(music) It’s been a tough time for
David and Julie-David has been laid off, credit card payments
have slipped and the other bills are also falling behind. Thinking bankruptcy
may be an option, he sits down and begins
an online search to get information about the topic. He finds the Office of the Superintendent
of Bankruptcy Canada, the federal organization
that licenses and regulates Licensed Insolvency Trustees, professionals who can provide
the information he needs. Using the search tool,
David finds a Licensed Insolvency Trustee in his
area and makes an appointment. Seeing a Licensed Insolvency
Trustee is a great first step. The trustee will explain the
options to Julie and David, giving them the information
they need to make a well-informed decision. After an open and frank
discussion about what they earn, what they own and
how much they owe, Julie and David decide that
bankruptcy is, in fact, the most appropriate choice. The trustee then files the
bankruptcy application with the Office of the Superintendent
of Bankruptcy Canada. Once the application is filed,
the trustee will take care of legal obligations and Julie and
David will stop making payments directly to their cred­itors. As the trustee is now
in charge of the file, any and all legal actions
against them will stop and no one will be able
to garnish their wages. Julie and David will likely be
able to keep some of the things they own, be­cause those assets
are protected by provincial and federal laws. However, some assets
may be sold by the trustee and the pro­ceeds used to
help pay the debts they owe. Their creditors will be
notified of the bankruptcy and, if a meeting of
creditors is called, Julie and David
will have to attend. They will also have to attend
two counselling sessions to help them get back
on their feet financially. Finally, they may have to make
payments toward their debt, called
“surplus income payments.” These payments ensure that
people who declare bankruptcy and have sufficient income,
contribute to paying off a portion of their debt. Eventually, their debts
will be discharged, relieving them from the
obligation of repaying most of the debt they had on the day
they filed for bankruptcy. While this comes as a relief
to both Julie and David, the trustee also explains that
some debts cannot be discharged. These include: alimony and
child-support payments, court-ordered fines
or penal­ties, debts arising from fraud and, in some cases,
student loans. While the bankruptcy will affect
their credit rating for a number of years, the trustee tells
them that once the debt is discharged, they can start to
rebuild their financial future. It’s not an ideal situation,
but dealing with this does lift a weight off their shoulders. This is one of a series of
videos available on our website. The website also includes a
searchable database of Licensed Insolvency Trustees-the only
professionals who can file a consumer proposal or
bankruptcy application in your name-should you wish to
contact one for information. (music)