Bankruptcy is a legal process, regulated by the Bankruptcy and Insolvency Act, by which you may be discharged from most of your debts. The purpose of the Act is to permit an honest, but unfortunate, debtor to obtain a discharge from his or her debts, subject to reasonable conditions.
When you declare Bankruptcy, your assets are given to a trustee in bankruptcy who then sells them and distributes the money among your creditors. (Some assets – if they don’t have a lien on them are exempt from seizure – the Trustee will inform you of these as they vary by Province).
Once you declare bankruptcy, your unsecured creditors will not be able to take legal steps to recover their debts from you (such as seizing assets or garnisheeing wages).
Once you are legally bankrupt, you are required to perform the duties of bankrupts as outlined in the Act.