I’m An Undischarged Bankrupt - What Are My Options?
Options For an Undischarged Bankrupt
Filing for bankruptcy is often the last resort but can be very helpful for those who have large outstanding debts that they are unable to pay.
Although in many cases, at the end of a person’s bankruptcy proceedings their debts are extinguished when they are discharged, this is not always the case, and you could end up an undischarged bankrupt meaning that your bankruptcy proceedings will continue.
What is an undischarged bankrupt
If you are a first time bankrupt, then so long as you fulfil all of your obligations, then your bankruptcy will be discharged after 9 months (If you have to pay a surplus income charge then this can be extended to 21 months).
Technically, anyone who is still going through a bankruptcy is classified as an undischarged bankrupt, but in this case, we are referring to someone who has been unable to complete their bankruptcy proceedings and has had their discharge opposed by their Trustee or their creditors.
Reasons why your discharge from bankruptcy may have been opposed
When you file for bankruptcy you agree to fulfil a certain set of obligations.
If for whatever reason, you are unable to complete these obligations, then your discharge from bankruptcy may be opposed by your Licenced Insolvency Trustee.
Some of the obligations that you will need to uphold include:
- Attending two budget counselling meetings with your Trustee (these are mandatory).
- Proving your Trustee with all of the information that they need to complete your tax return for the year in which you filed for bankruptcy.
- Declaring your monthly income and expenses to your Trustee, including providing any necessary documentation such as payslips, bank statements or receipts.
- Making surplus income payments if required.
- Attending the Office of the Superintendent of Bankruptcy for an examination under oath if requested.
- Attending meetings with your creditors if you are asked to do so in order for them to question you on your financial situation.
- Attending bankruptcy court if requested.
- Performing any other necessary obligation to your Trustee.
If you do not fulfil these obligations, then your Licensed Insolvency Trustee has grounds to delay your discharge.
In some cases, a person’s creditors can be the cause of a delay of discharge.
A debtor’s discharge can be challenged for a number of different reasons, but the most common is because the creditor believes that they can recuperate more money from the debtor than they have received.
The difficulties of being an undischarged bankrupt
Being an undischarged bankrupt isn’t the end of the world, but it can cause you some potential problems.
As an undischarged bankrupt your credit rating is exceptionally poor, which can make it very difficult for you to buy a property or to take out any form of finance agreement.
Background checks by employers will also show your bankruptcy status and depending on the position you are going for, you may find that you are inapplicable.
Lastly, if you have managed to rack up any additional debt during your current bankruptcy, then you will not be able to file for bankruptcy again until your current bankruptcy proceedings have been discharged, potentially causing interest to pile up and your debt problems to worsen.
No one wants to have to undergo bankruptcy for longer than they need to, so it’s best to have these issues resolved as soon as possible.
What are the options for an undischarged bankrupt?
Although a delay in your discharge can be frustrating, there are some things that you can do about it.
Complete your obligations
If your discharge has been delayed by your Trustee because you have not upheld your end of the bankruptcy agreement, then the first thing you should do is to contact your Trustee to inquire about what you can do to obtain your discharge.
If your bankruptcy file has been closed because you have not been in communication with your Trustee for some time, then you will need to have them re-open your file.
Opening a closed bankruptcy file can cost you, and it is not unheard of for Trustees to charge a former client a significant fee to re-open their file.
To avoid spending this money unnecessarily, try to keep communication open with your Trustee, and do what they ask of you when they ask it.
Use a bankruptcy lawyer
If you have thoroughly burnt bridges with your current Trustee, then they are not obligated to reply to your messages or to reopen your file.
In this case, you will need to seek help from a bankruptcy lawyer who specializes in this area of bankruptcy law.
A bankruptcy lawyer will obtain your file from the Office of the Superintendent of Bankruptcy and will review why your discharge was delayed.
Once you and your lawyer are aware of what you need to do in order to obtain your discharge, you will need to find a new Trustee to complete your obligations with.
Once your obligations are complete your lawyer can go to court to apply for an Order of Absolute Discharge on your behalf.
If your bankruptcy discharge has been delayed by your creditors, then you may wish to use a bankruptcy lawyer in this situation too to oppose their challenge.
File a consumer proposal
Lastly, if your creditors are challenging your bankruptcy discharge, then you may want to consider filing a consumer proposal.
A consumer proposal involves coming to an agreement with your creditors about monthly repayments to be paid over a set period of time (up to five years).
If your consumer proposal is accepted, then your bankruptcy will be annulled so long as you keep up with your repayments.
If, however, at any point you do not stick to the payment terms in your proposal, then your proposal may be annulled and your bankruptcy will return.
Getting the help you need as an undischarged bankrupt
Here at Bankruptcy Canada, we are experts on all areas of bankruptcy and can provide you with the help you need as an undischarged bankrupt.
Regardless as to why you have been undischarged, it is always worth reaching out to a Licenced Insolvency Trustee who will be able to offer you a free consultation about your bankruptcy situation.
To be put in touch with a Licenced Insolvency Trustee today, please call us on (877) 879-4770 or fill out one of our online evaluation forms.