You may be contemplating filing an assignment in bankruptcy or a consumer proposal and are wondering when and where you should start the process.
You will determine when it is time to start the process and which trustee in bankruptcy you choose to assist you. The Bankruptcy and Insolvency Act determines where geographically you need to start the process.
In determining when you should be looking to resolve your debt problems, the sooner you start the process, the better off you will be in both the short and long term. For example, if you have collection agents calling you or lawyers sending letters to you regarding pending legal action to collect amounts you owe to your creditors, or if the Canada Revenue Agency (CRA) is pursuing you for unpaid taxes, these would be some of the indicators that you need to take action. The consequences of not facing your debt problems under these circumstances can make an already difficult situation worse.
Creditors may obtain judgments against you and enforce the judgments through garnishment of your wages, seizure of funds in your bank account or registering the judgments against your home. CRA can obtain a certificate of judgment and register this certificate against all of your assets.
Although a bankruptcy or consumer proposal filing may stop the garnishment of future wages, stop future seizure of funds from your bank account and have judgments removed from your property, you have lost the use of the seized or garnished assets already taken pursuant to the judgment. CRA’s certificate of judgment does not, however, get removed from your property until the full amount owed to CRA is paid if it has been registered prior to the bankruptcy or consumer proposal.
On top of these problems, your mortgage lender may not look too favourably about renewing a mortgage when there are other registrations against the property.
In terms of where you should be filing an assignment in bankruptcy or lodging a consumer proposal, the BIA contains a provision that refers to the locality of the debtor. This is defined in the statute as the principal place:
• Where the debtor has carried on business during the year immediately preceding the date of the initial bankruptcy event,
• Where the debtor has resided during the year immediately preceding the date of the initial bankruptcy event, or
• In cases not coming within the above criteria, where the greater portion of the property of the debtor is situated.
For most people, this is a straightforward issue. There may be situations, however, where an individual may be working in Manitoba but has their principal residence and property in another province. Under these circumstances, the individual would most likely have to start the process in their home province.
The above is not a complete treatment of the subject. A trustee or legal counsel should be consulted to obtain more detailed information on this subject.