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Difference between revisions of "Assignments in Bankruptcy"
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Assignments in Bankruptcy (view source)
Revision as of 15:05, 12 October 2018
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* Client thinks they need to go bankrupt but has a number of questions for you, such as: How long will it take? What will I be left with? How much does it cost? Will I ever get credit afterwards? Are there any alternatives?
| * Client thinks they need to go bankrupt but has a number of questions for you, such as: How long will it take? What will I be left with? How much does it cost? Will I ever get credit afterwards? Are there any alternatives?
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* Client has heard about a law that allows the client to get rid of debts by paying off a part of each debt to each creditor.
| * Client has heard about a law that allows the client to get rid of debts by paying off a part of each debt to each creditor.
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== Summary of the law== | == Summary of the law== | ||
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In Canada, bankruptcy is governed by the federal [http://canlii.ca/t/7vcz ''Bankruptcy and Insolvency Act'']. There are actually three debtor remedies under the Act: | In Canada, bankruptcy is governed by the federal [http://canlii.ca/t/7vcz ''Bankruptcy and Insolvency Act'']. There are actually three debtor remedies under the Act: | ||
* assignments in bankruptcy
| * assignments in bankruptcy
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* [[Consumer and Ordinary Proposals|proposals]]
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* [[Consumer and Ordinary Proposals|orderly payment of debts]] (this remedy is not available in BC at this time)
| * [[Orderly Payment of Debts|orderly payment of debts]] (this remedy is not available in BC at this time)
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This section discusses assignments in bankruptcy. Usually this involves a client working with a licensed insolvency trustee and volunteering to declare bankruptcy. | This section discusses assignments in bankruptcy. Usually this involves a client working with a licensed insolvency trustee and volunteering to declare bankruptcy. | ||
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=== Going into bankruptcy=== | === Going into bankruptcy=== | ||
Debtors can go into bankruptcy in two ways: | Debtors can go into bankruptcy in two ways: | ||
* '''They may make a voluntary assignment in bankruptcy | * '''They may make a voluntary assignment in bankruptcy''': This process is started by the debtor.
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* '''They are forced into bankruptcy | * '''They are forced into bankruptcy''': A creditor can sometimes force a debtor into bankruptcy by filing a court action called a petition, and asking the court to declare the debtor bankrupt.
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The majority of consumer bankruptcies are started by voluntary assignments in bankruptcy. Creditors will only try to force debtors into bankruptcy when there are considerable assets available to be sold to pay creditors, and when creditors think they are not going to get any more money from the debtor through any other means. Petitions in bankruptcy are used much more frequently against businesses than individual debtors. | The majority of consumer bankruptcies are started by voluntary assignments in bankruptcy. Creditors will only try to force debtors into bankruptcy when there are considerable assets available to be sold to pay creditors, and when creditors think they are not going to get any more money from the debtor through any other means. Petitions in bankruptcy are used much more frequently against businesses than individual debtors. | ||
