Financial difficulties can arise at any time. For most people, the decision to declare bankruptcy is a serious and often painful one, usually resulting from loss of income or too much consumer credit.
In many cases, individuals who are considering bankruptcy do not understand the bankruptcy process. At Janes & Noseworthy, we recognize the need to understand the process and the associated risks. This section will explain, in simple terms, the duties, restrictions and responsibilities imposed on a person who declares bankruptcy.
What is bankruptcy?
The bankruptcy process is intended to give a person with financial problems a fresh start.
Bankruptcy is a legal process that provides immediate financial relief to individuals with financial problems by stopping legal actions by creditors. Bankruptcy usually results in getting rid of most, if not all, of a person’s debts. The procedure itself is referred to as “filing an assignment” and the person making an assignment in bankruptcy is referred to as the “bankrupt.”
The bankruptcy process is intended to give a person with financial problems a fresh start. The bankruptcy provides for a fair split of the bankrupt’s assets (if any) among his or her creditors.
The steps to declaring bankruptcy include: filing the assignment in bankruptcy, a meeting of the creditors, counselling and discharge.
If you are considering bankruptcy, the following provides a summary of these steps and addresses many of the questions you may have.
Who can go bankrupt?
In order to declare bankruptcy, you must meet certain conditions, i.e.:
- owe at least $1,000;
- be unable to meet regular payments as they become due; and
- if you sold all of your assets, the funds would not be enough to pay off all of your debts.
In general, bankruptcy is considered to be the best solution only if you cannot reorganize your debts to repay them (in full, or some lesser amount if a viable proposal is agreed upon by the creditors) over a reasonable period using available assets and income.