Bankruptcy Mediation in Canada
What is Bankruptcy Mediation?
If you are in a disagreement with your creditors or Trustee during your bankruptcy process, you can seek mediation.
Mediation involves an impartial person working with the parties involved to resolve the conflict.
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Mediation could occur over surplus income payment disagreements or a bankruptcy discharge disagreement.
Who Is The Bankruptcy Mediator?
During the bankruptcy mediation process the mediator must be approved by the Office of the Superintendent of Bankruptcy.
The mediator could be an employee of the Superintendent of Bankruptcy office or a trusted mediator chosen by the Superintendent.
During the mediation process the mediator will be responsible for having the parties communicate.
The role of the mediator is to help the parties reach an agreement.
The mediator will assist each party to understand the issues in the dispute and ways that the disagreement could be settled.
Another job of the mediator is to explain the mediation process and the procedures for scheduling additional meetings.
The mediator will not decide the settlement, but will help the parties reach an amicable agreement.
Is The Licensed Insolvency Trustee Involved In The Mediation?
Yes, the LIT will be responsible for guiding the creditors and debtors who are involved in the bankruptcy mediation.
What Types of Disputes Can Be Solved With Bankruptcy Mediation?
The two types of dispute that a bankruptcy mediator can help solve through mediation is over surplus income payments and bankruptcy discharges.
Surplus Income Bankruptcy Mediation
If the Licensed Insolvency Trustee (LIT) and bankrupt are not in agreement over surplus income payments, a mediator could be called in to mediate the dispute. Often, the bankrupt will not agree with the Trustee’s surplus income calculation.
A debtor’s bankruptcy discharge could be delayed over surplus income payments that have not been paid.
Your LIT will calculate your required surplus income payments at the beginning of your bankruptcy.
However, your surplus income payments could change if your income or your family situation changes during the bankruptcy.
You might disagree with the new calculations. In this case, the LIT will request mediation.
A bankrupt can also request bankruptcy mediation if they cannot afford the surplus income payments on time.
Mediation can be used to extend the time in which a bankrupt debtor can pay their surplus income payments.
Any creditors involved in the bankruptcy can also request mediation if they do not agree with the amount of surplus income that has been paid.
Bankruptcy Discharge Mediation
If the bankrupt has not completed their duties, such as making the surplus income payments, their bankruptcy discharge could be opposed by the creditors or the LIT.
When the bankruptcy mediation results in an agreement being reached it is considered successful.
If an agreement is reached a “mediation settlement agreement” must be signed by all parties.
The bankrupt must comply with the agreement’s conditions.
What If An Agreement Can Not Be Reached?
If a surplus income mediation agreement cannot be reached and the mediation has failed, the LIT can apply to the court to set the amount of surplus income payment the bankrupt must make.
When the discharge mediation fails and an agreement is not reached the LIT will ask the court to schedule a hearing to rule on the situation.
If the bankrupt fails to comply with the conditions of the mediation settlement agreement, the Licensed Insolvency Trustee will also ask the court to fix the matter.
Want More Information on Bankruptcy Mediation?
You can find a Licensed Insolvency Trustee in Your Province to ask your questions about bankruptcy mediation and all other insolvency matters.