What Happens Once You File for Bankruptcy?
Once your bankruptcy is filed, there is an immediate “stay of proceedings”. This means that unsecured creditors cannot begin or continue lawsuits, wage garnishees, or even contact you to request payment. Within five days of the bankruptcy starting the trustee will send a copy of the bankruptcy paperwork to creditors, so they can file a claim.
The trustee will file outstanding tax returns up to the date of bankruptcy. Any outstanding taxes or penalties owed CRA will be included.
You will have certain obligations that you will have to fulfil including a monthly income statement and attending credit counselling sessions.
Benefits of the Bankruptcy Process
Once your bankruptcy is discharged your debts will be canceled with some minor exceptions. The bankruptcy will remain on your credit report for a minimum of six years after the date of discharge. In most circumstances, your bankruptcy will be discharged in 9 months.
This means that for most people their debts are canceled 9 months after filing for bankruptcy and they can start going through the process of rebuilding their credit.
Successfully filing for bankruptcy means that:
• Most unsecured debt will be eliminated
• Collections will cease
• Wages will not be garnished any longer
• You will embark on a fresh start, free from the financial burden of debt