How does personal bankruptcy work?
Someone who cannot pay their bills and debts and is unable to file a consumer proposal to creditors may be forced to file for personal bankruptcy. In exchange for having all of their unsecured debts wiped clean, they surrender everything they own to a bankruptcy trustee. Although a set dollar value of certain things can be kept – these vary by province but include some personal possessions, vehicles, furnishings and tools of a trade – everything else the bankrupt person owns is sold to repay creditors. Depending on the circumstances, the person may be able to keep their home and car. A personal bankruptcy will remain on an individual’s Equifax credit report for six years after they are discharged. At the end of the six years, it gets wiped clean. * Note: This quote attributed to Alan Spergel has been corrected from the earlier version.
