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Bankruptcy law in Montreal, Canada, is governed by the federal Bankruptcy and Insolvency Act (BIA). It stipulates the legal processes under which a person or corporation unable to repay outstanding debts can declare bankruptcy. The purpose of bankruptcy legislation is to allow the bankrupt party a fresh financial start while ensuring fair treatment to creditors. The process involves the assignment of the bankrupt's property to a Licensed Insolvency Trustee who then converts the assets to cash to distribute to creditors.
Engaging a lawyer can be beneficial if you are considering bankruptcy, or if your creditors are forcing you into bankruptcy. You might also need legal advice to determine the best debt solution for your situation, such as consumer proposals, consolidation loans, or debt management plans. Additionally, a lawyer could help if you're facing legal action from a creditor. They can help navigate the complexities of the Canadian bankruptcy laws and ensure that your rights are protected throughout the process.
Bankruptcy laws in Montreal are primarily under the federal jurisdiction. Before filing for bankruptcy, you must take part in two credit counselling sessions. After declaring bankruptcy, you're expected to provide monthly income statements to your trustee, and your income can affect the length and cost of your bankruptcy. There are property exemptions in Quebec – including tools of the trade, certain home equity, and some personal effects – which means you can keep these assets. The bankruptcy will stay on your credit report for six years from the date of discharge in the case of first bankruptcy.
Bankruptcy can eliminate most unsecured debts, such as credit cards and personal loans. However, it does not eliminate secured debts like a mortgage or a car loan. Certain types of debt, such as child support, alimony obligations, or student loans (if it’s less than seven years since you stopped being a student) are also not discharged.
A consumer proposal is an alternative to bankruptcy. It involves making an offer to your creditors to pay a percentage of what you owe and extend the time to pay off the debts. Unlike bankruptcy, a consumer proposal allows you to keep all your assets.
When you declare bankruptcy, your assets are transferred to the Licensed Insolvency Trustee, except for those exempted by Quebec provincial laws. The trustee will sell non-exempt assets to pay off your creditors.
First time bankrupts can receive a discharge from bankruptcy in as little as nine months, provided they fulfil all their duties and there are no objections. If your income is higher than the government threshold, the bankruptcy period will extend to 21 months.
After being discharged from bankruptcy, you can start rebuilding your credit. However, the bankruptcy will appear on your credit report for six years post-discharge. With careful planning and consistent financial practices, you can rebuild your credit during this period.
Several useful resources provide guidance on bankruptcy laws and processes in Montreal, Canada. The Office of the Superintendent of Bankruptcy Canada is a reliable source of information. Legal aid services in Montreal can also provide advice if you can't afford a lawyer. The Montreal Association of Business Recovery Professionals website could also be helpful.
If you're facing bankruptcy, consider reaching out to a lawyer experienced in bankruptcy or a Licensed Insolvency Trustee. They can provide sound advice on the debt relief options suitable for your situation. If a lawyer's fees are a concern, check whether you qualify for legal aid. Finally, educate yourself about bankruptcy and its consequences to make informed decisions about your financial future.
