Learn about filing for bankruptcy

If you have a lot of debt and have trouble paying it off, you may file for bankruptcy.

To do this:

• you sign over your assets to a licensed insolvency trustee, except those exempt by law, such as household goods and clothing; and
• the licensed insolvency trustee will sell your assets and use the funds to settle your debt.

Personal bankruptcy falls under federal law, the Bankruptcy and Insolvency Act.

Bankruptcy can affect your credit rating because it stays on your record for a number of years. This depends on if you:

• are a first-time bankrupt; or 
• have previously filed for bankruptcy.

Who can file for bankruptcy

You may file for bankruptcy if you:

• have lived or done business in Canada in the last year; and 
• are insolvent.

Insolvent means you:

• owe at least $1,000; and
• are not able to pay your debts.

What happens to your debt

Debt is divided into 2 types: secured and unsecured. 

Secured debt

Secured debt is tied to assets like mortgages or car loans. If you miss payments, the lender can take possession of the asset. Bankruptcy does not wipe out secured debts. For many people, property and vehicles are their most valuable possessions.

The value of exempted items :

• determines whether you can keep an item; and 
• establishes how much money you keep if the item is seized and sold during bankruptcy.

Unsecured debt

Unsecured debts, like credit card debt, are partially or completely released during bankruptcy.

Child support payments

Child support payments are never forgiven during bankruptcy.

How long bankruptcy lasts

It depends on your circumstances. It can be as little as 9 months if you are filing for bankruptcy for the 1st time.

Exemptions from bankruptcy process

Items exempted without limits are:

• medical equipment; and
• social assistance payments.

Items exempted with limits include:

• 1 personal vehicle;
• tools necessary for work; and
• equipment used for hunting, trapping or fishing.

File for bankruptcy

If you decide to file for bankruptcy, a licensed insolvency trustee must handle the process.

Select a trustee who is licensed to practice in the Yukon. Look at the list of licensed insolvency trustees. You can also look in the Yellow Pages of your phone directory under "Bankruptcies — Trustees" for the Yukon. 

Since trustees are located outside of the Yukon, they accept collect calls.