Three frequently asked questions about personal bankruptcy

Bankruptcy can be scary and raise many questions.

Here are the answers to three questions consumers often ask.

Does bankruptcy pay off all debts?

Jean-Simon, 35, a mechanic from Brossard, wants to know if it’s true that bankruptcy frees you from all debt.

Answers : Both consumer proposal and bankruptcy effectively relieve a person of the vast majority of their debt.

“Those who cannot be fired are the exception rather than the rule. Basically, you can get rid of credit cards and lines of credit, personal loans, debt to the government for taxes and duties, and even loans secured by real estate (like a car) if you want to return the real estate to the creditors.” explains Pierre Fortin, licensed liquidator and President of Jean Fortin & Associés.

On the other hand, one cannot be exempt from alimony, fines, student loans (if filing or bankruptcy was filed less than seven years before graduation), and from any debt resulting from false declaration or fraud.

In Jean-Simon’s first meeting with a trustee, two important steps are analyzing his debt and the context in which it arose.

“The task of the trustee is to avoid unpleasant surprises as much as possible. If there is any doubt as to whether or not it can be released, our job is to notify the person so that they can consult a lawyer if necessary,” stresses Pierre Fortin.

Who will know that I’m bankrupt?

Normand is 62 years old and lost his wife three years ago. He had many difficulties in overcoming this ordeal. He is employed in a printing company, but has been unemployed for a few months. Due to the drop in his income, he has accumulated debt. He knows that he has no other solution than bankruptcy and has come to terms with it. However, he wonders if his three children will find out that he has gone bankrupt, as he would prefer that no one knew about it.

Answers : The facts surrounding the Normand file, like most bankruptcy files, do not require the opening of a file in court. Consequently, the information circulates only between him, his trustee, his creditors and the Office of the Superintendent of Bankruptcy (BSF). His employer, family and relatives are not informed of his bankruptcy.

Note, however, that the BSF maintains a register which can be viewed by the public for a fee. Even so, bankruptcy remains a relatively private act that can be undertaken with confidence.

In addition, Normand was able to conduct the preliminary discussion with the licensed insolvency administrator by telephone and sign his file without having to leave his home.

“Besides reducing costs and wasted time, not having to be in our office has given him more discretion,” says Pierre Fortin.

Can bankruptcy affect my spouse?

Anne-Sophie, 44, has been in a relationship for three years. She has unpaid debts behind her and believes bankruptcy is inevitable. She would like to know if this gesture could affect her lover’s finances and credit. She doesn’t want to hurt him for debts that aren’t his.

Answers : Anne-Sophie has had $32,000 on her cards and lines of credit for over six years. His $43,000 gross salary will never be enough to pay her back.

The only two possible avenues are consumer filing or bankruptcy. In both cases, there are no consequences for the spouse. In fact, everyone, whether married, in a civil partnership, or de facto spouse, has their own credit report, assets, and debts. Even if Anne-Sophie’s spouse had been guarantor or joint debtor for one of her debts, her credit file would not have been affected in that he would have repaid it to the creditor on the same terms as the loan.

During the analysis of the situation, the trustee Anne-Sophie explained the impact of the insolvency and made a proposal for each property. Her furniture has a low liquidation value, so she could keep it with no problem. The same applies to his personal belongings (clothes, souvenirs, etc.), which the law protects. Since her vehicle’s value is no more than the amount she owes on her car loan, she can keep it if she continues making monthly payments.

Can you transfer assets to your spouse to “protect” them in the event of bankruptcy?

” No, we can’t. If you are unable to pay all your debts, creditors have a say in what happens to your assets,” says Pierre Fortin.

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