What you Should Know

Bankruptcy stops almost all forms of garnishee proceedings and law suits related to your debts.

Bankruptcy should not affect your employment.

The assets that you turn over to the Trustee when you file for bankruptcy do not generally include household furnishings, personal effects and jewellery. These are excluded from the bankruptcy by virtue of the Executions Act of Ontario up to an amount not exceeding two thousand dollars for furniture and household effects and an additional one thousand dollars for jewellery and personal effects.

"Tools of the Trade" are also exempt under the Executions Act for a maximum amount totalling two thousand dollars. Tools of the trade cover such items as a car if you are a travelling salesperson or hand tools if you are a carpenter. To qualify for the exemption, the "tools" must be necessary to allow you to earn your livelihood, as it is not the intent of the Bankruptcy and Insolvency Act to prevent you from supporting your family.

You may incur credit while you are a bankrupt. However, you are required to inform any person from whom you obtain credit in excess of $500.00 that you are an undischarged bankrupt. For obvious reasons, it is not recommended that you create a new debt load.

You must give up all inheritances or windfalls such as lottery winnings that occur before your discharge from bankruptcy. These form part of your estate for distribution to your creditors by the Trustee. Where the amount involved is large enough to satisfy all debts, the Trustee can apply to the court to pay your creditors in full and have the bankruptcy annulled. Any excess funds would be returned to you.

Two income tax returns must be completed for the year in which you declare bankruptcy. The pre-bankruptcy return covers the period from the beginning of the year to the date of bankruptcy. The post-bankruptcy return covers the period from the date of bankruptcy to the end of the year. These returns are filed by the Trustee and any refunds due are assets of the estate and should be mailed directly to the Trustee. You are required to provide the Trustee with all applicable information and documentation to expedite the filing of these returns.

Your bankruptcy is a matter of public record and information is therefore available to any interested party. This includes credit reporting agencies. Credit reporting agencies and financial institutions may keep the fact of your bankruptcy on file for seven years. To obtain credit after your discharge you may be required to convince potential lenders that you now have the earning power and the financial stability necessary to consider you a good credit risk.