Tell Your Licensed Insolvency Trustee Everything

The Importance of Full Disclosure to Your Bankruptcy Trustee

Bankruptcy is a tool that offers a fresh start, a clean slate, and the opportunity to rebuild one’s financial life. However, it’s a process that requires complete transparency. When filing for bankruptcy, the declaration of your assets and living expenses is a crucial part of the procedure.

When you tell your licensed insolvency trustee everything, you’re setting the stage for success. Any form of concealment or dishonesty can lead to serious ramifications that could complicate the bankruptcy process or even result in criminal charges.

The Consequences of Non-Disclosure

When you fail to fully inform your licensed insolvency trustee of your financial circumstances, several problems can arise:

Delayed Discharge

Failing to disclose all relevant information to your trustee can result in a delay in your bankruptcy discharge. This could occur, for instance, if you neglect to inform your trustee about significant unfiled tax returns. In such a case, the Canada Revenue Agency (CRA) may request that your discharge be postponed until you’ve filed all your old returns.

Unexpected Bankruptcy Costs

Bankruptcy cost is influenced by many factors, including your surplus income. Concealing income from your trustee in an attempt to reduce bankruptcy costs can backfire. A statement of income is a mandatory part of the bankruptcy process. If your reported income exceeds what you initially declared, it could trigger a surplus income payment, which your trustee wouldn’t have anticipated due to the lack of disclosure. It’s always best to disclose your complete family income from the start so that both you and your trustee can fully grasp the cost of your bankruptcy and consider other options, like a consumer proposal.

Extended Bankruptcy Duration

Failure to disclose certain assets or providing information that eventually complicates your bankruptcy could prolong the process. The court could issue an Order of Conditional Discharge, which means certain conditions or penalties must be met before you are declared bankrupt. This could include extending the length of your bankruptcy and requiring you to make additional payments.

Refusal of Discharge by Creditors

If you fail to disclose assets or critical facts, and your creditors believe you are acting fraudulently, they can petition to have your discharge refused. Your trustee can do the same if they suspect you are withholding information or assets.

Criminal Charges

In extreme cases, if your omission is deemed fraudulent, you could face criminal charges. When filing for bankruptcy, you are required to sign your bankruptcy documents. One of these documents, the Statement of Affairs, lists all your assets, liabilities, and a summary of your personal information. Penalties for a false statement can be imposed under the Bankruptcy and Insolvency Act and the Criminal Code.

Dealing with Honest Mistakes

Bankruptcy can be a stressful process, and it’s not uncommon for individuals to accidentally omit some information on their documents. While this is not ideal, it’s certainly fixable. The key is to rectify the issue as soon as you become aware of it by contacting your trustee. They can guide you through the necessary steps to correct the error, ensuring that the process remains fair and beneficial for everyone involved.

Remember, when you tell your licensed insolvency trustee everything, you’re laying the foundation for a smoother, quicker, and more successful bankruptcy process. So, it’s in your best interest to be as open and honest as possible.

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