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Bankruptcy is a legal status that discharges the debts owed to most creditors. In Canada, the debtor must usually owe at least $1,000 and be unable to pay it back. During the process of bankruptcy, the debtor’s assets are liquidated (turned into cash) and the resulting money is distributed fairly and equally among creditors.
Depending on what province you live in, certain assets are exempt from bankruptcy liquidation. Some debts, such as alimony, child support, court fines, and debts arising from criminal behaviour, are not discharged by the bankruptcy court. The Canadian Revenue Agency has been known to successfully appeal a bankruptcy judgement and revive tax debt. Student loans, in certain circumstances, are also exempt from bankruptcy judgements.
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