If mounting debt payments and soaring interest rates are weighing you down, you’re not alone. Many Quebecers are facing the same financial challenges. In many cases, even a small dip in income can cause your debt to spiral out of control.
If you’ve already explored options like credit counselling or debt settlement and haven’t found relief, bankruptcy may feel like the only remaining option. But before taking that step, it’s important to understand what bankruptcy really means and how it could affect your financial future. Read on to find out more about filing for bankruptcy in Quebec.
What Is Bankruptcy?
Bankruptcy is a legal process that helps individuals eliminate most unsecured debts when they can no longer meet their financial obligations. It’s administered by a Licensed Insolvency Trustee (LIT), who manages the sale of non-exempt assets and distributes the proceeds to creditors. Once discharged, you’ll be released from most of your debts, allowing you to have a fresh financial start.
Does Bankruptcy Eliminate All Debts?
No, bankruptcy in Quebec does not forgive all debts. While most unsecured debts are discharged, certain debts still remain payable.
Debts Typically Discharged
Bankruptcy typically eliminates unsecured debts, which means they aren’t tied to specific assets, like a house or car. Unsecured debts that are typically handled in a bankruptcy include the following:
- Credit card balances
- Personal loans
- Lines of credit
- Payday loans
- Utility bills
- Unsecured tax debts (in many cases)
Debts Not Forgiven
Certain debts are excluded from discharge in Quebec, including the following:
- Student loans less than 7 years old
- Child support and alimony
- Court fines
- Debts from fraud or misrepresentation
- Secured debts (ie. mortgage or car loan) unless you surrender the asset
Learn more: Bankruptcy
Who Can File For Bankruptcy In Quebec?
To file for personal bankruptcy in Quebec, you must meet the following conditions:
- Owe At Least $1,000 In Unsecured Debt: This includes credit cards, personal loans, payday loans, and other debts not tied to specific assets.
- Be Insolvent: This means you’re unable to meet your financial obligations as they become due, and the total value of your debts exceeds the value of your assets.
- Live In Canada: You must be a resident of Canada to file for bankruptcy.
- Work With A Licensed Insolvency Trustee: Only a federally licensed trustee can legally file and administer your bankruptcy. They will assess your financial situation and guide you through the process.
Bankruptcy In Quebec: A Step-By-Step Breakdown
If you’re considering filing for bankruptcy, here’s a breakdown of how the process works in Quebec.
Connect With A Licensed Insolvency Trustee
Filing for bankruptcy begins with a consultation with a Licensed Insolvency Trustee, which is a professional authorized to administer bankruptcies. They act as a neutral party, ensuring both you and your creditors are treated fairly under Canadian law.
Review Your Financial Health
Before moving forward, your trustee will conduct a thorough review of your financial situation. This includes assessing your income, debts, and assets to determine whether you’re insolvent.
Initiate The Bankruptcy Process
If bankruptcy is considered appropriate in your situation, your trustee will prepare the necessary legal paperwork. You’ll be asked to provide detailed financial information, which will be used to complete the following documents:
- Assignment Of Assets: Grants the trustee authority to manage and sell non-exempt assets to repay creditors.
- Statement Of Affairs: A detailed summary of your financial status, including debts, income, and assets.
Once signed, your bankruptcy is officially filed with the Office of the Superintendent of Bankruptcy (OSB), and your creditors are formally notified.
Legal Protection Begins
Once you file for bankruptcy, you’re immediately protected against collection actions by a stay of proceedings. That means you’ll no longer be threatened with lawsuits or wage garnishment.
Meet Your Legal Responsibilities
To successfully complete bankruptcy, you must fulfill several obligations:
- Surrender Non-Exempt Assets: Items not covered under provincial exemption limits may be sold to repay your debts.
- Attend Financial Counselling: You’ll participate in two mandatory sessions focused on budgeting, credit rebuilding, and financial literacy.
- Submit Monthly Reports: You’ll provide regular updates on your income and expenses to help your trustee monitor your financial progress.
- Make Required Payments: You’ll contribute a fixed monthly amount. If your income exceeds a specific threshold, surplus income payments may apply, which will extend the bankruptcy period.
Get Discharged
If this is your first bankruptcy and you’ve met all requirements, you may be eligible for an automatic discharge after 9 months. However, if surplus income rules apply, the process may extend to 21 months.
Once discharged, your unsecured debts are erased, giving you a clean slate to rebuild your financial future.
| Life After Bankruptcy While bankruptcy offers relief, it also significantly impacts your credit score and financial health. It will typically remain on your credit report for 7 years. During this time, rebuilding your credit through responsible financial habits is key. |
Who Can Help File For Bankruptcy In Quebec?
