Do you feel that your debt problems are insurmountable?
The expertise of a Financial Turnaround Advisor can enlighten you and offer you debt solutions. Among the debt consolidation and the consumer proposal, you also have the choice to declare a personal bankruptcy in Quebec. Faced with this decision, which is often very difficult to take, a trustee in bankruptcy can tell you when to declare bankruptcy.
Before venturing into unknown waters, it is important that you know the consequences of a personal bankruptcy in Quebec. You will then be able to weigh your options and choose the most suitable for your financial situation.
What is personal bankruptcy in Quebec, exactly?
Before determining the benefits and consequences, it would be good to know what personal bankruptcy represents in Quebec. First and foremost, personal bankruptcy in Quebec is a right you exercise which allows you to defend yourself against your creditors.
It’s a way of getting rid of your debts and stopping harassment from your creditors.
Be careful! Some debts are not considered as forgivable, such as debts related to:
- Fines and tickets:
- Fraudulent debts
- Indemnities for intentionally caused bodily harm
- Debts or obligations related to alimony
- Dividends to which a creditor would have been entitled if he had not been notified of the bankruptcy
- Education debt (if bankruptcy is declared within 7 years after graduation date)
Your licensed insolvency trustee will be able to inform you of all the debts that are dischargeable, and the non-dischargeable, at the stage of declaring your personal bankruptcy in Quebec.
Under what conditions can I declare a personal bankruptcy in Quebec?
The minimum required by the Bankruptcy and Insolvency Act is to have a minimum of $1,000 in debt and to be a person considered insolvent.
A financial advisor can easily guide you through the process of declaring personal bankruptcy in Quebec. Here are some advantages and disadvantages of declaring bankruptcy.
Can I declare a personal bankruptcy in Quebec if I do not have a job?
Yes. Most of the time, unemployed people are over-indebted and unable to support themselves in addition to their payments. It is worth noting that even if you declare personal bankruptcy in Quebec and you are unemployed, you may still have to make monthly payments.
Can my creditors refuse that I declare bankruptcy?
Only the Court has the right to refuse a declaration of personal bankruptcy in Quebec, and again, only under extremely rare conditions. Your creditors do not have the power to prevent you from exercising this right. When you declare a personal bankruptcy in Quebec, your creditors must stop all legal proceedings against you and can not contact you directly. They must do business with your trustee.
What happens to my student debt after declaring a personal bankruptcy in Quebec?
If you declare your personal bankruptcy in Quebec 7 years after the end of your studies, your student debt could be releasable. If you stopped being a student at least 5 years ago, you can go to the court to ask for the cancellation of your debt. It will be the court that will judge your good faith and your inability to repay before rendering its verdict.
What happens with my inheritance in the event of personal bankruptcy in Quebec?
In addition to certain exceptions, your share of an inheritance can be seized in the event of personal bankruptcy in Québec.
Are my RRSPs or my retirement pension seizable?
No. The retirement pension is not seizable and only the contributions to your RRSP made in the 12 months preceding your personal bankruptcy in Quebec are seizable.
What will happen to my family allowances?
Nothing, these are untouchable, as much at the provincial level as at the federal level. Even if you declare a personal bankruptcy in Quebec, you will continue to receive these benefits in their entirety.
Will my endorser have to repay my debt if I declare a personal bankruptcy in Quebec?
Yes. Your personal bankruptcy only frees you from your commitments. If you have an endorser, he will be forced to pay the debt for you.
Am I liable for my spouse’s debts if they declare a personal bankruptcy in Quebec?
No. Rest assured, you will not have to follow him or her in bankruptcy. Marriage or common-law partnership does not commit you to become the endorser of your spouse and the only debts you will have to pay will be those where you are jointly liable. Unless the majority of debts are joint, you do not have to declare bankruptcy and you are not liable for your spouse’s debts.
How long does a bankruptcy in Quebec last?
If you are on your first personal bankruptcy declaration in Quebec, you may be eligible for release after 9 or 21 months if you have an income that exceeds a reasonable standard of living. After a second personal bankruptcy in Quebec, the minimum period will be 24 to 36 months.
Certain exceptions make the release from bankruptcy impossible. For example, if you are an individual who has accumulated more than $200,000 in tax debts and these represent more than 75% of your debt, the release will be refused. The licensed insolvency trustee may submit an application to the Court, but it is important to know that the duties as an administrator are not included in the calculation of the $200,000.
When it comes to your credit rating, the time depends on the agency you are dealing with. Generally, during a personal bankruptcy in Quebec, the credit rating will be affected for 6 years after the first bankruptcy, and 14 after the second bankruptcy.
You have the right to a second chance
When you declare a personal bankruptcy in Quebec, most of your debts disappear. This represents an opportunity for you to take a break from your past and develop a discipline when it comes to your finances. Personal bankruptcy in Quebec offers you the opportunity to start from scratch and avoid making the financial mistakes that led you to declare bankruptcy in the first place.
