What Do I Do After Declaring Personal Bankruptcy?

Did you know that the average Canadian household owes close to $1.78 for every dollar earned?

It’s no wonder debt is a financial issue for Canadians, with many of them facing owing amounts so high that there is no hope of paying it off.

If you find yourself in this type of financial crisis, bankruptcy is an option for clearing your debts. However, it comes with certain obligations you are expected to fulfill.

What is Bankruptcy?

Bankruptcy is a legal process for individuals who seek relief from some or all debts when they cannot repay these debts to creditors.

Filing for bankruptcy requires a licensed insolvency trustee, who files the bankruptcy and sends a notice of bankruptcy to the creditors.

The creditors then cannot proceed with any lawsuits, garnishes or payment requests.

After filing for bankruptcy, you are eligible for discharge from the trustees after 9 months. However, the bankruptcy itself remains on your credit report for at least 6 years.

What Happens After My Bankruptcy is Filed?

Once the bankruptcy is filed, you are required to fulfill a few obligations with the trustee.

Your responsibility during the bankruptcy includes:

  • Sending your trustee proof of your income and a monthly budget once a month.
  • Notifying your trustee of any changes with your work or income.
  • Attending 2 credit counselling sessions. During these sessions, a credit counsellor will guide you through budgeting and money management techniques.
  • Making monthly bankruptcy payments to the trustee.

During this time, you can expect to no longer have to deal with creditor calls. When your bankruptcy is filed by the trustee, an “automatic stay” is forwarded to the creditors.

An automatic stay indicates to the creditors that they are not allowed to take collection action against you.

What Should I Do After I File Bankruptcy?

Once your bankruptcy is discharged, you will no longer be required to deal with the trustees.

However, although your obligations to the trustee are compete, there are measures you can take to protect yourself from future bankruptcy and rebuild credit.

1. Check Your Credit Reports

Even though filing for bankruptcy clears your debts, you want to make sure nothing was missed on your credit report before beginning to reestablish credit.

About 3 to 6 months after your discharge from bankruptcy, you should check your credit report.

This is not the same as checking your credit score, which you can do for free now through most bank’s websites and apps.

According to Canada.ca, you can order a copy of your credit report through Equifax Canada and Transunion Canada without affecting your credit score.

2. Start a Budget

The reason bankruptcy proceedings require you to attend credit counseling is to try to prevent a bankruptcy from happening in the future.

You should continue what you learned from the credit counseling even after your bankruptcy is discharged.

Additionally, before you begin to build credit again, you want to make sure you can afford payments on a credit card.

Healthy financial habits will help you avoid a future bankruptcy as well as help you rebuild your credit quickly.

3. Build New Credit

Although the bankruptcy remains on your credit report for a minimum of 6 years, you can begin to build credit again immediately after your discharge.

While some financial institutions will deny you credit due to your bankruptcy, many lenders will look at you as if you have never had credit before, since bankruptcy essentially clears your credit status.

In order to reestablish credit, you should begin with a low limit secured credit card. Secured credit cards, as opposed to prepaid cards, offers you revolving credit.

This means that you can borrow against the card as long as you keep the balanced paid. Secured credit cards require a security deposit.

Be sure to use the card responsibly and only spend what you can afford to pay off each month.

Is Bankruptcy the Right Option For You?

Whether bankruptcy is the right choice for you or there is another viable option to help with your debt, you should speak with a professional accountant to ensure you are heading down the right financial path.

Contact our experts at Liu & Associates for more information about bankruptcy and other debt-solving options.


Personal Bankruptcy – What You Should Know

Personal BankruptcyIf you are suffering from overwhelming debt, you may find yourself considering bankruptcy. People generally start to consider filing for bankruptcy when they are no longer able to pay their bills on time and are starting to get buried in their debt. While bankruptcy is a viable solution for many, it should always be your last resort. If you’re in a situation where debt has taken over, make sure to talk to an advisor about what your options are. Read on as we dive deeper into the details of personal bankruptcy.

What is Personal Bankruptcy?

Personal bankruptcy is a legal process, that is governed by federal law. When you declare bankruptcy, you effectively surrender everything you own to a Licensed Insolvency Trustee in exchange for the elimination of your debts.

