When considering bankruptcy, one of the biggest concerns you may have is what happens to my debts if I file bankruptcy? There are two important dates in bankruptcy, both of which impact your debts.
Date of the bankruptcy filing
At the time your bankruptcy is filed, you will provide your Licensed Insolvency Trustee (LIT) with a list of your debts. Be sure to include both debts that you want to include in the bankruptcy (ie Credit Card debt), and others that you don’t want to (ie. Car loan, mortgage on a house). If you aren’t sure who you owe money to, you might consider obtaining a copy of your credit bureau report or asking your LIT to do so for you.
Your LIT will notify your creditors about the bankruptcy once it is filed, and they are no longer permitted to collect from you. Once your bankruptcy starts, your payments on the debts being included can stop. During the bankruptcy period (usually a 9- or 24- month process, depending on whether you are a first or second time bankrupt), you do not have to make payments on your unsecured debts.
Date of bankruptcy discharge
Once your bankruptcy is complete, you will obtain a certificate of discharge. This means that your debts are ‘discharged’ – gone, erased, eliminated – and you are no longer legally responsible to pay them. However, your bankruptcy discharge does not stop your creditors from contacting co-signors, if any, and asking them to make payments on those debts. Your bankruptcy does not protect any co-signors or guarantors on the accounts.