Under the Bankruptcy and Insolvency Act, a reasonable and honest individual is given the chance to be released of his/her debts by declaring bankruptcy.
At the end of nine months, if you perform certain duties required of you by law, your debts will be discharged or wiped out subject to certain exceptions. It is intended to allow you to make a fresh start.
The bankruptcy gives you protection against phone calls from your creditors; wages will no longer be garnisheed; and your utilities will not be cut off.
Generally, you are allowed to keep basic furniture and your personal effects when you go bankrupt, and under certain circumstances you may even be allowed to keep your car; your house/trailer, RRSPs and life insurance policy.
Some debts such as student loans, fines and fraud will not be discharged.