Attention Canadians: There are new bankruptcy laws in Canada!

On Sept 18th 2009, the changes to Canadian bankruptcy law that were proposed years ago, finally became law.

While there are mixed reactions to the new bankruptcy amendments, there are still many certainties, with an expected increase in consumer proposal filings being the most significant.

These new insolvency laws correlate with what is a year after year increase in Canadian bankruptcy filings.

Here are the “highlights” to this new bankruptcy legislation:

Excess Income

Any Canadian making $200 or more above the bankruptcy monthly income limit, will be required to remain in bankruptcy for 21 months.

Income Tax in Canada

Canadians that owe income tax debt greater than 75% of their total debt are required to go to court for bankruptcy discharge (this applies when you owe more than $200,000 in tax debt).

Multiple Bankruptcies

Individuals with a previous bankruptcy will not be discharged from bankruptcy for 3 years.

Secured Lenders Rules

New bankruptcy law states that secured lenders in Canada cannot repossess a vehicle or seize an asset because their customer filed bankruptcy (provided they remain up to date on their payments).

Consumer Proposal Law

The new Canadian bankruptcy laws raise the debt limit for consumer proposal in Canada to $250,000, making it easier to file a proposal in Canada. This excludes principal residence mortgage debt.