What debts are covered by a bankruptcy or consumer proposal?

A bankruptcy or consumer proposal can deal with most types of unsecured debts.  If you have secured debts such as a mortgage on your home or a loan on your vehicle and you intend on keeping those assets, then you will also have to keep paying the related mortgage or loan.

The following are common types of debt that can be dealt with in a bankruptcy or consumer proposal:

  • Credit card bills

  • Unsecured personal loans

  • Unsecured lines of credit

  • Payday loans

  • Student loans that are older than 7 years old

  • Personal income tax debt

  • Directors’ liabilities for unpaid GST and Source deduction remittances

  • Unpaid GST for sole practitioners

  • Shortfall resulting from the foreclosure of property or seizure of an asset by a secured creditor

The Bankruptcy and Insolvency Act outlines in Section 178, types of debt which are not released by a bankruptcy or consumer proposal and that will survive the insolvency proceedings.  Some examples of these are:

  • A fine, penalty or restitution order imposed by a court in respect of an offence or any debt arising out of a recognizance or bail

  • An award for damages by a court in civil proceedings in respect of intentionally inflicted bodily harm, sex assault or wrongful death resulting therefrom

  • Debts that arose from fraud, embezzlement, theft, misappropriation or defalcation while acting in a fiduciary capacity

  • Any debt resulting from obtaining property or services by false pretences or fraudulent misrepresentation

  • Student loans that are less than 7 years old

  • Any debt from child support payments, spousal support payments, maintenance payments, or family support payments, unless you’ve been released from your obligation under a court order.

If you are considering your options for dealing with your debt, reach out to a Licensed Insolvency Trustee.  At JW Weber & Associates Inc. we offer a free, non-judgmental consultation to review your specific circumstances and help you find the option that best suits your individual situation.  Call us at 403-836-6690 or visit our website at correctthedebts.com