How Bankruptcy Works

Bankruptcy-by-Full-Circle-Total-Debt-SolutionsBankruptcy is an option to consider after all other options have been considered or exhausted. When you work with Full Circle’s Total Debt Solutions Specialists, we assess your current situation and ensure Bankruptcy is the right solution for you; we  support you through the entire process.

Through bankruptcy, a person hopelessly burdened with debt gets that second chance to start fresh. Personal bankruptcy is a legal process, governed by the Government of Canada, the Bankruptcy & Insolvency Act (BIA, “The Act”). The “Act” is designed to permit an honest but unfortunate debtor to obtain relief from his / her debts while treating the Debtor and creditors equally and fairly.

To enter into personal Bankruptcy in Canada, a person must live or do business in Canada, and must be insolvent. To be insolvent means:

  1. To owe at least $1,000.
  2. Not to be able to meet your debts as they are due to be paid.

Because bankruptcy is a legal process, there is a “stay of proceedings” that prevents a garnishment legal action from happening, and stops your creditors from calling.

You may be entitled to an automatic discharge from personal bankruptcy in 9 or 21 months, this depends on income; this is the minimum terms set by the Court to be bankrupt, provided you have never been bankrupt before and you complete various duties and responsibilities.

Your ability to obtain credit in the future could be affected, since Bankruptcy remains on your credit report for six after discharge for first time Bankrupts.

Exceptions to the discharge of all debts

Bankruptcy only deals with unsecured debts – things like credit cards, personal loans, income taxes, overdrafts, etc.

A secured debt such as a car loan or mortgage is not included. Since you have given an asset as collateral, your creditor does not need the bankruptcy process to recover the amount owing to them.

Some unsecured debts are also not discharged in a bankruptcy, such as Student Loans less than 7 years after you stopped going to school and/or any alimony or child support.


  • Tax Debt is included in this process.
  • All collection action by creditors is stopped.
  • All legal action is stopped.
  • All Garnishees of wages are stopped and even collection and or legal action on debts that are not relieved by bankruptcy are stopped.

Disclaimer – we are not lawyers, Trustees in Bankruptcy, nor do we provide legal advice. Should you require legal advice we recommend you contact a lawyer in your location.

If you need help finding the option that will help you reduce your debt payments and get out of debt as quickly as possible, call a certified credit counselor at 1-877-220-3328 or get started online for a free analysis of your financial situation or simply chat with us now. You could be just minutes away from debt relief.

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