“Bankruptcy Abuse and Fraud” Section Updated by the OSB
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The Office of the Superintendent of Bankruptcy is responsible for overseeing insolvencies across Canada and has a section on Bankruptcy Abuse and Fraud.
One of the biggest reasons for the Canadian insolvency laws is to allow unfortunate individuals a chance for a new financial start, without being weighed down by prior debts.
In some cases, however, people want to know how to protect their belongings from being seized when going bankrupt and sold to have the proceeds distributed to the creditors.
Some people consider if they could pay a family member instead of paying off a credit card bill before declaring bankruptcy.
Bankruptcy Abuse and Fraud Examples
Our word of advice to these people: Don’t try this! This would be considered a preference payment, which is not allowed and would be considered Bankruptcy Abuse and Fraud.
Your bankruptcy trustee will have the power to recover these payments and they will then be sold and not included in the bankruptcy.
In addition, you will face serious penalties in court, as the trustee will be required by their professional ethics to report these activities.
You are not allowed to take advantage of the insolvency laws in any way.
The Office of the Superintendent of Bankruptcy has updated its “Bankruptcy Abuse and Fraud” web section, which you can view at this link.