The bankruptcy process is available for individuals or businesses that owe money to banks, companies or individuals who cannot pay the bills or make their financial commitments. A bankruptcy has to be filed though a Licensed Insolvency Trustee.
What does Filing for Bankruptcy Mean?
Bankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Wikipedia
Bankruptcies in Canada
The Canadian government defines bankruptcy as:
What is Unsecured Credit in a Bankruptcy
Unsecured credit is credit or loans where the debtor, (the person who owes the money) did not secure the debt or loan to an asset. This means the money owed is not secured by a piece of property that is worth something. Unsecured debt can be eliminated in a bankruptcy.
You can also include secured debt, like a car loan or a mortgage, but if you want to keep those assets, you must continue to pay the lender under the existing terms of the loan you signed with them. Although filing for bankruptcy does have advantages, before you consider a bankruptcy we’d like to discuss your situation and help you find the best financial option for you.
There are alternatives to bankruptcy and the team at Yanch Dey & Associates Ltd. can discuss your options, like debt counselling and consumer proposal. Call now to speak with a Licensed Insolvency Trustee to discuss your case.
Sole Proprietor Bankruptcy
Owners of sole proprietorships or partnerships are responsible for the debts of the business and the personal assets of themselves and their partners. The assets of the business and the owner’s personal assets are grouped together. This becomes a personal bankruptcy.
An incorporated business gives a small business owner a liability protection. In this case, a bankruptcy would not affect them personally.
Incorporated Company Bankruptcy
An Incorporated company is a legal entity. An incorporated company can own things and receive credit or loans, but they are their own being. The owners are shareholders of the incorporated company but they do not own the property or incur the debts of the company. This means, when an incorporated company goes bankrupt only the incorporated company is responsible for any losses – not the owners or directors of the company.
The shareholders credit is not affected when the company goes bankrupt, only the company. Oftentimes the bankrupt company doesn’t operate afterwards and the assets are sold.
Going bankrupt or starting a bankruptcy is basically the same; the company is forced into or voluntarily seeks bankruptcy protection. Furthermore, all of the company’s property assets are turned over to the Licensed Insolvency Trustee, who then sells the property of the bankrupt company and distributes the money to any creditors.
Employees of the Bankrupt Company
The Licensed Insolvency Trustee will review the payroll records and officially notify your employees that the company has gone bankrupt. As employees of a bankrupt corporation Service Canada has a program that ensures all employees are reimbursed for all or part of their wages. They will also address severance, termination pay and any outstanding holiday pay.
The staff and Licensed Insolvency Trustee of Yanch Dey & Associates Ltd. are interested in helping you with your financial issues. We offer a free consultation for you to come and discuss your issues. Many times just talking about your issues will help you to proceed and get the help you need. Call now to discuss your finances.
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This site is for information only and is not meant to replace qualified legal advice by a Licensed Insolvency Trustee the writers shall not be held responsible for any information that may be incorrect or out of date in regards to what is bankruptcy and bankruptcy issues. The owners of this website recommend that anyone wishing to learn about how a trustee can deal with your financial issues should contact our office.