Bankruptcy Lawyer or Licensed Insolvency Trustee: Who Do I Need?
Bankruptcy is a challenging process for anyone to navigate. In Ontario, it is governed by both federal and provincial regulations. But, do you need a bankruptcy lawyer to oversee this complex process? Let’s shed some light on this.
What is Bankruptcy?
Bankruptcy refers to a legal process initiated when an individual or a business can’t pay their outstanding debts. This process begins with the debtor filing a petition or, in some cases, imposed by the court. It provides the debtor with an opportunity to start afresh while offering creditors a chance to obtain some payment.
The Bankruptcy and Insolvency Act
The Bankruptcy and Insolvency Act, a federal legislation in Canada, outlines and governs the bankruptcy process. This indicates that the majority of the process isn’t under your trustee’s discretion but follows the regulations passed by the Government of Canada.
The Role of Provincial Laws
Provincial laws, such as those in Ontario, also have a say in the bankruptcy process. However, federal law usually takes precedence. These provincial laws are designed to govern specific aspects of the bankruptcy process, including exemptions and asset seizures.
Does a Bankruptcy Lawyer Play a Role?
For most bankruptcy cases in Ontario, a bankruptcy lawyer doesn’t get involved directly in the process. A bankruptcy can only be filed by a Licensed Insolvency Trustee, and most debtors only interact with their trustee from the beginning to the end of the process.
When is a Bankruptcy Lawyer Required?
A bankruptcy lawyer might come into the picture if a debtor fails to fulfill their duties, or if there’s a dispute about what needs to be done or how a matter should be resolved. In such situations, the case moves to the bankruptcy court.
Bankruptcy Court: The Ultimate Resolution Platform
The bankruptcy court serves as a means to resolve all kinds of issues, whether they’re between trustees, debtors, creditors, or asset holders. If a creditor or trustee opposes your discharge (the date you are no longer obligated to pay your creditors), the matter is usually settled in the bankruptcy court.
Settling Issues Outside the Court
If an agreement can be reached with the trustee before the court date, there’s no need for a bankruptcy lawyer. If you feel capable of answering questions about your situation, debts, assets, income, and expenses in court, you might do a better job than a hired lawyer.
When to Consult a Bankruptcy Lawyer
If you believe a creditor might try to exploit you, or if you need advice during the bankruptcy hearing, a bankruptcy lawyer could be a valuable resource. They can provide legal advice on contentious matters and help you understand the process, but remember, the process itself is fully administered by a Licensed Insolvency Trustee.
The Cost of Hiring a Bankruptcy Lawyer
Bankruptcy lawyers, due to their specialized knowledge, can be quite expensive. Other lawyers might be able to assist but might not be the best choice during the bankruptcy process.
Final Considerations
If you need to consult a lawyer during the bankruptcy process, discuss it with your trustee. While trustees are not lawyers and can’t provide legal advice, they do know many bankruptcy lawyers and can refer you to one if needed. However, remember that most of the bankruptcy process is designed to be completed without legal expenses, and your trustee should explain the process thoroughly to make you comfortable with it.
