FAQs About Personal Bankruptcy

What Debts Do Not Get Discharged in a Bankruptcy?

Some of the more common types of debt that are not discharged are:

• Court fines, penalties and restitution orders
• Payments for alimony or child support
• Student loans, if you file your bankruptcy less than seven years after you cease to be a student.  Click here to read about the special rules related to student loans
• Any debt or liability for obtaining property under false pretenses or fraudulent
  misrepresentation;
• A debt or liability arising out of fraud, embezzlement, misappropriation or misconduct while acting in a fiduciary capacity

How Long Does Bankruptcy Stay On My Credit Report?

Your first bankruptcy will remain on your credit report for six years after discharge. Your second bankruptcy will remain on your credit report for 14 years.

Do I Have to Include All My Debts if I File Bankruptcy?

Yes, all of your debts are listed in your bankruptcy.  You cannot pick and choose what creditors to include and not include.  All unsecured debts will get discharged including CRA tax debts, lawsuits from creditors even if they have received judgement and common debts such as credit cards, payday loans and unsecured lines of credit.

Will My Bankruptcy Affect My Spouse or Partner?

When you file bankruptcy, only your debts are affected.  This means that your spouse or partner will NOT be responsible for your debts and your bankruptcy will not affect them.

However, if you have joint (co-signed or guaranteed) debts with your spouse or partner, these debts will affect your spouse or partner.  The creditors can pursue your spouse or partner for debts that are included in your bankruptcy. When this occurs, we often find that a joint filing can be an affective debt solution if they are not able to repay the joint debts.

Can I Keep My Car If I File Bankruptcy?

Most people that file personal bankruptcy do NOT lose their vehicle.  Ontario has an exemption value of $6,600 for a motor vehicle (we use the black book value) when you file bankruptcy.   Most older vehicles fall under this value and as a result, the vehicle is exempt from seizure by the trustee. This means that you get to keep your car.

If you have a vehicle that is worth more than the exemption limit, you can purchase the excess amount from the trustee.  Here is an example: your vehicle has a black book value of $7,600 (or $1,000 more than the Ontario exemption limit). You can purchase this excess amount from the trustee for $111 per month for 9 months of your bankruptcy.

Another option, when you have a high value vehicle, is to file a consumer proposal.

How Are Tax Refunds Treated In A Bankruptcy?

You will lose any income tax refunds that are owed to you for periods prior to filing bankruptcy and up to the year of filing bankruptcy.  CRA will automatically send the refund to the trustee.