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DAVIS DAIGNAULT SCHICK

Suite 830
840 - 7th Ave. SW
Calgary, Alberta
T2P 3G2

ACCOUNTING
(403)262-3394
(403)269-3540 FAX

BANKRUPTCY
(403)777-2415
(403)269-3540 FAX

 
 
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Questions & Answers

CONSUMER BANKRUPTCY - "A Fresh Start"

Bankruptcy is a legal process governed by the Bankruptcy and Insolvency Act which provides an individual with immediate protection from creditors and relief from the burden of debt.
Who can go bankrupt?

To qualify for bankruptcy you must owe at least $1,000 and be unable to pay your debts when due.

Will my creditors stop harassing me?

Yes. The Bankruptcy and Insolvency Act requires that all collection actions cease when a person files for bankruptcy. This does not however apply to secured creditors (i.e. banks holding a mortgage) whose rights are not affected.

How do I go bankrupt?

Contact Davis Daignault Schick Ltd. We will review your financial situation, explain the options available to resolve your financial problems and if required we will prepare bankruptcy documents for your signature.

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BANKRUPTCY - "Questions & Answers"

How long will I be bankrupt?

Most 1st time bankrupts receive an automatic discharge from bankruptcy after nine months. However, if you have been bankrupt previously, an application for your discharge will be brought before the Court, usually after 9 months.

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What assets can I keep?

You can keep certain assets, known as Exempt Assets which include (within certain dollar limits) your residence, household furnishings, a vehicle and your pension plan. The type and value of Exempt Assets vary from province to province (see below for list of Assets Exempt in the province of Alberta). Pension plans and the cash surrender value of some Life Insurance policies (including some RRSP's) are protected by federal legislation in Canada. Property which is not exempt, must be turned over to the Trustee for the benefit of your creditors.

Exempt Assets in the Province of Alberta

The Civil Enforcement Act of Alberta specifies what you are entitled to claim exempt from seizure in a bankruptcy. Generally, you are able to keep the following assets:

  • The equity in your home (including a mobile home) up to $40,000. ( If you are a co-owner of the home, the exemption is reduced to an amount proportionate to your ownership interest. )
  • Household furnishings and appliances up to a value of $4,000.
  • A motor vehicle not exceeding a value of $5,000. (Or equity in a motor vehicle not exceeding $5,000).
  • Personal property ( i.e. Tools and equipment ) that you require to earn income from your occupation up to a value of $10,000
  • There are also specific exemptions provided to persons who generate their primary income from farming operations.

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Who will find out?

Your creditors will be sent notice of your bankruptcy. A record of your bankruptcy is kept by the Superintendent of Bankruptcy. Credit reporting agencies will also maintain information about your bankruptcy on their files.

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What debts survive bankruptcy?
Certain debts are not erased by bankruptcy including the following:
  • Child Support or Alimony.
  • Court fines, ie: traffic offenses.
  • Debts arising from fraud or misrepresentation.
  • Damages awarded by a Court for intentional infliction of bodily harm or sexual assault.
  • Certain Student Loans.
  • Secured debts will also survive i.e. a mortgage or a car loan if you continue to make payments after bankruptcy.

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What do I have to do during my bankruptcy?

When in bankruptcy, you have certain responsibilities referred to as duties, which are set out by the Bankruptcy and Insolvency Act. These duties include:

  • You must keep the Trustee informed of your address and employer.
  • You must provide the Trustee with a report on your earnings and living expenses on a monthly basis. (Usually your Trustee will supply preprinted forms for your completion).
  • You must provide information to allow the Trustee to file your tax return for the year of bankruptcy.
  • You must attend 2 financial counselling sessions.

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What happens to my paycheck during bankruptcy?

As soon as you go bankrupt, your paycheck is protected from garnishment. Earnings, such as wages, salaries and commissions belong to you, however you may be required to contribute a portion of your income to the Trustee based on formal guidelines issued by the Superintendent of Bankruptcy. There is no restriction on maintaining a bank account while you are in bankruptcy.

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What about Child Support or Alimony?

Your responsibility to make child support or Alimony payments are not affected by bankruptcy. Collection of these payments is not affected by bankruptcy.

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What does bankruptcy cost?

Trustee fees, filing fees and counselling fees are prescribed by the Bankruptcy and Insolvency Act. The Trustee is normally paid out of funds arising from liquidation of assets. If no assets are available the Trustee will require the bankrupt to pay the fees and disbursements.

The minimum fee is $975 plus counselling fees, GST and disbursements (i.e. filing fees). Our firm has a payment plan to allow you to pay over time. No retainer is generally required.

 
Last Updated July 13, 2002 | webmaster@dds.ab.ca