will have to wait to make a “hardship” application to have student loan debt or obligation discharged (BIA , s. 178 (1.1)) is also now in force.  This amendment applies to all debtors notwithstanding when the bankruptcy or the process that results in the bankruptcy is initiated.

How long will I be in bankruptcy?

In most cases a bankruptcy is over in 9 months, at which time all eligible debt is erased.

Bankruptcy Discharge Rules:

- 9 month automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have excess income. (Required monthly payment of less than $100.00 per month)

- 21 months (or more at the court's discretion) for 1st. time bankrupts who fulfill all their duties. and who have excess income. (Required monthly payment of $100.00 per month or greater)

-24 months for 2nd time bankrupts who do not have excess income. (Required monthly payment of less than $100.00 per month)

-36 months for 2nd time bankrupts who have excess income. (Required monthly payment of $100.00 per month or greater)

-Bankrupts with personal income tax debt of $200,000.00 or more representing 75 percent or more of total unsecured claims, are not eligible for an automatic discharge. They must go to court for an adjudication.

Who will find out that I have declared bankruptcy?

Unless you're a prominent person and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors.

Unless you are a prominent person, in most cases only your creditors will know you have filed for bankruptcy. Most bankruptcies are not published in the newspapers. Newspaper announcements are reserved for corporate and very large personal bankruptcies. Once you declare bankruptcy, the Trustee will notify all your creditors of your bankruptcy. The Superintendent of Bankruptcy will notify the credit bureaus. The credit bureaus will keep a record of your bankruptcy until 6 years after your discharge.


What happens during the bankruptcy?

How Long in Bankruptcy?The bankrupt must keep the trustee informed as to where the bankrupt is living and also must respond to the trustee's requests and assist him as required and provide whatever information is requested. The bankrupt must also provide the trustee with reports as to earnings and living expenses and any change in the bankrupt's family situation. The trustee will provide the bankrupt with appropriate forms to be filled in that will provide the trustee with the necessary information.  A meeting of creditors is not required unless requested by the Superintendent of Bankruptcy or creditors with an aggregate of at least 25% of the proven claims.  These meetings are usually held at the office of the trustee.

Can a bankruptcy help alleviate the terrible stress I am under?

For most people the stress of the financial crisis will vanish as soon as a bankruptcy or proposal is filed.

Stress is alleviated for a number of reasons. Probably the major reasons are the stay of proceeding and the fact that the trustee will deal with your creditors allowing you to get on with your life.

What if I have the cash flow to make a proposal?

A proposal allows you to avoid bankruptcy, while paying off only a portion of your debts.

PowerPoint Presentation: Steps in a Consumer Proposal.

If a person has the ability to make a proposal (i.e. his or her income exceeds living expenses), then he or she should consider making a proposal.

If any person files for bankruptcy when he or she has the ability to make a proposal, it is the Trustee's duty to oppose the bankrupt's discharge.  In this case, the bankrupt may be in bankruptcy up to an additional 12 months beyond the usual 9 months.  The bankrupt will be required to make payments in each of these months.

Will I end up with a better credit rating if I use a credit counsellor?


Credit CounsellingNo! So long as you're on any kind of payment plan the credit bureau will record that fact. Using credit counsellors will not give you a better credit rating faster. In fact, you will likely take longer to re-establish a good rating and pay much more if you use a credit counsellor rather than a trustee. For more information about credit counsellors and trustees refer to this page.

Will I ever get credit again?

You can and you will get credit again, if your cash flow can support your payments.

After you have been discharged from bankruptcy or completed your proposal, you may be a good credit risk, since you have no debt. Naturally, you will find it a little harder to get credit until you can re-establish a good credit rating.  

You can get credit again after a bankruptcy or a proposal. The bankruptcy and proposal laws of Canada are intended to give you a fresh financial start. The ability to rebuild credit is part of that new start.

Have a look at our tips on how to rebuild your credit and also have a look at our After Bankruptcy Lenders.


 

When you are ready for a FREE, confidential consultation
please call one of our offices to set up a meeting.

 

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