How to File for Bankruptcy_ 2022 Step by Step Guide

How to File for Bankruptcy_ 2021 Step by Step Guide

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By Bromwich+Smith Staff | 1637 words | Reading Time: 8 minutes | Updated Date: 2022/11/16

There are many reasons why people find themselves at the point where they feel bankruptcy is their only option. For some, they simply cannot pay their bills and are using what little, if any, credit they have to pay for basic means. Especially in these current times, they may have lost their jobs and may not have had savings or savings they had are already depleted. Unfortunately, there are many more scenarios that we could outline but for everyone of these situations when you think of filing for bankruptcy the goal is to clear away debt that you are unable to pay off.

At Bromwich+Smith we understand the stress that comes with facing financial challenges. We also know it is not easy to determine what steps to take so we wanted to provide a step-by-step guide on how to declare bankruptcy. Before we get into it, here are some advantages of the bankruptcy process in Canada.

Benefits of the Bankruptcy Process

Making the decision to file for bankruptcy is not an easy one so knowing the benefits of doing so is critical to your decision process. Successfully filing for bankruptcy means that:

  • When you file for bankruptcy, you receive an automatic stay of proceedings, which is a legal order that creditors need to abide by. This order gives you immediate creditor protection and it is a unique feature only available through a Licensed Insolvency Trustee.  Creditors will no longer be able to contact you for collection of debt or take any legal action against you.
  • Bankruptcy stops wage garnishments. When you claim bankruptcy, your Trustee will notify your employer, the court, and the creditor to stop the wage garnishment. An exception is that bankruptcy cannot stop the garnishment of your wages by the Family Responsibility Office.
  • Once you are discharged from bankruptcy, with a few exceptions, you are debt free. The few unsecured debts that cannot be discharged include student loans that are less than 7 years old, court fines, penalties, and child support.
  • Filing for bankruptcy will give you a target date for a clean credit report. Check out this video to find out more.
  • With your bankruptcy filed, you will have a schedule determined for being discharged from your bankruptcy. This will help you plan how to rebuild your wealth.

Steps to Filing Bankruptcy in Canada

Filing bankruptcy in Canada consists of 4 key steps. Bankruptcy can be time-consuming and in-depth, but understanding these 4 simple steps may help in navigating the overall process. Understanding the basics can relieve the stress in taking the first step to conquering your debt. We hope this information will help you in making an educated financial decision.

1. Understanding Your Debt Situation

First, you will have to acknowledge your financial situation in order to determine solutions.

Every individual situation varies, but the following are common indicators of money challenges that are suggesting you should take action:

  • You have failed to make one or more payments on a mortgage or loan.
  • Your credit cards are constantly at their limit.
  • You are paying bills by taking credit card cash advances.
  • Your creditors have passed your account to collection agencies, who are now calling.
  • You have received notice of legal action against you to collect money you owe.

If you are feeling pressure from debt, we want to let you know that filing for personal bankruptcy and consumer proposals will provide immediate protection from debt collectors. Please take comfort in knowing that no matter how complicated your financial situation may seem, there are options to explore.


2. Selecting a Licensed Insolvency Trustee to Help You Understand Canada's Debt Regulations

Licensed Insolvency Trustees are the only people licensed by the Canadian Superintendent of Bankruptcy to administer consumer proposals and bankruptcies. In order to declare bankruptcy or file a consumer proposal you must work with a Licensed Insolvency Trustee.

Your trustee will provide information about consumer proposals, the process for filing bankruptcy, along with other debt relief options. As well, during the bankruptcy or consumer proposal process your trustee will ensure your rights are respected.

When selecting your trustee, keep the following in mind:

  • Your trustee should be easy to access.
  • You should feel comfortable with your trustee. Ask them questions about your situation and make sure you understand their answers.
  • Confirm they are licensed by the Superintendent of Bankruptcy.

3. Meeting with Your Trustee to Review Your Options

Having selected your Licensed Insolvency Trustee you will now be asked for specific details related to your financial situation, including your income and expenses, assets and debts. In your first meeting with your trustee they will review your financial details, and outline the alternatives to bankruptcy that could be chosen in your case; ranging from debt consolidation through consumer proposals and including the bankruptcy process. Your trustee will provide you with information and advice on the best course of action for you. However, the decision remains in your hands and you will have as much time as you need.

