FAQ

Discharge from Bankruptcy

When I filed bankruptcy I had unpaid student loans. I now have been discharged however, no one from student loans has contacted me. Is it possible that my debt to student loans was written off?

The government may be taking time to start action to collect your debt but interest will continue to accrue. Contact the government through the www.canlearn.ca website to find out the status of your loan. That website will also provide you with a recent summary of options available to people with outstanding student loans.

Our secured creditor has taken no action to realize on the vehicle that we gave as security. Does this mean that the vehicle is ours free of the bank’s charge?

No. You could do a motor vehicles search to see if the bank has secured itself on the vehicle. Their right to security on the vehicle will remain in place until you pay off their loans if such security was part of the loan agreement. It would be a good idea to review your copy of the loan agreement to determine if the vehicle was given as security..

I have previously been bankrupt and we now are in financial difficulty. Is there any way that I can cash in my retirement savings accounts and use the funds to settle my debts?

Recent amendments to the Income Tax Act allowed for redemption of locked-in pension plan RRSPs for people in dire financial situations. We suggest that you discuss the matter with the trust company handling your locked-in pension plan. Please note that the funds withdrawn from the locked-in pension plan are not protected. If the amount of the settlement that you are trying to make is significant, you should seek professional insolvency advice. This could be an ideal situation for filing a proposal funded by part of your exempt pension plan.

Two of my creditors filed Writs against my house after I filed an assignment. What do I need to do to have these Writs removed?

Technically the creditors have no right to obtain judgement against you after you filed your assignment. We suggest you discuss your situation with the Trustee handling your assignment. These creditors may agree to discharge their Writs against your property voluntarily. If they do not, and the Writs are causing you problems and you need them released immediately, you will have to see a lawyer and make arrangements for a special Court application to have the Writs released. When you are released from bankruptcy, all your debts will be discharged and it will not be too difficult for your lawyer to obtain an Order compelling Land Titles to remove the Writs from your property.

What is the effect of a suspended discharge?

A suspended discharge from bankruptcy does not release your from your debts and responsibilities under the Bankruptcy and Insolvency Act until the effective date - the suspended date has passed. Basically with a suspended discharge, you are still bankrupt until the date of the suspension arrives. Prior to that date you cannot get credit or carry on business without disclosing the fact that you are an undischarged bankrupt. If you receive an inheritance or windfall prior to your discharge date, the funds from that windfall will have to be paid to the Trustee. You cannot be the director of a limited company.

What restrictions are there on me getting credit after I have received my discharge?

You can apply for credit anytime. Remember that your new creditor will be able to confirm that you have just been discharged from bankruptcy. One of the advantages of filing bankruptcy was that you were able to prove to yourself that you could live without credit for nine months. Getting credit following bankruptcy will not improve your credit rating. The fact is that the credit application and its rejection would be quite negative on your credit history. Concentrate on applying the skills that you learned while you were bankrupt. We do not believe that you should be seeking credit so soon after your discharge. If you want to build up you credit rating, it would be better to concentrate on your current finances so that there are no further negative reports on your credit bureau. Try to work with a bank or credit union to establish a relationship. Banks are really impressed with discharged bankrupts who are not asking for credit and are doing things like buying RRSP's.

I have previously been bankrupt and am now considering a bankruptcy again. It has been over ten years since my last discharge. Will I be eligible for an automatic discharge?

No. You will be required to make a Court application to get your discharge again. The type of discharge and the terms of the discharge depend a great deal on the circumstances of your first bankruptcy. The Court will set the terms of your second discharge based on the facts. You could receive as little as a ten-day suspended discharge.

I have been discharged from bankruptcy for sometime now. My credit history at the credit bureau seems to be causing me problems. Why doesn’t my discharge wipe my slate clean at the credit bureau?

No one should have promised you that bankruptcy would wipe out the negative comments that your creditors have about you at their credit bureau. In fact all your history, including the fact that you filed bankruptcy will be on your credit bureau. We suggest that you concentrate on developing the skills you learned when you were bankrupt. You can live without credit and you can save what you were paying to your Trustee. You have to earn back your credit rating by being responsible with your banking and avoiding credit as long as possible. If there are no further credit problems reported, the credit bureaus will remove the old credit history because the information on the record is out of date.

How can I get a copy of my discharge papers?

You can obtain a copy of your discharge from the Courthouse, from your trustee or from the Office of the Superintendent of Bankruptcy.

I am dissatisfied with the way that my trustee is handling my files. Is there someway that I can change trustees?

No, you have to use the Trustee that you selected. It is important that when you pick a Trustee that you feel comfortable with the individual or firm and that they understand your problem.

I received a sine die discharge and when I contacted my trustee, he advised me that he required a significant amount of money before he would agree to be re-appointed as my trustee. Is there any other way that I can get my discharge from bankruptcy?

The reason that your discharge was adjourned on a sine die basis was that your were not carrying out your duties and you left your Trustee in a position where he could not advise the Court. Most Trustees in this area advise potential bankrupts about sine die charges and the extra fees relating to the opening of the file after it has been closed. The reappointment fees should not be a surprise and they could have been avoided if you had carried out the duties that were required from you under the Bankruptcy and Insolvency Act. The reappointment fees vary considerably amongst the Trustees. We suggest that you talk to your Trustee and attempt to resolve the problems. If you have to involve a third party, talk to the District Area Superintendent, Office of Superintendent of Bankruptcy. It may be necessary for you to hire a lawyer to make an application for your discharge. Before going to that cost, it’s a very good idea to ensure that there are no outstanding items before the Court.

What is a restitution order? How can I be certain if my all by debts will be discharged when I am discharged from bankruptcy?

A restitution order granted by the Court requires a person to repay funds to someone who has suffered damage, often because of fraud. Restitution orders usually are not released by bankruptcy. You should review the restitution order that you received with an insolvency lawyer to determine if it would be discharged.