FAQ

Bankruptcy - Procedures

Who can file bankruptcy or make a proposal?

You can file bankruptcy or make a proposal if:

• you are not presently bankrupt and;
• you owe at least $1,000 and;
• you are not able to meet your regular payments as they become due; or
• you would not be able to pay all of your debts if all of the assets you are not allowed to keep are sold.

Your company, partnership, or business may also file bankruptcy or make a proposal if it meets the above requirements.

There are special steps to be followed by someone who is bankrupt and wants to file a proposal. It is worthwhile discussing these steps with the Trustee involved in the bankruptcy.

You should be aware that any unsecured creditor to whom you owe more than $1,000 could try to force you into bankruptcy. This is called a petition for a bankruptcy order. In this case, the creditor must prove that you have committed an act of bankruptcy, such as not paying your bills as they came due. The court reviews the facts and, if the petition is allowed, issues a bankruptcy order that places you in bankruptcy. The petitioning creditor selects the Trustee.

What are the steps that someone goes through when they file bankruptcy?

Briefly, the steps are:

• Choose a Trustee
• Contact the Trustee by phone, or over the Internet at www.billhelps.com or meet with the Trustee personally so that you can be certain that filing bankruptcy is the best option for you and your family.
• The Trustee will help you prepare a Statement of Affairs which lists all of your assets, creditors, income, expenses, and other pertinent information. The documents will be signed, sworn and filed with Industry Canada.
• Copies of your Bankruptcy documents will be forwarded to all your creditors so that they can prove your indebtedness to them to the Trustee.
• After you file bankruptcy, it is not worthwhile for most of your creditors to pursue you for collection of their accounts. They cannot seize assets or garnishee your income without Court approval because the stay of proceedings in the Bankruptcy and Insolvency Act protects you.
• In rare cases, you may be requested to meet with the Official Receiver, an official with the Office of the Superintendent of Bankruptcy, to discuss your situation.
• You will be required to attend two financial counselling sessions at our offices.
• If you have any assets that you will not be allowed to keep (see Will I Lose Everything?), you will be expected to help the Trustee sell them.
• You will report your income and expenses on a monthly basis to the Trustee. You may also be required to pay some money to the Trustee each month depending upon your family income, how much you earn, the size of your family and your circumstances.
• You will be automatically discharged from bankruptcy in 9 months if this is your first bankruptcy and there are no objections. You will have no further obligations for the debts covered in your bankruptcy.
• The Trustee will finalize the bankruptcy, prepare final statements and send the statements along with distributions to your creditors. You will receive a copy of the final accounting and copies of all tax returns filed on your behalf at the same time.
  

How long will my Bankruptcy Last?

An individual who has not been bankrupt before will normally be discharged nine months after bankruptcy. The discharge will be automatic unless the bankrupt does not live up to his obligations or fails to perform the duties imposed upon him by the Bankruptcy & Insolvency Act.

Second time and third time bankrupts are not eligible for an automatic discharge and the Trustee must apply to Court to obtain their discharge.

Some things such as the receipt of GST quarterly payments are delayed until your Trustee has been discharged. It is important that you supply the Trustee with anything that he needs to finalize the administration of your bankruptcy.

What are the counseLling sessions?

Counselling sessions are required by the Bankruptcy and Insolvency Act. They are usually done in face to face meetings. Our firm does not conduct counselling sessions in groups.

You must attend two counselling sessions at our offices. The first counselling session, held between 30 and 60 days following the filing of an assignment in bankruptcy, deals with budgeting techniques, money management and goal setting related to money. The meeting is an opportunity for you to clarify any questions regarding your duties and responsibilities during your assignment.

The second counselling session, held within six months of your assignment, deals with identifying reasons that may have caused your insolvency, use of credit and steps that you can take to re-establishing your credit. During this meeting we make sure that there are no outstanding issues that interfere with your discharge.

Who will find out about my Bankruptcy?

A Bankruptcy is a matter of public record. It will appear on your credit history and the Trustee will notify all of your creditors. Advertisement in the newspaper is not required in most bankruptcies.

We do not notify your employer if you provide a copy of your most recent pay statement, you make all required payments and we are not required to stop a garnishee.

Can my wages be garnished or my assets seized after I file bankruptcy?

No. A stay of proceedings protects you and your creditors can not proceed against you unless they can convince the court that there is a reason to lift the stay of proceedings. Maintenance Enforcement garnishees usually continue.

What happens to my credit cards?

Do I still handle my own money?

Yes, you continue to receive your income and you can have a bank account if you wish.

How Are Loan Co-Signers Affected By My Bankruptcy?

