Canadian Bankruptcy and Insolvency Laws
Canadian bankruptcy and insolvency laws are determined by two major pieces of federal legislation—the Bankruptcy and Insolvency Act, and the Companies' Creditors Arrangement Act—as well as provincial legislation that for example specifies what type of property an individual debtor is entitled to keep during bankruptcy.
The Bankruptcy and Insolvency Act
The Bankruptcy and Insolvency Act (BIA) governs all bankruptcies and proposals that take place in Canada. Sometimes informally referred to as "the Bankruptcy Act", for individuals it is designed to help "honest but unfortunate debtors" overcome their financial challenges.
The act defines the roles and protects the rights of everybody involved in a bankruptcy or proposal proceeding, including the Superintendent of Bankruptcy, his or her representatives, the court, trustees, creditors, and debtors.
The Companies’ Creditors Arrangement Act
The Companies' Creditors Arrangement Act (CCAA) is federal legislation designed to give financially troubled corporations the opportunity to restructure their affairs in order to avoid bankruptcy. It was enacted in 1933, a time of global economic depression when a company going bankrupt usually meant shareholders' investments disappeared, creditors recovered very little of the debt owing to them, and the "social evil of devastating levels of unemployment" was exacerbated.
The CCAA brings the company and its creditors together under the supervision of the court. The ultimate goal is to reorganize or reach a Plan of Compromise under which the company can continue to do business.
Bankruptcies in Canada are not only governed at the federal level. Each province and territory have specific laws surrounding property exemptions and enforcement of court orders and debt collection. Provincial laws are often relied upon to determine what property you are entitled to keep when you file for bankruptcy.
Alberta’s Civil Enforcement Act dictates Alberta insolvency law, including details about how different types of assets are affected by bankruptcy. Alberta also has an Orderly Payment of Debts Program, which is a debt repayment arrangement that consolidates unsecured debts into one monthly payment with a low interest rate and set payment period.
British Columbia bases bankruptcy, asset management, wage garnishment, and payment option decisions on the provincial laws laid out in the Court Order Enforcement Act.
The Memorials and Executions Act governs bankruptcy and insolvency law in New Brunswick, including what to expect when it comes to mortgages, personal property, and sale of land.
Newfoundland and Labrador
The Judgement Enforcement Act lays out Newfoundland and Labrador’s insolvency laws and provides detailed information on the seizure of property and land, wage garnishment, exemptions, and more.
The Judicature Act is Nova Scotia’s authority on bankruptcy and insolvency in the province. The government also offers an Orderly Payment of Debts Program for anyone considering bankruptcy or a consumer proposal.
Ontario’s bankruptcy laws are governed by the Executions Act, which includes how wage garnishment works, exemptions for property ownership, and more.
Prince Edward Island
The Judgement and Execution Act is Prince Edward Island’s authority on bankruptcy and insolvency procedures. The PEI provincial government also offers an Orderly Payment of Debts Program, which can help you navigate anything from wage garnishment to asset management during the bankruptcy process.
The Code of Civil Procedure dictates Quebec’s bankruptcy and insolvency laws, including what you can and can’t keep if you go bankrupt in Quebec.
The Enforcement of Money Judgement Act and the Farm Security Act both contain information on the impact of going bankrupt in Saskatchewan. The provincial government also provides an Orderly Payment of Debts Program to help navigate the process.
The Exemptions Act dictates what property you are entitled to keep if you go bankrupt in Northwest Territories.
The Exemptions Act dictates what property you are entitled to keep if you go bankrupt in Nunavut.
The Exemptions Act dictates what property you are entitled to keep if you go bankrupt in Yukon.
You’re Not Alone: Work with a Licensed Insolvency Trustee
In order to better understand your rights and responsibilities during bankruptcy, it's important to seek advice from a Licensed Insolvency Trustee. Start by arranging a free, confidential consultation at your local MNP LTD office. We're here to help you choose the right debt solution for your unique situation—whether it's declaring bankruptcy or opting for an alternative process, such as a consumer proposal or debt consolidation loan.