Bankruptcy Court and What You Should Expect

Barrie Bankruptcy Court

Since filing for bankruptcy in Canada is a legal process, as outlined by the Bankruptcy and Insolvency Act (BIA), you may be required to appear in court. In Canada, the ability to exercise the bankruptcy process falls under the provincial Superior Court’s jurisdiction. You typically would attend a hearing in a Bankruptcy Court to appeal for a discharge.

In your first or second bankruptcy, you need to:

  • Complete all of the duties required for filing for bankruptcy as outlined by your trustee
  • And if no one opposes the discharge.

Throughout the process of filing for bankruptcy, you are bound to complete certain duties – which includes attending two sessions for credit counselling. Not completing these duties is a sure-fire way to wind up in court. To add insult to injury, if you don’t complete them, you will not only have to go to court, but offer up an explanation as to why they weren’t finished.

If you are eligible, you will be given a copy of the discharge papers by your trustee. However, if you do not qualify, your trustee will have to apply for a hearing with the court to review your discharge.

In Canada, there are four types of discharges: Automatic Discharge, Order of Absolute Discharge, Order of Conditional Discharge, and Order of Suspended Bankruptcy Discharge.

An Automatic Discharge will be appointed if you have completed all of your duties on time, and there were no objections to the discharge. No court hearing is required in this case.

An Order of Absolute Discharge will officially rid you of your debts that were incurred prior to filing for bankruptcy. Exceptions are taken into consideration under the BIA.

An Order of Conditional Discharge means you will be discharged of your debt provided you meet the conditions set by the court.

An Order of Suspended Bankruptcy Charge means the court has delayed the discharge until a set date. This is typically due to an opposition to the discharge on the grounds of a criminal investigation, or failure in completing any and all duties.

Don’t place all of your worries on the notion that your creditor will oppose your discharge. In fact, an opposition occurs less than 1 out of 100 bankruptcies filed in Canada. A creditor would really only oppose the discharge if they believe they can convince the court to require you to make extra payments, or perform extra duties – however, this is a rarity due to the fact that your duties are laid out in the BIA.

You should note that on your third bankruptcy (and fingers crossed you don’t come to that), you will not be eligible for an automatic discharge. You will now have to go to bankruptcy court for a discharge hearing in any of the other three categories.

If you have any questions regarding bankruptcy, debt or help handling your personal finances, give us a call toll free at 1-888-504-1511, or visit us on the web at www.allentrustee.ca.

What is Your Role in Filing for Bankruptcy?

Filing For Bankruptcy Barrie If you have decided it’s time to throw in the towel by declaring bankruptcy, one way to make the process less stressful than it already is would be to educate yourself on your role in filing for bankruptcy. When you declare bankruptcy, you have set duties and responsibilities you must comply with in order to not commit any offenses under the Bankruptcy and Insolvency Act. If you commit an offense, you could not only face a hefty fine, but also imprisonment for upwards of five (5) years.

Start by handing over your assets to your bankruptcy trustee. You will also have to hand over all credit cards issued to you for cancellation. Your Trustee will also need to obtain all of the records relating to your affairs.

Compile a formal list of your liabilities and assets, which should include the names of your creditors, addresses, account numbers and debt amounts. You should also note any of your assets you have sold in the year leading up to your bankruptcy declaration, and any assets you have obtained as a gift in the last five year prior. Your Trustee will need the necessary information to file income tax returns, as well as a monthly income and expense statement. You are also required to report inheritances or lottery winnings to your Trustee.

Your Trustee will begin arranging meetings with your creditors, and you will be required to attend if you are called upon. You will also need to attend at least two counseling sessions, which are set up by your Trustee. If you have a change in address or telephone number during the time of your bankruptcy filing, you are required to inform your Trustee immediately.

While it all seems like an incredibly stressful process, you have to keep your head together. If you miss anything, make any mistakes or purposely leave something out of your bankruptcy claim, you can be convicted with a fine or jail time.

You are at risk of conviction if you fail to follow any and all of the requirements previously mentioned, as well as falsifying statements, hiding or destroying property / records, obtaining any kind of credit over $1000 in the time of your bankruptcy, falsely obtaining credit, engaging in any sort of trade or business without full disclosure to your Trustee, and refusing to answer questions truthfully during an examination under oath. These offenses carry fines and/or jail time, depending on their severity. Your Trustee is there to guide you through the process, so if you feel confused or overwhelmed; it always helps to just ask questions.

If you are considering filing for bankruptcy or would like to know some of your other bankruptcy alternatives, feel free to contact one of our four offices located in Toronto, Barrie, Collingwood and Owen Sound.

What is Surplus Income?

I know you are saying – there is no way I have ANY surplus income! However, when you file for bankruptcy, the regulatory body that oversees bankruptcy has established levels of income that, if you make over these amounts, a portion of your income has to be paid to the trustee toward the creditors in your bankruptcy estate.

The Superintendent of Bankruptcy has established that the amount you are required to pay if you are bankrupt is based on your family income, and that amount is adjusted for inflation each year by the government. The limits this year increased by about 2.8% from last year.

If you, combined with net earnings (if any) of any other family member who live with you, earn more than the limit allowed by the government (based on the number of family members in the household), you pay half of the amount you are over the limit each month during your bankruptcy. Also, the time of your bankruptcy is extended by twelve months.

For example, if there are two family members in the household, the combined net monthly income (after taxes) can be up to $2,597 before you have surplus income.

If the surplus income you have to pay it too much, we can review with you the alternative of a consumer proposal to deal with your debt problems. Surplus income is not required to be calculated or paid with these.

The surplus income rules are complicated over and above what is shown above – we suggest you read our detailed explanation of surplus income

Please call us at 416-504-1511 or 888-504-1511 or 05-443-4473 to review your situation and options – our consultation will be free.

Bankruptcy Rate in 2011 and 2012

The Office of the Superintendent of Bankruptcy recently released bankruptcy statistics for the last quarter of 2011 and for the
first three months of 2012. Here is a quick summary:

In Canada in 2011 personal bankruptcies dropped by 16%, while
consumer proposals increased by 6.4%. Overall, there were 77,993 personal
bankruptcy filings, and 45,006 consumer proposals filed, for a total of 122,999
filings, the lowest number since 2008.

In Ontario in 2011 personal bankruptcy filings dropped by 22.6%,
while consumer proposals increased by 5.6%. Overall there were 25,529 personal
bankruptcies, and 24,931 consumer proposals, for a total of 50,460 filings, the
lowest number since 2008.

A reduction in the number of bankruptcy filings is generally good news;
it usually implies that consumers are more able to handle their debts.

The only troubling signs are that the number of monthly filings in
Ontario are increasing. In Ontario the total number of filings by consumers
were:

  • 3,496 in January 2012
  • 4,140 in February 2012
  • 4,333 in March 2012

At Don Allen & Associates Inc., our May and June were very busy so we predict that when the numbers for the spring are released, there will  continue to be an increase in the number of filings.

If you are experiencing financial problems, you are not alone. We
help people who have experienced a job loss, marriage break up, or medical
issues that have caused debt problems, so if you are unable to manage your
debt, call us at 800-504-1511 or email us at info@allentrustee.ca and we will review with you your options at no charge.