What is bankruptcy counselling? All people filing personal bankruptcy and consumer proposals are required to complete two counselling sessions. These sessions must be completed before the debtors are given a discharge (bankruptcy) or a certificate of completion (consumer proposal).
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The counselling can be one-on-one with your proposal administrator or trustee or another authorised counsellor.
It can also be in a group consisting of other bankrupts and a qualified counsellor.
The trustee must provide or arrange for counselling for individual debtors.
The trustee may also provide or arrange for counselling for a person financially associated with an individual debtor.
The debtor pays the cost of counselling, which is set by regulation at $85 for an individual session or $25 for a group session.
Qualifications of the Counsellor
A qualified counsellor is a person (who may be a trustee) who has been granted a counselling certificate by the Office of the Superintendent of Bankruptcy and has at least 100 hours of counselling experience under the supervision of a trustee.
A good counsellor requires strong insolvency knowledge as well as good “people skills” – such as being a good listener, empathetic, and able to read non-verbal signs.
First Stage Counselling
The first stage counselling has to be taken within 60 days of the filing of the bankruptcy or the consumer proposal.
The objective for the first-stage counselling is to provide the debtor with counselling advice regarding the following:
* Money management;
* Spending and shopping habits;
* Warning signs of financial difficulties;
* Obtaining and using credit.
Second Stage Counselling
The second-stage counselling has to be taken within 210 days following the date of bankruptcy or the filing of a consumer proposal.
The second stage requires the qualified counsellor to arrive at an understanding with the debtor as to the causes of insolvency, including non-budgetary causes.
Where non-financial underlying causes are present, such as drugs, gambling, compulsive shopping, or alcoholism, the counsellor is required to offer the debtor a referral to appropriate agencies, organisations, and professionals available within the community.
The objectives for the second-stage bankruptcy counselling are to:
* Determine budgetary and/or non-budgetary causes of the insolvency;
* Follow up on the debtor’s application of the principles presented in the first stage;
* Assist the debtor to better understand his or her financial strengths and weaknesses;
* Assist the debtor to better understand his or her behaviour in financial management and consumption habits;
* Make the debtor aware of resources available that will assist in achieving and maintaining economic stability; and
* In cooperation with the debtor, develop a plan of action including, if appropriate, referral for specialized counselling for non-budgetary causes of debt.
Mandatory bankruptcy counselling should not be confused with the use of credit counsellors. Credit counsellors may in some circumstances be used to avoid bankruptcy.
If you have any questions about insolvency counselling or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our trustees,who are in every province and territory in Canada: or call Bankruptcy Canada directly: 1-877-879-4770.
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