The work of the bankruptcy trustee is to help you develop a recovery plan to bring you to financial stability. This help is a crucial support in a situation of intense stress such as bankruptcy. This professional guides you at every step of the process so you have control over your future. Remember, personal bankruptcy in Quebec is a last resort, so use it only if you have exhausted all possible solutions to settle your debt! Although you are entitled to a second chance thanks to this one, certain consequences are not to be neglected.
Some of your property will be seized
This seizure of your assets makes it possible to refund part of the amount due to your creditors. If you have luxurious possessions, these may be part of the confiscated lot.
Will my car be seized if I declare a personal bankruptcy in Quebec?
Yes and no, it depends on several factors if it is not leased. If the vehicle is not yours, your creditors can not seize it for reimbursement. On the other hand, if your vehicle is leased, it could be that the person who leased it to you takes it back if you are in default of payment.
In the event that your vehicle is subject to a secured loan, it will depend on you, the amount due and the vehicle’s value. In some situations, it would be more beneficial to continue the payments, sell the car, or simply hand it over to your creditors to free yourself from that debt.
If the car is fully paid, you could keep it under certain conditions.
Are there any assets that can not be seized in a personal bankruptcy in Quebec?
The seizure of your assets does not imply the entirety of your assets. Here is a list of assets you can keep:
- Your clothes ;
- Your disability benefits;
- Your alimony;
- Your work tools;
- Your furniture.
Does declaring a personal bankruptcy in Quebec stop the seizure?
Right away. As soon as a personal bankruptcy is declared in Quebec, all legal proceedings are suspended except those initiated by the secured creditors. For example, if your mortgage creditors have started the proceedings for the repossession of your home, their right is limited to its resumption. They can not, under any circumstances, bring another lawsuit against you to obtain an additional amount of money. When you declare a personal bankruptcy in Quebec, your creditors can no longer interact with you and must contact the trustee for further procedures.
Another exception to personal bankruptcy in Quebec is the seizure of alimony, where a creditor has obtained special permission from the Court.
You will have commitments to fulfill
You will have to familiarize yourself with the Bankruptcy and Insolvency Act, in order to possess all the useful information for your file. A licensed insolvency trustee (LIT) tells you how to proceed during the entire process of a personal bankruptcy in Quebec.
What is a licensed insolvency trustee and what is its role?
The licensed insolvency trustee is the professional who will explain all the stages of the personal bankruptcy in Quebec, its duration and its consequences. It is also your representative in front of your creditors so that your bankruptcy goes smoothly.
What should we tell our licensed insolvency trustee during a personal bankruptcy declaration in Quebec?
For the best advice, you will have to ensure transparency towards your bankruptcy trustee. You will be required to give him or her a complete picture by addressing all the details of your current financial situation:
- The amount of your debts;
- The assets you own
- Any changes of address or income.
In short, you must find a trustee inan honest bankruptcy trustee that will put you in confidence so you share your information safely. Communication is essential for you to keep you abreast of your file’s progress.
It will be more difficult for you to access credit
Of course, you will not have access to credit as long as you are bankrupt. A first personal bankruptcy in Quebec means that it will appear in your file for the next 6 years, while a second, 14 years.
Once this period has passed, you will be able to benefit from credits. However, it may be difficult for you to obtain banking institution support after a personal bankruptcy in Quebec. You can call on lenders. However, you will need to be extra careful and make sure these establishments are honest.
What will happen to my credit rating after a personal bankruptcy in Quebec?
Your credit rating will inevitably fall and you will end up with an R-9 rating, which is the lowest credit rating possible. This rating will follow you for six years after your release. However, it is possible to rebuild credit after a personal bankruptcy in Quebec.
What happens if I make purchases on my credit card and declare bankruptcy?
It depends on the type of purchase made. For example, if it’s purchases that you would have made on your card, regardless of your financial situation, there will be no negative impact on your personal bankruptcy in Quebec.
On the other hand, if you make purchases that are considered unjustified, your request for release of debts may be rejected using these purchases as a ground of opposition. The Bankruptcy and Insolvency Act also serves to counter those who commit abuse and fraud. If you are aware that you will have to declare a personal bankruptcy in Quebec, avoid overloading your credit card unnecessarily.
In case of personal bankruptcy, can I keep one or more credit cards?
No. If you declare a personal bankruptcy in Quebec, you are no longer eligible for credit. Regardless of whether your balance is $ 0 or $ 1000, you will have to hand over your credit cards to your trustee.
For more information on personal bankruptcy in Quebec or if you would like to be accompanied by an honest and professional bankruptcy trustee, do not hesitate to contact N. Séguin Inc. at (514) 768-2002.