Declaring bankruptcy in Manitoba can provide relief if your debt has become unmanageable and other solutions haven’t worked. Filing for bankruptcy can stop collection efforts, wage garnishments, and legal actions, giving you breathing room while your financial affairs are addressed. Although bankruptcy will hurt your credit score, it can eliminate many unsecured debts and give you the opportunity to rebuild your financial health over time.
Before filing, it’s essential to understand how bankruptcy in Manitoba works and what it means for your finances.
What Is Bankruptcy In Manitoba?
Bankruptcy is a legal process governed by federal law that helps individuals who cannot repay their debts. In Manitoba, once you officially file, creditors must stop collection activity. This includes lawsuits, collection calls, and wage garnishments.
Most unsecured debts, such as credit cards, lines of credit, and payday loans, can be discharged. However, certain obligations cannot be erased through bankruptcy.
What Isn’t Covered Under Bankruptcy?
Some debts cannot be dealt with under bankruptcy in Manitoba, including the following:
- Mortgages
- Home equity loans
- Secured lines of credit
- Secured personal loans
- Car loans
- Federal student loans (if you finished school less than 7 years ago)
- Court-imposed fines and penalties
Learn more: Bankruptcy
Who Can File For Bankruptcy In Manitoba?
You must meet specific criteria to qualify for bankruptcy in Manitoba, including the following:
- Be a resident of Canada
- Owe a minimum of $1,000 in unsecured debt
- Have debts that exceed the value of your valuable assets
- Be unable to meet your financial obligations as they come due
If you meet these requirements, bankruptcy may be one option to consider.
The Bankruptcy Process In Manitoba: What To Expect
If you decide to declare bankruptcy in Manitoba, here’s what typically happens:
Consult A Licensed Insolvency Trustee (LIT)
You cannot file for bankruptcy on your own. A Licensed Insolvency Trustee is needed to administer the process, prepare your paperwork, and ensure compliance with federal regulations. They act as an intermediary between you and your creditors.
Learn more: What Is A Licensed Insolvency Trustee?
Financial Review
Your trustee will examine your full financial picture, including your income, debts, assets, and expenses. This assessment helps determine whether bankruptcy is appropriate for you, or if another solution, such as a consumer proposal, may be more suitable.
Complete The Paperwork
Your trustee will then prepare the required documents. You’ll need to disclose complete financial details, including the following:
- Assignment of Assets: Authorizes the trustee to sell non-exempt assets for the benefit of creditors.
- Statement of Affairs: Provides a detailed summary of your debts, income, property, and liabilities.
Your LIT will then file your documents with the Office of the Superintendent of Bankruptcy, and your creditors are formally notified.
Stay Of Proceedings
Once filed, an automatic stay of proceedings takes effect. This legal protection stops most collection actions, including lawsuits and wage garnishments. Creditors must communicate directly with your trustee instead of contacting you.
Fulfill Your Responsibilities
To receive your discharge, you must do the following:
- Surrender any non-exempt assets
- Attend two mandatory financial counselling sessions
- Submit monthly income and expense reports
- Make required monthly payments, including surplus income payments if applicable
Discharge From Bankruptcy
If this is your first bankruptcy and all requirements are met, you may be discharged after 9 months. If surplus income is applicable, the period can extend to 21 months. After discharge, eligible unsecured debts are eliminated.
Where Can I File For Bankruptcy In Manitoba?
Here are a few firms in Manitoba that can help you file for bankruptcy:
| BDO Canada | – 201 Portage Ave 26th Floor, Winnipeg, MB – 148 10th St, Brandon, MB | Learn More |
| Consolidated Credit | – 201 Portage Avenue, Winnipeg, MN | Learn More |
| MNP | – 242 Hargrave Street, Suite 1200, Winnipeg, MB – 1401 Princess Avenue, Brandon, MB | Learn More |
How Much Does It Cost to File For Bankruptcy In Manitoba?
Bankruptcy is not free. Costs vary depending on income, household size, and assets.
In Canada, the base cost generally starts around $1,800. This amount can often be paid in installments, such as $200 per month over nine months. The fee covers administrative costs, government levies, and trustee compensation.
To understand your exact cost, you’ll need to consult with a trustee directly.
| What About Surplus Income? Surplus income can increase both the cost and duration of bankruptcy. If your income exceeds specific thresholds based on your household size, you’ll need to pay extra. The higher your income above the limit, the larger your required payments may be. This can also extend the bankruptcy period. |
Learn more: How Much Does It Cost To File For Bankruptcy In Canada?
Can I File For Bankruptcy Online In Manitoba?
While many trustees offer virtual consultations and allow you to complete paperwork electronically, you cannot file for bankruptcy online on your own. The process must go through an LIT. That said, electronic signatures and remote meetings are often available for convenience.
Bankruptcy Laws In Manitoba
Although bankruptcy is federal, certain provincial laws in Manitoba affect how assets are treated. More specifically, the Executions Act in Manitoba establishes which assets are protected from seizure during bankruptcy1. These exemptions prevent creditors from taking everything you own and helps you preserve a minimum standard of living.
Will You Lose Your Home In Bankruptcy?
Many people worry about losing their home if they file for bankruptcy. While bankruptcy may require surrendering some assets, Manitoba law provides exemptions that protect certain assets, including the following2:
- Up to $2,500 in equity in your principal residence
- Up to $3,000 in vehicle equity
- Household furnishings and appliances up to certain limits
- Tools of the trade needed to earn income, subject to value limits
- Clothing necessary for you and your dependents
- Certain pension plans and RRSPs (with exceptions for recent contributions)
If the equity in an asset exceeds the exemption amount, you may need to pay the difference or surrender the asset.
Learn more: Will I Lose My House If I File For Bankruptcy In Canada?
How Does Bankruptcy Impact Your Credit In Manitoba?
Bankruptcy significantly damages your credit score. Once filed, the credit bureaus are notified and a public record is added to your report.
For a first bankruptcy, the record typically remains for 6 to 7 years after discharge. A second bankruptcy can stay on your credit report for up to 14 years.
During this time, securing a loan or credit product can be challenging. Even if you are approved, you’ll face higher interest rates and stricter borrowing limits due to the increased risk to lenders.
Learn more: How Long Does Credit Information Stay On Your Credit Report?
Bottom Line
Filing for bankruptcy in Manitoba can provide debt relief if you’re unable to manage your financial obligations. While it can eliminate many unsecured debts and stop collection efforts, it also has long-term effects on your credit health and may involve surrendering certain assets. Speaking with a Licensed Insolvency Trustee will help you evaluate your options and determine whether bankruptcy is the best solution for you.
FAQs
Will I lose my home or car if I file for bankruptcy?
Are my RRSPs protected from seizure when I file for bankruptcy?
How does bankruptcy affect my credit score?
Are there alternatives to bankruptcy in Manitoba?
How much does it cost to file for bankruptcy in Manitoba?
References:
1Government of Manitoba. Residential Tenancies Branch. Gov.mb.ca
2MNP. (2012, January 4). Exempt Assets When Filing For Bankruptcy In Manitoba. MNPDebt.ca