Pros of Declaring Personal Bankruptcy

Filing for bankruptcy, while an extreme measure, does offer a number of advantages:

  • protects you from collectors taking legal action
  • eliminated debts
  • can be filed relatively quickly

Cons of Declaring Personal Bankruptcy

Filing for bankruptcy shouldn’t be thought of as a quick and painless solution. It comes with its fair share of disadvantages, such as:

  • it’s hard on your credit score
  • it may require you to surrender some or all of your possessions to your trustee
  • it requires you to keep detailed records while you’re in bankruptcy

Alternatives to Personal Bankruptcy

As stated earlier, filing for bankruptcy should be your last resort. There are several alternatives that you should explore with a trusted advisor before you decide to declare bankruptcy. Some of the alternatives include:

  • a debt consolidation loan
  • credit counselling
  • a consumer proposal to creditors

How To Declare Personal Bankruptcy

If you are considering declaring personal bankruptcy, here are a few of the steps you’ll need to take:

  • Select a licensed trustee to help you handle your affairs. Look for a trustee who you are comfortable with and that is easily accessible. You’ll also want to confirm that they are licensed by the Office of the Superintendent of Bankruptcy Canada (OSB).
  • Discuss your options. Chat with your trustee to see if there are any other options out there to help you manage your debt.
  • File the paperwork. If you and your trustee have decided that filing for bankruptcy is the best option, it’s time to your file and process the required paperwork. Your trustee will submit this paperwork on your behalf.
  • Stay on track. During bankruptcy, you will be required to keep detailed reports of income, as well as attend credit counselling sessions.

Liu & Associates Can Help

If debt has taken over your life, talk to an expert at Liu & Associates. Our team can help discuss your debt management options and assist you in filing for bankruptcy if applicable.

Corporate Bankruptcy — What You Should Know


When a business can no longer pay its debts, the business owner’s may start to consider bankruptcy. Before you make any decisions, be sure to talk to a trusted advisor to see if there are any alternative solutions to your problem. Filing for bankruptcy should always be your last resort. Read on to learn a bit more about corporate bankruptcy, and how Liu & Associates can help.

Small Businesses

If your business is a sole proprietorship or a partnership, a corporate bankruptcy will essentially be a personal bankruptcy. This is because the assets of the business can not be held separately from your personal assets.

Sole Proprietorship

If you have a sole proprietorship and you file for bankruptcy, the business will be seen as a separate venture from the day the bankruptcy goes into effect. If you’d like to start another business, you’ll have to get a new business number and set up new accounts with the CRA.


If you are part of a partnership with only two people and you file for bankruptcy, the original partnership will cease to exist. If there are more than two people in the partnership, business continues but some sort of deal must be reached to handle the bankruptcy.

Incorporated Businesses

If an incorporated business files for bankruptcy, it is considered to be an independent legal entity. Therefore, a business owner’s personal assets will be kept separate in most circumstances. When a corporation files for bankruptcy, it can no longer exist. The only way a corporation can keep running is if it pays all its debts when in the process of declaring bankruptcy.

How To Declare Corporate Bankruptcy

If you’ve talked to a licensed trustee, considered your options, and still feel that declaring bankruptcy is the best option, here are a few of the steps you’ll need to take:

  • Talk to your licensed trustee and fill out the proper paperwork. Your trustee will file these forms on your behalf.
  • Once the paperwork has gone through, your trustee will begin to sell any property, investments or assets.  
  • All institutions with which you carry a debt will be notified about the bankruptcy by your trustee.
  • You may need to meet with creditors to determine how they could receive payment for the debt owed to them.
  • The Office of the Superintendent of Bankruptcy Canada (OSB) may bring you in for questioning regarding your excessive business debt.
  • There will be some sessions with a debt counsellor to hopefully prevent future debt problems.  
  • Your trustee will create a summary of the actions your took during the bankruptcy and submit this to the OSB.
  • There may be a hearing to make your bankruptcy official.
  • Lastly, your debt that qualifies under your bankruptcy will be wiped away and legally discharged.

Liu & Associates Can Help

Business bankruptcies are complicated. If you are contemplating bankruptcy, or are looking for a licensed trustee, contact Liu & Associates. Our team is ready to help you get back on your feet.