There are many words and phrases to describe the bankruptcy process, and it can be hard to distinguish American bankruptcy terms like Chapter 7, Chapter 11 and Chapter 13 from what applies here in Canada. It can also be confusing to navigate what applies to personal bankruptcy, business / corporate bankruptcy, or what applies to your situation and what doesn’t.
Bankruptcy Chapters Refer to American Bankruptcy Laws
Some common terminology about "Chapters" does not apply in Canada. Bankruptcy laws in the States are governed by the Code of Laws of the United States of America (USA). The Code has many sections, called Titles, and within various Titles are Chapters.
Whenever bankruptcy information refers to “Chapters,” it is almost certainly American. In the States lawyers are often referred to as attorneys.
Canadian Bankruptcy versus American Bankruptcy Information
To help you figure out if you’re reading Canadian bankruptcy or American bankruptcy information, here are some of the most frequently used terms in the States:
Chapter 7 is the most common type of personal bankruptcy in the United States. Some businesses also file for Chapter 7. The name “Chapter 7” does not apply to personal or business bankruptcies in Canada.
Chapter 11 is also part of the American bankruptcy system and the term “Chapter 11” does not apply to bankruptcies in Canada. A Chapter 11 petition is usually used by businesses and corporations, however some individuals with high debt loads also file a Chapter 11 bankruptcy. Chapter 11 includes a restructuring process, giving a business or individual time to get their financial affairs back in order.
Chapter 13 is the American equivalent to a Canadian Consumer Proposal. In Canada, a Consumer Proposal is administered by a bankruptcy trustee and the process is governed by the Bankruptcy and Insolvency Act. It is, however, not the same as going bankrupt. In the States, a Chapter 13 petition is a form of bankruptcy, and the term “Chapter 13” does not apply in Canada.
How to Get Help with Your Debts - Is Bankruptcy the Right Option for You?
If you have questions about your debts and are trying to decide if bankruptcy is a good option for you, make an appointment to speak with one of our Credit Counsellors. They will answer your questions and provide you with guidance and information so that you can make an informed decision.
A Common Question About Bankruptcy Laws in Canada
Contact Us for More Information About Debt Help - Contact the OSB for More Information About Bankruptcy Laws in Canada
When you're looking for information to solve your debt problems, it is important to not mix up bankruptcy laws from the USA and Canada. Chapters 7, 11, 13 don’t apply to Canadians. Contact the OSB for more information and help with distinguishing which laws apply to you as a Canadian.
If you are struggling to pay your debts and aren't sure if you need to file for bankruptcy, get help determining your options. We would encourage you to view the rest of the articles in this section, including bankruptcy definitions, bankruptcy laws in Canada and the USA (Chapters 7, 11, 13). You could also consult the OSB website for more information.
One of our Credit Counsellors would be happy to answer your questions about how to get out of debt and provide you with guidance so that you can choose the option that's right for you. Our appointments are free, confidential and don’t obligate you to anything. Make an appointment today to speak with a Counsellor over the phone or in person, whatever is easier for you. Knowing how to handle your situation will put your mind at ease. Contact us today by phone at 1-888-527-8999, by email or chat with us online now.
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