3 min read
25 Jun
25Jun

Financial difficulty is a stressful reality for many Canadians. If you're struggling with overwhelming debt, considering bankruptcy may be an option. But before you take that step, it's crucial to understand the process and how a bankruptcy attorney can help you navigate it.

What is a Bankruptcy Attorney and Why Do You Need One?

A bankruptcy attorney, also known as a licensed insolvency trustee (LIT) in Canada, is a legal professional specializing in resolving financial problems. They have a deep understanding of the Bankruptcy and Insolvency Act (BIA) and can guide you through the various debt relief options available, including:

  • Bankruptcy: This is a legal process where you are discharged from most of your debts. There are two main types of bankruptcy in Canada:
    • Bankruptcy (liquidation):  Your assets are sold, and the proceeds are used to pay your creditors as much as possible.
    • Consumer proposal:  You negotiate a payment plan with your creditors to repay a portion of your debts over a set period.
  • Debt consolidation: This involves combining multiple debts into one loan with a lower interest rate, potentially making repayment more manageable.
  • Credit counselling:  A non-profit credit counsellor can help you develop a budget, create a debt repayment plan, and negotiate with creditors.

Finding the Right Bankruptcy Attorney in Canada

The decision to file for bankruptcy is significant, so choosing the right attorney is critical. Here's what to consider:

  • Experience: Look for an attorney with experience handling cases similar to yours. The Law Society of Ontario (LSO) or your provincial law society website may have a lawyer referral service you can utilize.
  • Location:  Convenience is important, especially for consultations and meetings. Consider virtual consultations offered by some attorneys.
  • Cost: Bankruptcy attorneys typically charge an hourly rate or a flat fee for their services. Be upfront about your budget and get a clear fee structure before proceeding.
  • Communication style:  Choose an attorney who explains things clearly and answers your questions patiently.

What to Expect When Working with a Bankruptcy Attorney in Canada

During your initial consultation, your attorney will review your financial situation, discuss your debt relief options, and explain the potential consequences of each option. They can also help you gather the necessary paperwork and guide you through the filing process.Here's a breakdown of what a bankruptcy attorney can do for you:

  • Review your financial situation:  They will analyze your income, debts, and assets to determine the best course of action.
  • Explain your options:  They will discuss the different debt relief options available in Canada and explain the pros and cons of each.
  • Complete the necessary paperwork:  They will assist you in gathering and completing the required documents for filing for bankruptcy or a consumer proposal.
  • Negotiate with creditors:  They can help you negotiate with your creditors to reach a settlement or payment plan.
  • Represent you in court:   If necessary, they will represent you in court hearings related to your bankruptcy case.

Additional Resources for Canadians Facing Debt

Remember:

  • Bankruptcy is a serious decision with long-term consequences.
  • Explore all options with your attorney before proceeding.
  • Filing for bankruptcy may impact your credit score for several years.

By seeking professional guidance and utilizing available resources, you can make informed decisions about your financial future and achieve a path towards debt resolution.

Disclaimer: This article is for informational purposes only and should not be taken as legal advice. Always consult with a qualified bankruptcy attorney before making any decisions about your financial situation. 

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