What Happens in Bankruptcy Court?
Guide to Bankruptcy Court
Bankruptcy court is not like other kinds of court which you often see in criminal cases.
In Canada, there is a separate court which deals with bankruptcies exclusively.
The judge who presides over your case will be trained and educated in the types of hearings that happen and they will also have a very heavy amount of knowledge when it comes to the various situations that people often find themselves in.
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Will you Have to Go to Bankruptcy Court?
If you want to be discharged from bankruptcy, then you can get an automatic discharge or you can get one that is court-ordered.
An automatic discharge essentially means that a court hearing is not required.
Your advisor will give you a copy of your discharge documents and it will also outline and confirm that the debt that is outlined in your bankruptcy is now no longer active.
When this happens, your creditors will then need to write off your payments and they will also need to relieve you of your repayment.
The good news here is that in Canada, most of the bankruptcies that are filed are discharged automatically.
You won’t need to have them heard in court.
If you are not eligible to have your bankruptcy discharged automatically for any reason at all then the court will need to hear your case.
Your advisor will be able to help you with this if you have any questions.
How do you Qualify for Automatic Discharge?
Obviously, you’ll want to avoid going to court if you can.
One way for you to do this would be for you to try and opt for an automatic discharge.
If you want to make sure that you qualify for this, then you need to make sure that you fulfil all of your bankruptcy details and you also need to:
- Attend two counselling sessions;
- Make all of the payments to the estate;
- Provide monthly income reports;
- Report your assets;
- Keep any contact information up to date;
- Provide all of the right information for your pre and post-tax returns.
If you do not fulfil any of these duties, then your LIT will oppose your automatic discharge and you will then need to attend a hearing in court.
If one of your creditors happens to oppose your discharge, then your situation will need to be heard in court.
You will then attend court with your trustee.
Some of the reasons why your creditors might oppose your bankruptcy include if:
- You owe more than $200,000 that represents three-quarters of your total debt. If this is the case, then the Canada Revenue Agency will the have to request a hearing;
- You have borrowed money for post-grad education. This includes law school or medical school;
- If there is suspicion of fraud.
At the end of the day, you have to remember that situations like this are in fact rare.
These only apply to a first or a second bankruptcy as well.
If you have more than two then a court hearing will be scheduled and you will need to attend, regardless of whether or not you performed your duties.
Getting Ready for Court
If you do need to attend court, then you need to know what is going to happen.
This will help you to prepare and it will also help you to understand the process.
Your Licensed Insolvency Trustee will always be there with you and they will guide you through the entire process.
They will also help you to prepare the terms for your discharge as this will be presented during your hearing.
Remember that when you do go to court, you need to be yourself.
The court is not going to judge you on your personality or your education.
You also need to dress the way that you usually do.
Just because you are going to a court of law, doesn’t mean that any of your attire needs to match.
There is absolutely no need for you to wear formal clothing in court unless that is what you wear normally.
It’s also important that you are there early, well in advance of your hearing if you can.
You also need to give yourself enough time in case you hit traffic or if you have to deal with some kind of parking issue.
Do you need a Lawyer?
Normally you do not need to hire a lawyer.
Instead, you will deal with your trustee.
They will administer your bankruptcy under the Canadian Bankruptcy and Insolvency Act.
If you do have to go to court then you may need representation in very specific situations.
For example, if you have transferred an asset where you happened to be insolvent or if you are filing bankruptcy for the third time then hiring a lawyer may be a good idea.
If you do have to face a lawyer from the CRA then you would be well-advised to appoint some legal representation yourself.
It doesn’t matter whether you are considering filing bankruptcy or if you have done already because you need to work closely with someone who is licensed and someone who can advise you on your situation as it stands.
If you want to get some help, then we can work with you to make sure that you are given the support you need.
Our Bankruptcy Canada team are experts in the field when it comes to bankruptcy and the process in general.
We can also help you to understand the steps that you need to take in order to get through the process as smoothly as possible as well.
If you want to find out more about this then please do contact us today.
When you do, we can then work with you to make sure that you are given the guidance you need to feel confident in the whole process.
If you want to contact us then you can do so by using our email address or even by dialling our phone number.
We will then put you in touch with an advisor.
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?