When filing for bankruptcy an individual assigns all of their property (subject to certain statutory exemptions) to a Trustee in Bankruptcy for the benefit of their creditors. A portion of monthly income earned in excess of certain government thresholds, referred to as “surplus income”, must also be paid into the bankruptcy estate. Once bankruptcy is declared, an individual no longer has to deal with their unsecured creditors, and any wage garnishments will stop. Most people who declare bankruptcy for the first time are eligible for an automatic discharge nine-months after the bankruptcy filing, provided they do not have surplus income. Once discharged, an individual’s obligation to pay their unsecured debts is extinguished, subject to certain debts that may survive such as student loans, alimony, child or spousal support, and certain court fines or penalties. A Trustee in Bankruptcy can offer a free consultation to fully review all of your options.

Deloitte, Trustee in Bankruptcy, www.debtsolutions.deloitte.ca