  • If you have enough income, debt consolidation or credit counseling are good debt relief options.
  • Consumer proposals allow you to keep your house and other assets, subject to the rights of secured creditors.

You may want to check out our blog on the pros and cons of bankruptcy to ensure you have all the information you need for your first meeting as well.

4. Filing For Bankruptcy

In the event you and your trustee choose to proceed with filing bankruptcy, in order to file the bankruptcy paperwork your trustee will need:

  • Your personal information (name, address, birth date).
  • A list of your creditors.
  • A list of your assets.

After your trustee has your information, they will prepare the initial paperwork and review the bankruptcy process with you again. When you are ready, you sign the papers and your bankruptcy starts.

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 your Licensed Insolvency 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 to CRA (Canada Revenue Agency) will be included.

You will have certain obligations that you will have to fulfill including a monthly income statement along with attending credit counselling sessions.

  • Filing bankruptcy immediately halts most creditors from taking your wages.
  • Your Trustee will deal with your unsecured creditors on your behalf.

What Are My Obligations During Bankruptcy?

Although, the goal is to discharge the debts that you cannot realistically manage, during your case, you will be expected to:

  • Surrender assets – If you have assets, such as a home or vehicle, that are worth more than what you owe on them, you may need to surrender them to the trustee. This is why people wondering how to claim bankruptcy in Canada should review their financial situation(s) with a licensed insolvency trustee before opening a case.
  • Surrender your credit cards – Those who want to know how to declare bankruptcy in Canada need to understand that while working to discharge existing debts, they cannot incur more debts during the case. When a case is filed, you must turn over all personal credit cards to the trustee.
  • Attend credit counselling sessions – Within 90 days of filing your bankruptcy case, you must attend one credit counselling session, and complete a second session prior to your discharge. These credit counselling sessions are meant to help you avoid getting into a similar position in the future.
  • Provide monthly income statements – An important step in understanding how to claim bankruptcy in Canada involves you providing your trustee with monthly statements that show income and basic bills.
  • Make your payments – In most cases, you will be required to make some sort of monthly payment to the bankruptcy estate to cover the costs. The fees of the trustee are set by the government.

What Happens After Bankruptcy?

Once your bankruptcy is discharged your debts will be cancelled (with minor exceptions). A note about your bankruptcy will remain on your credit report for a minimum of six years after the date of discharge, or fourteen years if this is not your first bankruptcy. In most circumstances, your bankruptcy will be discharged in 9 months.

This means that for most people their debts are cancelled 9 months after filing for bankruptcy and they can start going through the process of rebuilding their credit. Your trustee can help you here as well by providing effective strategies for getting your credit back on track and helping you manage your money.

Since 2002, Bromwich+Smith has helped thousands of Canadians with restructuring programs that conquer debt and put you back on track to rebuilding your worth. We examine your financial situation with you and provide the best solution for your specific financial situation. Whether that be budgeting, counselling, a consumer proposal or bankruptcy or another debt restructuring solution, we work with you to provide a solution that makes you whole again and settles your debt once and for all.

Bankruptcy can be scary, but with the thoughtful, knowledgeable, and helpful team at Bromwich+Smith you can make a fresh start and get busy rebuilding your credit right away. Before recommending bankruptcy, all other debt relief options are explored (including debt consolidation, debt forgiveness, consumer proposals, and credit counseling). In some debt situations, personal bankruptcy is the best solution. The good news is that working with the outstanding Debt Relief Specialists at Bromwich+Smith, you can start fresh debt-free in as little as 9 months.

To consider your options, it is important to seek help as soon as possible from a credible source. We offer an initial free, no obligation, confidential consultation by phone 1.855.884.9243 or video. You can also request a call back at our contact us page. Our team of Debt Relief Specialists are here to assist you with unbiased and nonjudgmental support, ensuring you find the right solution that will help you conquer your debt and rebuild your worth today.

Related source:

The Pros and Cons of Filing  Bankruptcy in Canada (
Bankruptcy Overview | Best Bankruptcy Solutions |Bromwich+Smith (
How is my spouse affected by my bankruptcy? (
Bankruptcy or Consumer Proposal cost?|Bromwich+Smith (
Canada Bankruptcy Exemptions - What Do You Keep? (
Filing Bankruptcy? Consumer Proposals| Bromwich+Smith (
Consumer Proposal: Alternative to Bankruptcy| Bromwich+Smith (


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