Assignment Into Bankruptcy - Ways It Can Happen

When an individual or business can no longer keep up with its debt obligations or satisfy its liabilities, it is considered "insolvent". Insolvency is not a formal legal state, but when insolvent, a debtor is capable of becoming bankrupt, which is a formal legal state. There are various possible ways that insolvent debtors can become bankrupt under the Bankruptcy and Insolvency Act (BIA).

Voluntary assignment

Debtors may, of their own accord, decide to assign themselves into bankruptcy and surrender their property to a Licensed Insolvency Trustee. By doing so, they dispose of their property and distribute the proceeds to benefit creditors in exchange for a release from their debts, and provide all creditors with an opportunity to participate in that distribution.