What Happens When You File Bankruptcy?

The process that entails an individuals or corporations or businesses that are not capable of paying their outstanding debts in a legal ways is bankruptcy.  The process of such may start with a filed petition by the debtor or on behalf of creditors.  All of the assets of the debtors will be calculated and be assed, whereupon the assets will serve as a payment for some of the percentage of the outstanding debt.  When the completion of the bankruptcy proceeding becomes successful, the debtor can be relieved from their obligations on the debts that they have before they have filed for bankruptcy.  However, what happens when they file for bankruptcy is now a big conundrum for these individuals and some businesses.

When the trustees who are licensed to insolvency has filed the needed forms with the office of the Superintendent of Bankruptcy and they have been legally declared as bankrupt that the situations that the individuals and businessmen will have to expect these things:

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Starting from this kind of situation, the licensed to insolvency trustees will have to be contact directly with their creditors.  This means that:

  • The individuals or businessmen will stop their payments directly to the creditors that are not secured
  • Garnishments against the individual’s and businessmen’s salary will be ended
  • Any legal actions that will be done against the individual or the businessman by their creditors will also be ended

The individual’s and businessmen’s properties and assets will be put up for sale

  • From the moment the individual or the businessmen have declared their bankruptcy the licensed insolvency trustees will put their assets and properties into sale, including any of the properties that they may have acquired at the time of their bankruptcy. However, under the provincial and federal rules and regulations, some assets and properties will not be included from this sale.  It is important the individuals and businessmen will say tell the licensed insolvency trustees about all their properties and assets or about any kind of their property that was sold in the market or has been transferred during the past years.  The licensed insolvency trustees will be holding the money that has been acquired by the sale in trust for the distribution to their creditors.

The licensed insolvency trustees will inform the individual’s or businessmen’s creditors of their bankruptcy.

  • Once the person or the businessmen has officially and legally declared the bankruptcy, certain people like the insolvency trustees who are licensed will be responsible of informing all their creditors about the person’s or businessmen’s bankruptcy.

The individual or businessman may be asked to make extra income payments

  • The responsibilities of the individual or businessman who went into bankruptcy must have to disclose to the licensed insolvency trustees about all their properties or assets and their debts or liabilities. It is also essential the bankrupt individuals or businessmen will have to advise the licensed insolvency trusties of any of their assets or properties that have been sold or transferred during the past years; they should also surrender all their credit cards to the licensed insolvency trustees.  It is also essential the individuals or businessman who went bankrupt have to attend the first meeting of the creditors if a meeting will be requested. They should also attend at least two sessions for counselling and advise the licensed insolvency trustees in writing of any changes on the address.  If you are required to do some activities like attending an examination at the office of the superintendent of bankruptcy then you must also go and attend such examination.  Also, it is also advisable the bankrupt individuals assist the licensed insolvency trustees as needed in administering their estate.   Aside from paying the charge for licensed insolvency trustees, the bankrupt individuals are also required to give some extra fees to their licensed insolvency trustees for the distribution to their creditors.  Every month during the process of bankruptcy, the bankrupt individuals will have to give a copy of their pay stubs and proof of their other incomes to the licensed insolvency trustees.  The trustees will then have to calculate their additional incomes. The additional income is a part of their savings that may be additional to the number of income a family may need to be able to maintain the reasonable amount for their living.  The number will be set by the OSB every year.  The larger the family of an individual, the more money that they will be allowed to keep.  The more the individual can save, the more money that they are required to give for contributions.  In other words, if their income for their household will exceed the level that has been set by the OSB, then it is necessary for them to make some extra payments to their licensed trustees during the time of their bankruptcy.  For example of their additional income is over $200 every month, then these individuals will be required to give a 50 percent contribution of that number of money.

The bankrupt individuals will have to attend a meeting of creditors if they are called

  • There are times that a meeting for creditors is required or will be requested. The purpose of these kinds of meetings is to give the creditors some opportunity to acquire some information about the bankruptcy, to verify the appointment of the licensed trustees, assign up to five inspectors to supervise the administration of their estate and to give the creditors some opportunities to give direction to the trustees.

There are so many things that can happen when an individual or a businessman files for bankruptcy.  They will have to check all their assets so as to pay all the debts that they may have incurred on the past few years.  It will always be important to seek help when such things happen because legal actions may be done by the creditors.  Some licensed trustees can help during the process and can even save you from prison.

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