As mentioned, an LIT must administer bankruptcy on behalf of those looking to file. In Quebec, several LITs are available to help, including the following:
| MNP Ltd. | – 2505, boul. Laurier, Bureau 600, Québec, QC, G1V 2L28 – 200, Décarie, bureau 190 Montreal, QC, H4P 2P5 | Learn More |
| Pierre Roy Debt Solutions | – 6662 St-Denis, Bureau A, Montreal, QC H2S 2R9 – 3107, avenue des Hôtels, Québec, QC G1W 4W5 | Learn More |
| Jean Fortin & Associés | – 1173, boul. Charest Ouest, bureau 300-3, Québec, QC G1N 2C9 – 853, boul. de Maisonneuve Est, bureau 202, Montréal, QC H2L 1Y8 | Learn More |
Can You File For Bankruptcy Online In Quebec?
No, you cannot file for bankruptcy entirely online in Quebec. While many trustees offer virtual consultations and digital document handling, the actual filing must be done through a federally authorized trustee.
What You Can Do Online:
- Book a consultation with a Licensed Insolvency Trustee
- Submit financial documents electronically
- Attend credit counselling sessions virtually
- Sign documents digitally (in many cases)
| Tip: Get Expert Guidance Navigating bankruptcy can be challenging, so it’s wise to seek support from a qualified professional. A legal advisor can walk you through your options and ensure your rights are protected. But hiring a lawyer may not be financially feasible. In this case, you may be eligible for free or low-cost legal assistance through organizations in Quebec, like Justice Pro Bono, which connects individuals with volunteer lawyers who offer support to those facing financial hardship. |
How Much Does It Cost To File For Bankruptcy In Quebec?
The exact cost of declaring bankruptcy in Quebec depends on your financial profile, including your earnings, assets, and debt load. To understand your specific costs, you’ll need to consult with a trustee who will assess your situation and explain the fee structure.
That said, most people who file for bankruptcy pay at least $1,800, which can be paid at all at once or over the duration of the bankruptcy.
What’s Included in Bankruptcy Fees?
When you file for bankruptcy, your costs typically cover:
- Professional services provided by your LIT
- Administrative and processing fees
- Court filing charges
All trustee fees are regulated by the OSB to maintain transparency and fairness.
| What About Surplus Income? If your monthly income exceeds a certain amount, you may be required to make surplus income payments. These are additional contributions you’ll need to make based on how much you earn above the limit. These payments can significantly increase the overall cost of your bankruptcy and may also extend the duration of the process. In Short: The more you earn, the more you may be required to pay. |
Learn more: How Much Does It Cost To File For Bankruptcy?
Quebec Bankruptcy Laws
While bankruptcy in Quebec is governed under federal laws, certain provincial regulations deal with property exemptions, court orders, and debt collection.
In Quebec, the Code of Civil Procedure governs the rules surrounding bankruptcy and insolvency in Quebec, including which assets you’re allowed to keep and which may be surrendered if you declare bankruptcy.
What Assets Will You Lose In Bankruptcy In Quebec?
You might assume that you’ll lose everything — including your house and car — when you file for bankruptcy. But while some assets may be vulnerable, you may not necessarily lose everything. The law provides specific exemptions to protect certain essentials needed for daily living and work.
Here’s a look at what may be protected from seizure during bankruptcy in Quebec:
| Household furniture and appliances | Up to $6,000 |
| Food, clothing, and fuel | No limit |
| Tools of the trade | Tools needed for work |
| Vehicle | One car needed for work |
| Medical Aids | No limit |
| RRSPs | Exempt, except for contributions made in the last 12 months |
Will I Lose My House?
In Quebec, your primary residence may be protected from seizure if the total amount you owe in debt is less than $20,000, though certain exceptions may apply. Otherwise, none of the equity in your home is protected in bankruptcy in Quebec, unlike other provinces.
Learn more: Will I Lose My House If I File For Bankruptcy In Canada?
Will Bankruptcy Affect My Credit Score?
Yes, your credit score will be significantly impacted when you file for bankruptcy in Quebec.
After you declare bankruptcy, credit reporting agencies are informed, and a record of the filing is added to your credit report. For a first-time bankruptcy, this note typically stays on your file for 6 or 7 years after discharge. For a second bankruptcy, it can remain for up to 14 years. During this period, your ability to qualify for new credit, such as a mortgage or car loan, will be significantly limited.
If you do find a lender willing to work with you, expect to face higher interest rates due to the increased risk associated with your credit history.
Final Thoughts
Filing for bankruptcy in Quebec is a serious decision, but it can offer a fresh start if you’re overwhelmed by debt. With the right guidance, it’s possible to navigate the process and start rebuilding your financial future. Work with the right team to ensure you’re protected while meeting all your obligations.
