What is a Conditional Discharge in Bankruptcy?
Conditional Discharge in Bankruptcy
When filing for bankruptcy, it’s essential to listen to the advice of your licensed insolvency trustee at all times.
To obtain a discharge from bankruptcy, you’ll need to fulfil specific responsibilities along the way.
If you don’t do that, things can get a little more complicated.
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Conditional Discharge During Bankruptcy in Canada
Conditional discharges happen when the court attaches one or more conditions before they’ll agree to release an individual from their debt.
That also applies to getting released from the actual bankruptcy procedure – so it essentially defines how long the process will last for you.
A condition could be you making certain payments within a set period, for instance.
How can a conditional discharge happen?
Usually, the actions of a creditor will lead to conditions getting imposed on your discharge.
That could be because the creditor feels you’ve been less than honest during the process – and therefore feels your actions are unfair.
Another reason you might get a conditional discharge ruling is that the Superintendent of Bankruptcy feels you haven’t fulfilled your responsibilities or required duties.
That could be because you have:
- Failed to reveal all your property to the Licensed Insolvency Trustee.
- Not surrendered all your credit cards.
- Failed to attend at least two financial counselling sessions.
- Not provided your tax records, any insurance policies or tax returns.
- Not accurately reported your household income and expenses.
- If it’s been requested, failed to attend a meeting of creditors.
- Not kept the trustee informed about your current address during bankruptcy.
The Difference Between Absolute and Conditional Discharge
Although the aim of both is ultimately that you shed your bankrupt status and become debt-free, a conditional discharge is going to elongate the process.
An insolvent person can expect to get an absolute discharge between nine and 21 months after filing, so long as they meet all of the conditions and no creditors or administrators object.
An absolute discharge is when that all happens straight away.
When a conditional discharge occurs, something is standing in the way, and you have to jump through some hoops before it happens.
Refusal of Discharge During Bankruptcy in Canada
It’s vitally important you comply with your responsibilities during bankruptcy.
In fact, conditional discharges represent a relatively good outcome – and it can get much worse if you fail to take the process seriously.
Worse arrives in the form of a discharge refusal from the court.
If that happens, you won’t shed your bankrupt status, and strict borrowing limitations will remain in place until the situation changes.
Your licensed insolvency trustee will monitor a situation like this, working with you to address the barriers to your discharge.
Still, they won’t allow you to make a fresh application for release until you’ve done precisely that.
It’s far better to avoid the situation in the first place.
Failing that, you have the option of filing a consumer proposal at this stage too.
Suspended Discharge During Bankruptcy in Canada
A suspended discharge is when the end of your bankruptcy gets delayed.
The difference between a conditional and suspended discharge is that there are no conditions with the suspended version.
It’s purely a case of the court imposing a waiting period before you can exit the process.
Working with a Licensed Insolvency Trustee Toward Discharge from Bankruptcy
Working closely and honestly with your local licensed insolvency trustee is the best way to ensure that your bankruptcy goes as smoothly as possible.
Remember that the system exists because you deserve a second chance and to escape debt.
It’s essential to accept the situation and find the quickest way to move past it.
Only then will you be free from a bankrupt status and able to get a fresh start.
Being open with your trustee will get you where you want to be.
If you’re in any doubt about your circumstances and the bankruptcy process, we recommend you give our friendly team of experts a call on (877) 879-4770 (24/7).
Here at BankruptcyCanada, we’ve been helping Canadians out of debt for decades, and we’re always happy to take your call.
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