It is rare that a person’s discharge is opposed but it does happen.
It usually happens when a creditor suspects that the debtor is hiding assets or not reporting his full income.
In many cases, the creditor and the debtor have a “history” of disputes.
Facts for which a discharge can be opposed are given in Section 173. (1) of the Bankruptcy and Insolvency Act. Here are just a few of the “facts”:
(a) the bankrupt has omitted to keep such books of account as are usual and proper in the business carried on by the bankrupt and as sufficiently disclose the business transactions and financial position of the bankrupt within the period beginning on the day that is three years before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included;
b) the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible;
(c) the bankrupt has lost their assets without a satisfactory reason to account for the deficiency to meet their liabilities to the bankruptcy estate;
(d) the bankrupt continued to trade, even after being aware they were insolvent;
(e) the bankrupt was irresponsible in their actions, such as through gambling, extravagent living beyond their means, or purposefully neglecting their business affairs which helped contribute to their bankruptcy filing.
Opposing a bankrupt’s discharge – The procedure when a discharge is opposed
When a discharge is opposed the court reviews the details of the opposition.
The registrar will then set a time for a hearing.
The challenger and the debtor and if desired their lawyers will attend the hearing.
The registrar will provide a written decision.
The decision can range from an absolute discharge for the bankrupt to actions the bankrupt must perform (such a paying additional funds) before he is granted a discharge.
A consumer proposal can prevent a discharge opposition
If a person suspects his bankruptcy will be opposed he should consider filing a consumer proposal. Be sure to inform the trustee of the details concerning the person or persons who might oppose and the details of why they would be opposing a bankruptcy discharge.
The trustee has to know these details so they can be addressed in the terms of the consumer proposal.
The creditors vote for the acceptance or rejection of the consumer proposal.
Any concerns can to addressed at the meeting of creditors’ and dealt with then and there. Once the consumer proposal is accepted and the required payments made the debtor will be issued a completion certificate confirming the debt has been erased.