What Are The Different Types Of Bankruptcy That Can Be Filed In Canada?

Many people sometimes find themselves in need of debt relief in order to maintain a reasonable lifestyle. This can occur to families that have large amounts of personal debt, small businesses that may have more debt than profits, or large corporations that may no longer have sufficient business management. Fortunately, Canadians can file for bankruptcy to give them the fresh financial start they need. These are the different types of bankruptcy that can be filed in Canada.

Summary Bankruptcy

A summary bankruptcy is commonly filed by individuals who can no longer afford to pay their debts. This type of bankruptcy is also known as personal bankruptcy. It allows those who file to be relieved of their debts by legally giving up their obligation to their creditors. This form of Canadian bankruptcy is very similar to Chapter 7 bankruptcy that is available in the United States.

Consumer Proposal

Another form of bankruptcy, known as a consumer proposal, is also available in Canada. In this process, the person who owes the debt can have their debts restructured so they are more affordable. This can include having the total amount of debts reduced so that payments will be less.

Consumers also have the option of having all their debts consolidated so they have one monthly payment that will be set at an affordable amount. The payment plan may also be set up over a five year period so that the debtor has more time to get the debt repayed without losing any collateral. A consumer proposal is much like the method of debt repayment that occurs during a Chapter 13 bankruptcy in the United States.

Division 1 Proposal/CCAA Filing

This form of bankruptcy is designed for business owners in Canada. However, it is also offered to individuals who owe a large amount of debt that cannot be written off completely or repayed within five years. In this process, the debtor pays back a partial amount of the debts he owes.

Then he is given time to get his finances in order before the remainder must be paid back. This is very much like the Chapter 11 method of bankruptcy that is filed in the United States.

Each of these plans can help individuals and businesses regain control of their finances. Those who are having difficulty paying for their debts may wish to look over with a lawyer, such as Littlejohn Robert H, what each plan has to offer to determine which will be most financially beneficial.

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