Can I File A Bankruptcy In Canada If I Live Abroad?

Jill is a 40-year-old Canadian who moved to Australia in 2011 to resume a new life and a new career.  Although Jill has not accumulated any new debts in Australia, she owes over $60,000 to her Canadian creditors, including the Canada Revenue Agency (CRA), for unpaid personal income taxes, student loans, various credit cards, a line of credit and a bank overdraft. Jill attended a Canadian university more than seven years ago. Now, she would like to file a bankruptcy in Canada to obtain a Stay of Proceedings against her Canadian creditors, stop creditor calls to her parents and obtain a fresh start from her debts should she decide to return to Canada in the future. 

Jill contacted MNP Ltd. with the following questions:

What are the requirements to file a bankruptcy in Canada?
The Bankruptcy and Insolvency Act, (the ‘Act’), sets out the requirements to file an Assignment in Bankruptcy in Canada. Those requirements are as follows:

1. Applicant must not be a bankrupt.

This refers to the fact that a person who is (presently) bankrupt in Canada or elsewhere cannot file a subsequent bankruptcy in Canada until he or she receives a discharge from bankruptcy. In Jill’s case, if she is bankrupt in Canada or elsewhere and not discharged from her bankruptcy, she will not be eligible to file a subsequent bankruptcy in Canada until she is discharged from her (current) bankruptcy.

2. Applicant resides or carries on business in Canada or has property in Canada.

Although Jill does not reside in Canada, if she owns or operates a business in Canada, she will be eligible to file an Assignment in Bankruptcy in Canada. Likewise, if Jill does not carry on a business in Canada but has property in the country such as real estate, RRSPs or other tangible property, she meets the eligibility requirement to file an Assignment in Bankruptcy in Canada.

3. Applicant owes $1,000 to one or more creditors, is unable to pay debts as they become due, has ceased paying debts in the ordinary course of business as they become due or has debts that exceed the fair market value of the individual’s property.

As Jill owes her creditors over $60,000, has not made any payment to her creditors since moving to Australia and has debts that exceed the fair market value of her assets, Jill meets the eligibility requirement to file an Assignment in Bankruptcy in Canada.

Can I file a bankruptcy on my Canadian debts in Australia or do I have to return to Canada to file?

Prior to the filing, the Trustee in Bankruptcy will contact the Office of the Superintendent of Bankruptcy (OSB), to obtain approval of the OSB to file the bankruptcy. As it was unfeasible for Jill to travel to Canada to meet with the Trustee, the Trustee conducted a financial appraisal interview and assessment of Jill’s personal and family situation by telephone. Upon completion of the assessment, the Trustee sent bankruptcy documents to the Canadian Embassy in Australia where Jill attended and met with an Embassy official who acted as a witness to Jill’s signature of the bankruptcy documents. The Embassy returned the documents to the Trustee and the Trustee filed the Assignment in Bankruptcy with the OSB in Canada. The OSB issued a Certificate of Filing to the Trustee and the Trustee sent a Notice of Bankruptcy and Stay of Proceedings to Jill’s creditors informing them of Jill’s bankruptcy.  

In a situation where the individual resides in a country that would make it difficult to attend an approved office of that country to sign the bankruptcy documents, the Trustee, with the approval of the OSB, may arrange for the bankruptcy documents to be signed in the presence of the Trustee by a person who has Power of Attorney for the individual filing the bankruptcy.

Are there any duties that I have to complete if I file a bankruptcy in Canada?
If you file a bankruptcy in Canada you are required to comply with certain duties as a condition of your discharge from bankruptcy. These duties include attending two mandatory financial counselling sessions and reporting your monthly income and expenses to the Trustee for the period of your bankruptcy. In Jill’s case, the Trustee obtained the approval of OSB to conduct the counselling sessions by telephone. 

How much does it cost to declare bankruptcy?
The cost of administering a personal bankruptcy is set by government regulations and is discussed at your initial meeting with a Trustee.

How do I locate a Trustee?
You can find a list of licensed Trustees in your area by searching the Trustee Registry of the Office of the Superintendent of Bankruptcy website http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/home.

You may also contact the MNP office in your region. All of our Trustees are licensed with the government, and will be happy to sit down with you for a free, confidential, no obligation consultation.