The Six Steps Involved In Getting Out Of Bankruptcy

Navigating Through The Six Steps Involved In Getting Out Of Bankruptcy in Canada

Coming out of bankruptcy can seem like a daunting and complex process, especially if you are not familiar with the steps involved. In this article, we will guide you through the six stages that you need to complete to achieve a discharge from bankruptcy in Canada.

1. Initial Consultations with the Bankruptcy Trustee

1.1 The Importance of the Initial Meetings

The journey of emerging from bankruptcy starts with two essential meetings with a Bankruptcy Trustee. These initial discussions are aimed at gathering crucial information and documents required to start the bankruptcy process.

1.2 The Information Required

During these meetings, the Bankruptcy Trustee will require a variety of information and documentation from you. The list includes:


  • Background information regarding the causes of your financial difficulties.
  • Documentation to confirm your full legal name.
  • A copy of your most recent tax return and pay stub.
  • An overview of your monthly expenses.
  • Details about the assets you own.
  • A comprehensive list of your debts and the amounts owed.
  • Bank statements from all your bank accounts.


2. Filing the Necessary Forms with the Office of the Superintendent of Bankruptcy

2.1 The Role of the Bankruptcy Trustee

The Bankruptcy Trustee acts as your representative during the bankruptcy process. They are responsible for preparing and submitting the required forms to the Office of the Superintendent of Bankruptcy at Industry Canada.

2.2 The Forms Required

The necessary forms for filing for personal bankruptcy include:


  • Statement of Affairs (Form 79).
  • Monthly Income and Expense Statement of the Debtor and the Family Unit (Form 65).
  • Assignment for the General Benefit of Creditors (Form 21).


These forms, once signed by you, are submitted electronically. Usually, within 48 hours, the Bankruptcy Trustee will receive a Certificate of Appointment from Industry Canada. This certificate marks the official start of your bankruptcy process.

3. Understanding the Implications of the Certificate of Appointment

3.1 Legal Status

Upon receiving the Certificate of Appointment, you will be legally referred to as a “bankrupt.” Most legal proceedings against you will be stayed or suspended. However, the bankruptcy does not prevent a secured creditor from seizing assets if a loan related to that asset is in default.

3.2 Communication with Creditors

The Bankruptcy Trustee will notify all your creditors within five business days of receiving the Certificate of Appointment.

4. Submission of Monthly Income and Expense Reports to the Bankruptcy Trustee

4.1 Reporting Obligations

During the bankruptcy process, you are required to provide a monthly Income and Expense Report to the Trustee. This report includes proof of income and proof of allowable income deductions.

4.2 Surplus Income Payments

If your monthly take-home income after allowable deductions is higher than certain government-set thresholds, you may be required to pay ‘surplus income’ into the bankruptcy for the benefit of your creditors.

5. The First Counselling Session with the Bankruptcy Trustee

5.1 The Purpose of the Counselling Session

The first counselling session usually occurs in the second month after receiving the Certificate of Appointment. The session aims to review your current financial situation and discuss the topics related to money management and budgeting.

6. The Second Counselling Session with the Bankruptcy Trustee

6.1 Timing and Objectives of the Second Counselling Session

The second counselling session generally takes place at least one month after the first session, but before the 8th month of the bankruptcy. This session focuses on reviewing the causes of the bankruptcy, discussing ways to avoid future debt problems, and reviewing credit rebuilding strategies.

6.2 Bankrupt’s Discharge

Just before your anticipated discharge date, the Bankruptcy Trustee may need to file a report with the Superintendent of Bankruptcy. This report indicates any objection to your discharge, and if so, the grounds for it. If there is no opposition, the discharge is automatic, and a discharge certificate will be issued by the Bankruptcy Trustee.

7. Factors Influencing the Length of the Bankruptcy Process

The timeline from the date of the Certificate of Appointment to the date of your discharge depends on several factors:



8. Conclusion

Going through bankruptcy can be a challenging and emotionally draining process. However, understanding the steps involved in getting out of bankruptcy can help alleviate some of the stress and uncertainty. Remember, you are not alone in this journey, and there are resources available to help you navigate through this process.

9. Additional Resources

For more information on the six steps involved in getting out of bankruptcy, consider visiting the following resources:


Office of the Superintendent of Bankruptcy Canada

Canadian Association of Insolvency and Restructuring Professionals


Remember, these resources are here to assist you, but they should not replace professional advice. Always consult with a bankruptcy professional or legal advisor when dealing with bankruptcy issues.

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