Personal Bankruptcy: The three types of bankruptcy

The bankruptcy trustee is an expert who can help you understand all the ins and outs of bankruptcy laws in Canada. Bankruptcy allows an honest but insolvent individual to be released from his debts and given a second chance.
There are three ways to declare bankruptcy:

1) Voluntary Assignment

A voluntary assignment occurs when the debtor (the individual in debt) himself makes the decision to declare bankruptcy. The debtor hands over his assets to the bankruptcy trustee, and the trustee liquidates them and shares the amount raised with the creditors. This possibility is open to anyone with at least $1000 of debt that they’re unable to pay.

2) Involuntary Assignment

An involuntary assignment occurs when creditors file a complaint with a provincial court requesting compensation. The creditors aim to obtain a receiving order against the individual unable to pay his various debts. To satisfy the court, the request must prove that the individual’s debt exceeds $1000 and demonstrate that the debtor has been unable to pay for at least a period of six months. However, please note that involuntary assignment is a rare occurrence.

3) Deemed Bankruptcy

According to Mr. Stéphane Leblond, a bankruptcy trustee in the Quebec City region, a deemed bankruptcy occurs when an allegedly insolvent individual files a notice of intention to put forward a bankruptcy proposal to a trustee (normally understood as seeking “protection” from creditors). For various reasons, this individual could not file a proposal within the time prescribed to the creditors. Therefore, at this point, it’s as if he has declared bankruptcy or that he has “allegedly” gone bankrupt.

Are there any methods more advantageous than the others, and if so, why?

“The ideal way to declare bankruptcy is obviously a voluntary bankruptcy, because it demonstrates responsibility on the part of an individual who has financial difficulties, but who also desires to resolve their debt without incurring undue cost to his creditors.”
– Stéphane Leblond, trustee

Voluntary bankruptcy, a responsible decision!

If you are experiencing financial difficulties, a bankruptcy trustee can help you regain financial health. Fill out the form located on your right and take control!

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