More Bankruptcy in Kitchener FAQ’s

The decision about whether or not to file a bankruptcy is a difficult one. To help with this decision we present below a list of frequently asked questions about bankruptcy from people who come to see us in our Kitchener office:

Is bankruptcy in Kitchener my only option?

If you have more debts than you can handle, you have a number of options. You could cut your expenses or increase your income so that you can repay your debts on your own. You could investigate credit counselling in Kitchener as a way to pay your creditors in full. Another great alternative to personal bankruptcy is a consumer proposal in Kitchener. If none of these options work, then, and only then, should you consider bankruptcy.

What does it cost to file a Kitchener bankruptcy?

The cost depends on your family size, monthly income, and various monthly expenses. As your income increases above the limits set by the federal government, your monthly bankruptcy payment will increase. Your Kitchener bankruptcy trustee will explain these costs to you in detail before you file, and will arrange a payment plan including pre-authorized payments timed with your paycheque to ensure that you can make your bankruptcy payments as required.

What do I get to keep in a Kitchener bankruptcy?

If you go bankrupt you are allowed to keep certain exemptions. Most exemptions are set by Ontario legislation and exemption amounts are increased annually based on inflation.  As of 2015 you are allowed to keep one motor vehicle worth up to $6,600, household furniture worth up to $13,150, and any amount of closing. You are also allowed to keep equipment used to earn a living, called tools of the trade (such as a hammer if you are a carpenter) worth up to $11,300. These values are determined based on liquidation value, not what the goods would be worth to purchase new and as mentioned they are indexed annually by the Ontario government.

I have a loan against my car. Can I keep my car if I go bankrupt?

Since we don’t have a subway system in Kitchener, many people use a car to get to work, so this is one of the most frequently asked questions about bankruptcy in Kitchener. If your car is worth less than the amount still owing, and if the lender agrees, you could keep your car, as long as you continue to make your monthly payments. However, some banks have a policy that if you go bankrupt they will take your car, even if your payments are up to date. Banks change their policies frequently, so it is essential that you bring your car loan documents to your trustee so that they can advise you on what is likely to happen to your car if you go bankrupt in Kitchener.

Can I keep my house if I go bankrupt?

This is another common question, since for many residents of Kitchener-Waterloo owning a home is their number one financial goal. It is possible to keep your home if you go bankrupt. You will be required to have your house appraised, and provide the trustee with your mortgage balance owing. If the house is worth about what remains owing on the mortgage, the trustee will not take your house if you go bankrupt, and generally the mortgage company will allow you to keep making your monthly mortgage payments. If the house is worth significantly more than the balance owing on the mortgage, to keep your house you would be required to pay to the trustee the net equity in your house. However the Ontario government has introduced legislation disallowing creditors (and as such your trustee) from seizing your equity if it $10,000 or less. The area can be quite complicated. For more information read our main site blog on the topic of home equity exemptions in bankruptcy in Ontario.

Who will find out that I went bankrupt?

Your bankruptcy is reported on your credit report, so for the next seven years anyone who runs a credit report on you will know that you went bankrupt. All of your creditors, and Canada Revenue Agency are also notified of your bankruptcy, as is the Office of the Superintendent of Bankruptcy. If you are being garnisheed, the court and your employer are also notified of the bankruptcy so that the garnishment can be stopped. If you are not being garnisheed, and if you provide your trustee with all required information, it is generally not necessary for the trustee to contact your employer.

How long will bankruptcy in Kitchener stay on my credit report?

This is one of the most common questions asked about bankruptcy in Kitchener. There are two main credit bureaus serving the Kitchener area, and in general a bankruptcy will remain on your credit report for seven years from the date you file bankruptcy. We recommend that you get a copy of your credit report and read the details from the credit bureau so that you understand how the credit reporting agencies report bankruptcies.

If I go bankrupt in Kitchener, will I ever get credit again?

This is another one of the most common bankruptcy questions we are asked in Kitchener. The answer is that whether or not you get credit again depends on you. Once your bankruptcy is over, you can start to rebuild your credit by saving money. The money you save can be used in the future for the security deposit or down payment on a car or house. If you have a sufficient down payment and a sufficient income, you will be able to get credit after your bankruptcy in Kitchener is finished.

For answers to these and other bankruptcy Kitchener questions, read more of our Kitchener bankruptcy articles, or contact one of our Kitchener bankruptcy trustees at Hoyes Michalos & Associates Inc. at (519) 747-0660.