The Bankruptcy and Insolvency Act : Your Options During Financial Difficulties

What is the purpose of the Bankruptcy and Insolvency Act?

In Quebec, the purpose of the Bankruptcy and Insolvency Act is to protect debtors (you) and creditors in difficult times.

It also ensures that licensed insolvency trustees and the courts fulfill their duties and responsibilities towards the various stakeholders.

Insolvency means that a person is unable to meet their financial obligations as they fall due, or to repay their debts. Fortunately, there are solutions regulated by the federal government and the Office of the Superintendent of Bankruptcy to help people in financial difficulty.

How can you get free of debt while being protected by the Bankruptcy and Insolvency Act?

If you’ve accumulated too much debt, you typically have two options :

• a consumer proposal
• personal bankruptcy

One of our licensed insolvency trustees will advise you on the best solution.

1. Consumer proposal

A consumer proposal consists in negotiating the repayment of your debt with your creditors. Only licensed insolvency trustees have the authority to enter into this arrangement on your behalf. With a consumer proposal, you can, among other things :

• Set up a regular payment schedule;
• Make only one monthly payment;
• Stop incurring other interest on your debts;
• Pay according to your financial capacity;
• Pay off your debts within 5 years (maximum);
• Keep your assets, RRSPs and life insurance;
• Suspend some legal proceedings brought against you.

2. Personal bankruptcy

While personal bankruptcy is often a last resort, it can help you get a fresh start by freeing you from your debts. After analyzing your situation, one of our licensed insolvency trustees will tell you whether this solution is right for you.

You will have to hand over some of your assets to the trustee, who will then sell them to compensate your creditors. For more information, read our article on the topic.

Once you have filed for bankruptcy under personal bankruptcy law, some of the proceedings brought against you by your creditors will be immediately suspended.

For example:

• Wage garnishment (except alimony);
• Collection activities, including those of Revenu Québec and the Canada Revenue Agency;
• Threats of legal proceedings by your creditors;
• Current legal proceedings.

You will be discharged from your debts generally between 9 and 21 months from the date of your first bankruptcy.

If you have a stable lifestyle, a new low-rate credit card that you’re paying off on time, and a small car loan, and you aren’t making excessive purchases, your banker should trust you again within three years.

For more information on a bankruptcy and its impacts, see our website section on this option and related FAQ.

Do you have a lot of debt? Don’t hesitate to contact one of our financial recovery counsellors. They will guide you towards solutions that reduce or eliminate your debt.