Personal Finance

Question about bankruptcy

  • Last Updated:
  • Jan 7th, 2006 11:47 am
User avatar
Jul 5, 2004
23845 posts

Question about bankruptcy

I know absolutely nothing about bankruptcy protection in this country, but I know someone who recently filed for bankruptcy and am confused about the whole process.

This person racked up huge amounts of debt, then filed for bankruptcy protection. Now, I thought this would erase all her debt, and it did, but she still has absolutely no money. According to her, she has to pay the "bankruptcy people" for approx. 9 months. I don't know how much she has to pay them, but I know she has to pay them a good chunk of change, as she is just as poor as she was before, but she says that will change once she is done paying them.

So is anyone familiar with bankruptcy protection? How does it work? Do you have to make monthly payments after you file, and if so, what are those payments for? How much does a person usually have to pay? How long do they usually have to pay? If a person can't afford to pay anymore, can they even file for bankruptcy?

I just thought bankruptcy was a last resort for people who couldn't keep up with their bills. It just seems kind of hypocritical to take everything the person owns, and then continue charging them money that they didn't have before.

Also, one more thing. This person has a car that she owns (no outstanding loans), why was her car not taken when she filed? What, if anything, is taken when a person files for bankruptcy?
5 replies
Deal Guru
User avatar
Mar 23, 2005
13432 posts
You need to pay the trustee payments totalling around $1,200 or $1,300 in total, but this can be done over about 9 months as you stated.
You also have to sign over your tax return (if you get anything - they complete the return for you) and perhaps any GST credit for a year.
I went through the bankruptcy thing, so I have an idea about it.
You also have to attend 2 counselling session during the 9 months with the trustee.
It would be nice if it was free, but considering if you owe $20,000 or $30,000, it's well worth the much smaller amount that you have to pay to the trustee.

As for the car, I think you are allowed to keep a car it it's value is $5,000 or less, plus some other assets (there are web sites that will explain the details).
"Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent." - US President, Calvin Coolidge
Deal Expert
User avatar
Jun 14, 2003
23140 posts
FastFokker wrote: If the person can't afford to pay the trustee, then they are mostlikely not bringing home any earnings, in which case why even go bankrupt?
Hmmm! No job, no earning, no money, has debt, hence, go backrupt. Am I missing something?
Deal Expert
User avatar
Jun 14, 2003
23140 posts
FastFokker wrote:I guess so? Since when did you need a job to make debt? :lol:
Did I imply that?
But anyway, that was my point. If you have no income, there is no reason to go bankrupt. Collection agencies can't touch you.

So if you have income, obviously you are wanting to protect it from being taken away, which is why you go bankrupt. So the trustee's fee's are still going to be less than the money that is owed.
Of course, they can. You can still have asset. I also want to protect my future income being taken away.
Deal Addict
Mar 31, 2003
4135 posts
Looks like the thread is wobbling a little OT. Hope this doesn't push it over the edge.

Some people end up in bankruptcy but from a moral point of view really want to do their best not to burn the creditors. They will approach it in a way that maximizes payback.

Some people jump to bankruptcy as a way to insulate themselves from the consequences of their own actions or as a kind of 'insurance' against unforeseen events. These folks are more concerned about minimizing damage to themselves and let the creditors take as much of the loss as possible.

Not much different from divorce if you know what I mean.

Being clear about which situation you are in will make the strategy much easier to define.

Being clear about how you believe about a person's obligation to repay money loaned in good faith, and the money spent in addition on collection and bankruptcy processing will make understanding your comments much easier.
User avatar
Dec 24, 2004
10708 posts
FastFokker wrote:The amount you pay them is dependant your trustee and how much you are earning.

That could range as you said, $1200.. but you can easily pay $2000 or more.

What you get to keep varies province to province, but yes, in most instances you can keep your car if it is not of significant value. Also, even if your car is worth more, but you are making payments on it, most often you keep the vehicle if your payments are up to date with the lender.

You can find online all the different amounts of specific items you get to keep during a bankruptcy (it's really quite generous). After the 9months+1day and if you are totally paid up with your trustee, the bankruptcy will be dissolved (if first bankruptcy) and you can go about your life again.
You can keep your tools of the trade too.
Air Canada Aeroplan Super Elite Reservations: 1-800-401-7201 or 514-369-7598
get unlimited calls or other discounts by calling directly to:
Fido Retentions: call 611 then push 7, then push 3 - or Rogers Retentions 1-514-734-7873 or 1-866-228-7109
Telus Mobility: 1-877-279-3100 or 416-279-3100 or 1 416 296 7669
Bell Mobility: 1-866-313-1086
nice chairs
great value - lol