Someone who has co-signed a loan for you will still be responsible for the loan after you go bankrupt, and will usually be required to pay that debt in your place.

My husband and I are separated, and we have significant joint creditors. If he files a bankruptcy, will his trustee advise me of the filing?

No, he only notifies your ex-husband’s creditors. They will contact you when they receive notice of your ex-husband's assignment so that you can consider your options.

What happens to my creditors when I file Bankruptcy?

Creditors must prove the amount they are owed by you to be entitled to receive their share of any distribution in your Bankruptcy. Creditors write off the balance of your account.

What happens to my debts at the end of my Bankruptcy?

Other than the debts outlined in the Section 178 of the Bankruptcy and Insolvency Act , all unsecured debts are forgiven (discharged) at the conclusion of your Bankruptcy.

Secured creditors, such as a mortgage on your house or a charge on your furniture, will remain unless you surrender the asset to the creditor.

ARE THERE ANY DEBTS THAT WILL REMAIN AFTER I AM RELEASED FROM BANKRUPTCY?

Certain debts will survive Bankruptcy and are not discharged in a Bankruptcy.

Bankruptcy must be filed in your own locality. The Bankruptcy and Insolvency Act defines a debtor's locality as the place where you have carried on business in the last year, the place where the bankrupt resided the year prior to filing bankruptcy or the the place where most of his property is located.

Do I qualify?

You qualify for bankruptcy if:

• You are over the age of 18.
• You owe $1,000 or more.
• You are unable to meet your required payments as they become due.
• You do not own sufficient property to pay all your debts.

How soon will the creditors know about my bankruptcy?

You and your creditors will be sent a package containing relevent bankruptcy documents within 5 working days after your date of bankruptcy.

What meetings do I have to attend?

First Counselling Session

This is a one-on-one session dealing with money management that takes place within sixty days after the date of bankruptcy. Information is provided on spending and shopping habits, warning signs of financial difficulty and obtaining and using credit. The session will take approximately one hour and is usually conducted at Bill McCulloch & Associates Inc.'s office.

Second Counselling Session

This session will follow up on the first session. The counsellor will discuss non-budgetary causes of financial difficulty. Referrals will be made to outside agencies if necessary and assistance will be given in developing a financial plan for the future. The session will take place approximately six months after the date of bankruptcy.

First Meeting of Creditors

This meeting will only take place at the request of creditors and is very rare.

Official Receiver Examination

The Official Receiver is an officer of the Superintendent of Bankruptcy. The Official Receiver will select certain files for review. An examination is held under oath which deals with the causes of bankruptcy, the disposition of property prior to the bankruptcy and the debtor's conduct prior to the bankruptcy. Because of the volume of bankruptcies being filed, examinations are not common in Northern Alberta.

How long will I be in bankruptcy?

If this is the first time you have filed for bankruptcy and there is no opposition to your discharge, you will be out of bankruptcy nine months after the date of filing for bankruptcy. This is called an automatic discharge.

However, if there is opposition to your discharge or if you have previously been bankrupt or filed a Proposal, Bill McCulloch & Associates Inc. will apply to court for a decision on your discharge. The court can grant various orders of discharge. These are:

Absolute Discharge
This order takes effect immediately.

Conditional Discharge
This type of order requires the bankrupt to do something or pay something. Once the bankrupt complies with the conditions he or she is discharged.

Suspended Discharge
A suspended order will postpone the discharge until some future date. It is the same as an absolute order except there is a delay until it comes into effect. Until the date for the suspension has passed, the Bankruptcy and all the restrictions on the Bankrupt remain in effect.

Refusal of Discharge
The court may refuse a discharge but it rarely exercises this power. A refusal is reserved for bankrupts that have abused the process through dishonesty or repeatedly filing for bankruptcy.

Sine Die
The court has the option of adjourning the application for the discharge indefinitely. This happens when you have not cooperated and have neglected to complete your duties. Once the application for your discharge is adjourned sine die, your Trustee is free to obtain his discharge. When the Trustee is discharged your protection from your creditors is lost. You will have all the responsibilities of a bankrupt without the protection afforded by the Trustee.

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After I sign the documents and attend the counselLing sessions, what further involvement will I have with the Trustee’s office?

In most cases if you are filing statements and making your payments, you will not have further contact with the Trustee’s office unless you fail to turn over assets or forward tax information. No news is good news! Your discharge will be processed automatically

When do I receive my Discharge Certificate?

If you don’t hear from us and there is no Court date set, you will receive an automatic discharge 9 months after your date of bankruptcy if this is your first bankruptcy and you have not previously filed a proposal. Your certificate will be mailed to you by the middle of the month following your discharge if there is no outstanding tax information required from you by the Trustee..