In Canada, all debts, anywhere in the world are debts are covered by a bankruptcy or Consumer Proposal (or a Division 1 Proposal). This is also true for tax debts that arise from personal tax debts from the CRA such as GST, un-remitted source deductions or payroll tax. Other tax debts that arise from operating a small business are also included.
As soon as your sign the formal documents with your Licensed Insolvency Trustee there is an immediate Stay of Proceeding, which means that no creditor can continue to collect from you, phone you, or garnish your wages etc – once you have done something formal with a Trustee under the Bankruptcy and Insolvency Act. It takes some time for the information to trickle down to your creditors to stop calling after your have formally assigned. To help speed up this process, answer any collection calls you receive after your assignment and direct them to the office of your trustee.
When you have complete all of your obligations under either a bankruptcy or a Proposal, you are discharged from the formal process. Once you are discharged your debts are extinguished or wiped away legally and you can make a fresh financial start debt free. However, there are some debts that are not discharged or wiped away and these include debts that arose from ;
Debts Not Released in Bankruptcy or Consumer Proposal
- Student Loans less that 7 years old (sometimes this is reduced to 5 Year in the case of Hardship Rules for Student loans)
- Alimony, Child Support payments
- Fraud, Misrepresentation, Theft
- Fines of the Court
- Awards of Damages for intentionally inflicting harm on another person