COSTS OF BANKRUPTCY


There are several costs to going bankrupt, they are:

What you have to pay out of your pocket

What assets or property you may lose.

The impact on your credit rating.


Addressing each in turn:

What you have to pay out of your pocket.

Going bankrupt does cost money.

There are registration fees, counselling fees, administrative costs, the fees of the Trustee, maybe court costs plus applicable sales taxes. The average minimum cost across Canada ranges from $1,800 to $2,500.

Also depending on the level of your income you may be required to pay what is called a monthly Surplus Income payment.

Surplus Income is a portion of your income over the Office of the Superintendent of Bankruptcy (OSB) standard.

Your Trustee will review this requirement with you if necessary.

All trustee's will try to put you on a affordable payment plan to meet your obligations.

If you think you can’t afford to go bankrupt it is still worth giving us a call.

In circumstances of extreme financial hardship Trustees are often willing to reduce their fees and if you make prior arrangements you may be able to pay your fees over a maximum of 21 months.

We can give you the contact information for all the trustees in your area.

What assets or property you may lose.

The property you are allowed to keep varies by province.

Your Trustee will explain your provincial exemptions .

However all bankrupts will lose their tax refund in the year they go bankrupt and for any un-filed prior years and a portion of your GST/HST rebates may be kept to cover costs.

The impact on your credit rating.

Credit ratings range from R1, to R9. R1 being the best rating and R9 the worst.

Going bankrupt will set your rating to R9 for at least 6 years after your discharge from bankruptcy or about 7 to 8 years.

This is not to say that you cannot get credit for 7 or 8 years. One requirement of doing a bankruptcy or consumer proposal is attending at least two mandatory counselling sessions. A part of the counselling process is addressing how to rebuild your credit.

The Website address for the two main credit agencies are on our links page .