Exploring Why Bankruptcy Discharges Are Opposed
When it comes to navigating the intricate universe of personal bankruptcy, understanding the various aspects, such as discharge hearings and their possible outcomes, is crucial. This guide will delve into the world of bankruptcy discharges, scrutinizing the process from all angles to offer a comprehensive overview.
1. Understanding Bankruptcy Discharge
A bankruptcy discharge can be best defined as the legal release of a debtor from the liabilities of their provable claims under a bankruptcy. This process, enacted under section 178(2) of the Bankruptcy and Insolvency Act (BIA), is not absolute. Some claims persist even after the discharge, which are listed under s. 178(1) of the act. For a more in-depth analysis, our article on ‘Debts Eliminated By Bankruptcy’ offers a detailed view of debts discharged by bankruptcy.
2. Automatic Discharge: When Is It Possible?
An automatic discharge is achievable under specific conditions as outlined in section 168.1 of the BIA. These conditions are based on the number of bankruptcies declared by the debtor and their surplus income. The following list details the eligibility for an automatic discharge:
- First-time bankrupt with no surplus income: 9 months
- First-time bankrupt required to pay surplus income: 21 months
- Second-time bankrupt with no surplus income: 24 months
- Second-time bankrupt required to pay surplus income: 36 months
3. The Bankruptcy Discharge Hearing: An Overview
A bankruptcy discharge hearing is a legal proceeding that may be initiated by a creditor, the bankruptcy trustee, or the Office of the Superintendent of Bankruptcy (OSB). The party opposing the discharge must adhere to the notification procedures outlined by the BIA. The process involves setting a hearing date, notifying all parties involved, and the preparation of a Trustee’s report.
4. Outcomes of a Discharge Hearing
The possible outcomes of a discharge hearing, as stipulated under section 172 of the BIA, include:
- Granting or refusal of an absolute order of discharge;
- Suspension of a bankrupt’s discharge;
- Granting an order of discharge subject to terms or conditions.
The court, under rare circumstances, may also refuse a discharge.
5. Mandatory Discharge Hearings
A discharge hearing becomes mandatory if a debtor owes more than $200,000 in personal income tax debt, making up more than three-quarters of the bankrupt’s unsecured proven claims.
6. Preparing For A Discharge Hearing: The Trustee’s Perspective
As a court officer, the trustee represents all creditors. The trustee’s responsibilities include preparing a report detailing the bankrupt’s discharge, assisting the court with factual information about the bankruptcy, and opposing the discharge under certain circumstances.
7. Preparing For A Discharge Hearing: The Creditor’s Perspective
Creditors, besides reviewing official bankruptcy documentation, can submit written questions to the bankrupt before the hearing. Any opposing application must be factual and not frivolous, and it should not be submitted at the last minute.
8. Preparing For A Discharge Hearing: The Bankrupt’s Perspective
The bankrupt, aiming for a discharge from their debt obligations, may represent themselves or hire legal counsel. Non-attendance at the hearing may result in a ‘No Order’ from the court, leaving the debtor liable for all the debts included in their bankruptcy.
9. The Aftermath of a Discharge Hearing
The bankrupt may appeal the hearing’s outcome under specific conditions. An appeal court holds the power to modify or change the conditions imposed at the original discharge hearing.
10. Conclusion
In conclusion, opposing a discharge from all points of view involves understanding and navigating complex legal processes. This guide aims to provide a comprehensive overview of the topic, offering insights from the perspectives of the trustee, the creditor, and the bankrupt.
