What are the effects of filing bankruptcy in Ontario? Our presentation will explain which debts can be absolved and how the process works.

1. The Effects of
Filing Bankruptcy
In Ontario
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2. Table of Contents
What Bankruptcy Does
Seizure of Assets
Your Credit Rating
Required Duties of a Bankrupt
Will Bankruptcy Effect My Spouse
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3. Claiming bankruptcy in Ontario gives an individual
with overwhelming debts the opportunity for a fresh
financial start.
It does this by absolving them of their debts, stopping
collection calls and ending wage garnishment orders
against them.
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What Bankruptcy Does

4. Keep in mind that not all
debts can be absolved. It is
very important to ensure
that you know which of your
debts will be absolved
before deciding to file an
Ontario bankruptcy.
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What Bankruptcy Does

5. Seizure of Assets
Once you are legally bankrupt
you will be required to
surrender your assets to a
trustee. These assets will then
be sold and the money earned
will be distributed amongst
your creditors.
However, you will never be
left with nothing!
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6. Seizure of Assets
Under Bankruptcy and Ontario law there is a list of items
which are exempt from seizure, when claiming an Ontario
bankruptcy.
Some bankruptcy exemptions include:
• Maximum of $5,650 in personal possessions (clothing, jewelry etc.)
• One motor vehicle worth up to $5,650 (cars, trucks, etc.)
• Maximum of $11,300 for furnishings
• Maximum of $11,300 for any tools of trade (equipment that is used to earn
a living)
• Certain types of life insurance and investments.
• All RRSP, RRIF and DPSP (Deferred Profit Sharing Plan) except for
contributions made in the last 12 months
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7. Seizure of Assets
Your Home
If you don't have significant
equity in your home, then
claiming bankruptcy should
not affect your house.
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However, to get the most accurate answer for your personal
situation, be sure to fully discuss the disposition of your home with a
licensed insolvency trustee.

8. Once a person files bankruptcy in Ontario, the Office
of the Superintendent of Bankruptcy will notify the
credit bureaus and the bankruptcy will be noted on
your credit report.
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Your Credit Rating
For a first time bankrupt, this mark will remain
on your credit for 6 years after your discharge.
For a second-time bankrupt, it will remain for a
period of 14 years.

9. This high risk status will make
your ability to obtain future
credit more difficult and
increase the interest rates
that you will be charged, for
any credit that you are able
to obtain.
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Your Credit Rating
Having a bankruptcy noted on your credit report flags
you to lenders as being high risk.

10. However eliminating your debts gives you a fresh start.
There are ways to successfully rebuild your credit after
being discharged from your bankruptcy.
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Your Credit Rating
• Pay your bills on time
• Monitor your credit report for errors
• Build your savings
• Obtain a secured credit card
• Apply for credit sparingly
• Use credit wisely

11. This is our number one recommendation. Missed
payments, habitually late payments or stopped
payments will likely be reported to the credit
reporting agencies. This will continue to ruin your
credit and prevent you from qualifying for new
borrowing.
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Your Credit Rating
Pay your bills on time

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Your Credit Rating
Monitor your credit report
You should get a copy of your credit
report four to six months after your
discharge to ensure that all information
reported there is accurate and up to
date. If there are errors, contact the
reporting agency and ask them to fix
them. You can get a free copy of your
credit report by mail by contacting one
of the two Canadian credit reporting
agencies: Equifax or Trans Union.

13. Having savings itself does not affect
your credit score, however having
an adequate emergency fund can
prevent you from missing payments
if an unexpected event happens.
You should also save an adequate
down payment if you are looking for
a new car loan or mortgage.
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Your Credit Rating
Build your savings

14. To start, you may need to consider a
secured visa card to begin to show
lenders that you can establish a good
repayment history. It is not the card
that gives you good credit, it is the
process of using the credit on the
card and paying off your balance
each month. One such card includes
the Home Trust Visa secured credit
card. More information can be found
on this Home Trust Visa page.
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Your Credit Rating
Consider a secured credit card

15. It is best to only apply for one secured credit card initially.
Multiple loan applications can show up on your credit report and
hurt your credit score. Apply for your card only after you have
saved for the required deposit. Don’t spend more on the card
than the initial deposit limit. Bumping up, or passing your limit
can hurt your credit too. In addition, beware of offers to increase
your limit. You do not want to get in trouble with debt again.
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Your Credit Rating
Limit your credit applications

16. No matter what type of credit
you use after your bankruptcy,
use it sparingly. Be sure you can
pay your balance in full as soon
as soon as your statement
arrives. This will help you avoid
both missed payments and the
high interest debt trap again.
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Your Credit Rating
Use credit wisely
For example, obtain a small line
of credit and use it to pay bills
only. Then, be sure to
immediately pay off the line as
you use it. Continue to repeat
this process, and over time, it
will have a marked improvement
in your credit score.

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Required Duties of a Bankrupt
Once your papers have been filed with the Official Receiver,
you are legally bankrupt and this declaration cannot be
reversed without an official court order.
During this bankruptcy period, generally nine months for a
first time bankrupt, you will be obligated to perform certain
duties; outside of surrendering your assets.

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Required Duties of a Bankrupt
•Attending two mandatory financial
counselling sessions
•Monthly Reporting of all income and
expenses to your Trustee
•Monthly surplus income payments,
depending upon your earning, size of
family and individual circumstances.
Some duties of a bankrupt will include:
*This is a very general overview of what some of these duties are.

19. As long as all of your debts are
solely yours, then claiming
bankruptcy should have no affect on
your spouse or their credit rating.
However, there are some unique
circumstances. You need to ensure
you are fully aware of all of the
details on how claiming bankruptcy
affects your spouse, prior to
deciding if an Ontario bankruptcy is
the correct choice for you.
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Will Bankruptcy Effect My Spouse?

20. There is hope.
You can be debt free.
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