What is the Bankruptcy and Insolvency Act?
If you ever have significant trouble paying your bills and become insolvent, you may consider filing for bankruptcy. Doing so will eliminate all of your debts to help you start over, financially speaking. By claiming bankruptcy, you can finally be rid of all your debt that continues to mount and stop all the collection calls.
What happens when you can’t make your loan payments? Find out here.
What is Bankruptcy?
Bankruptcy is a process governed by provincial and federal law that is designed to alleviate unfortunate debtors from their mounting debts. A Licensed Insolvency Trustee is appointed to consumers who file for bankruptcy
By the end of the process, the individual who initially filed for bankruptcy is released from their debts (with certain exceptions).
Bankruptcy filings are governed by the Bankruptcy and Insolvency Act (BIA), a federal law that oversees bankruptcy filings in Canada. Bankruptcy is also governed by individual provincial laws as well. That said, the federal BIA would take precedence over any provincial laws should there ever be a dispute between the two.
What is the Bankruptcy and Insolvency Act?
Basically, the Bankruptcy and Insolvency Act is a federal statute that manages the laws on bankruptcy in Canada, as well as consumer proposals. The government of Canada established this Act as a means of assisting Canadians who have fallen upon hard financial times and are unable to manage their current debt load.
Read this to learn if the Federal Government provides debt relief.
Essentially, the goal of the Bankruptcy and Insolvency Act is to protect those who file for bankruptcy and the creditors they owe. It also keeps the court and Licensed Insolvency Trustees up-to-date on their obligations, duties, and powers.
What Does the Bankruptcy Insolvency Act Govern?
There are all sorts of items that the Act governs, including the following:
- Obligations and responsibilities of trustees and the court
- How to apply for bankruptcy
- Consumer proposals to creditors
- Roles of the consumer in both bankruptcy and consumer proposals
- How properties are dealt with
- How assets are handled by trustees and creditors
- Ramifications of not following proper protocol during bankruptcy proceedings
- Alternatives to bankruptcy
- How security firms are dealt with
- How to handle international bankruptcy filings
Why Does the Bankruptcy Insolvency Act Exist?
This Act was established in order to help consumers resolve their debt issues. While there are several other avenues that they may pursue in order to settle their debt, bankruptcy is often the last resort. There are plenty of reasons why consumers may choose bankruptcy over other alternatives, such as:
- Job loss
- Medical issues
Any situation that places consumers in a position to be unable to pay their debt obligations may force them to seek out measures to deal with their debt and eliminate it altogether. Bankruptcy can help with this and the Bankruptcy Insolvency Act is meant to help consumers facilitate such a process.
Click here to learn how much will it cost you to declare bankruptcy.
Not only does the act protect consumers, it also helps ensure that any creditors who are owed money are treated fairly as well. The Act protects creditors’ right to recoup as much money owed to them as possible.
For some information about bankruptcy in Ontario, check this out.
As far as creditors are concerned, they might have to write off some or all of a debt that is owed to them. That said, the Bankruptcy and Insolvency Act ensures a fair distribution of assets and money to creditors while still giving consumers the chance to get rid of debt, and maintain a decent standard of living. It also ensures that other creditors are not being treated more favourably than others.
When a consumer files for bankruptcy, all the creditors are treated equally with one never being favoured over another. All creditors involved are required to follow the same rules under the Bankruptcy and Insolvency Act.
Filed for bankruptcy? Read this to discover some ways of rebuilding your credit.
The rules under the Bankruptcy and Insolvency Act have been modified over the years and are always revisited to ensure that they continue to treat both consumers and creditors as fairly as possible during bankruptcy filings. Find out more about more about how bankruptcy might help you deal with your debts by consulting with a licensed insolvency trustee.