Life After Bankruptcy, now what?  


Life After Bankruptcy, now what?

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By Bromwich+Smith Staff | 755 words | Reading Time: 3 minutes and 45seconds | Date: 2022/09/09

We know the decision to declare bankruptcy is never an easy one. You’ve made great steps forward and you are now on the road to ending your debt. The first thing you will notice after you file for bankruptcy with a Licensed Insolvency Trustee, your creditors are no longer allowed to phone you. That means an immediate end to threats to sue you and any existing garnishees are lifted. While bankruptcy is often looked at as a last resort, for some, bankruptcy can be the best option in providing financial protection and debt relief essentially providing a fresh start.

Do I lose everything when I file Bankruptcy?

Simply put, filing for bankruptcy isn’t a guarantee that you going to lose your personal belongings including vehicles and home. There are exclusions decided by each province allowing you to keep up to a set value in personal belongings. There will be a predetermined equity value in your car and home Typically pensions and other registered savings plans are usually protected from bankruptcy filings.  It is also important to note that a threshold amount of your income is protected which is set by the federal government, based on your family situation. 

Will Bankruptcy ruin my Credit?

You may not realize that if you are behind in paying your bills and creditors are calling your credit is not in a good place. If you do not take action your credit will continue to take a hit and you will find it more difficult to pay off your debt.  With a debt restructuring program like a bankruptcy, you will be able to put a stop to the actions against you, eliminate your debt, and get to rebuilding your worth and a better financial future. What you likely don’t know is that you don't have to wait to start rebuilding your credit.

What happens during Bankruptcy?

You will not be alone in this process; a Licensed Insolvency Trustee will help you to prepare and file all required paperwork. During the bankruptcy process, you will have a list of things to do, and know.

  • File monthly income and expense reports with your Licensed Insolvency Trustee to keep your budget in check and monitor any surplus income.
  • Attend two counselling sessions, during which you will examine the causes of your financial difficulties and work on debt-management strategies. During these sessions you will work with your Licensed Insolvency Trustee to restore your credit rating.
  • Provide your Licensed Insolvency Trustee with all necessary tax information to prepare and file your tax returns for the year in which you file bankruptcy (and previous years, if required).
  • Pay your Licensed Insolvency Trustee any necessary amounts, such as required surplus income payments, costs to repurchase any non-exempt assets, or administration fees.

Once you have completed all necessary steps and duties, you will automatically be discharged from your remaining debts at the 9- or 21-month mark (with minor exceptions). Some remaining steps may be required, but they will be communicated to you closer to the discharge date.

Will I qualify for a Loan?

Simply stated yes, but with some restrictions. Lenders may qualify you for a loan immediately after you have been discharged from bankruptcy, although you will likely be subject to higher interest rates and fees. You may also have to obtain a co-signer (an individual who promises to pay off your debt if you cannot pay it yourself).

Will I qualify for a mortgage?

You will be able to get a mortgage shortly after being discharged from bankruptcy, again it will potentially be at a higher interest rate, and you may need a co-signer. To improve your chances of being approved for a mortgage we suggest saving a down payment and showing proof of steady and reliable employment income. You will need to rebuild your credit, and a secured credit card could be a good place to start.

Bankruptcy is not a lifelong sentence and may be the right choice for you. If you’re struggling with debt, bankruptcy can provide you with a fresh financial start. Gain peace of mind knowing your debt is officially behind you and a blank slate awaits, with most debts permanently erased as early as nine months. If you do need further support don't hesitate to reach out to us at 1.855.884.9243, or through chat on our website. We’re here to ensure you flourish and rebuild your worth. 


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