If you’re thinking about filing for personal bankruptcy, it’s important to know how the process works and what to expect.
Although your licensed insolvency trustee (LIT) will guide you through the procedure, it’s helpful to have as much information as possible.
There are lots of elements to consider when deciding if bankruptcy is the right type of debt relief for you.
Knowing will there be a bankruptcy creditors’ meeting and what to expect is just one facet of the process that needs to be addressed.
By understanding more about how personal bankruptcy works and what role creditors play, you’ll feel more comfortable and confident if you do decide that filing for bankruptcy is the right way forward.
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What is a Creditors’ Meeting?
When you file for bankruptcy, a creditors’ meeting won’t automatically take place.
However, a creditors’ meeting will need to take place if:
- Creditors that are owed 25% of your overall debt or more request a meeting.
- If the Official Receiver (on behalf of the Office of the Superintendent of Bankruptcy) requests a meeting.
- If your realizable assets are worth more than $15,000, you’re making a Division I proposal or you’re filing for business bankruptcy.
As most personal bankruptcies do not fall within these brackets, it is rare for a creditors’ meeting to be held as part of consumer bankruptcy proceedings.
In some instances, the Official Receiver may request that you intend an Examination under Oath.
This is simply a formal interview that allows the Official Receiver to gain more information about you and your bankruptcy.
Again, this is relatively rare in personal bankruptcies and doesn’t happen often.
When is Creditors’ Meeting Most Likely to be Called?
Creditors are extremely familiar with the bankruptcy process, so they rarely exercise their right to request a meeting.
However, there are instances in which creditors may want to raise certain issues or access more information.
For example, a creditors’ meeting may be requested if:
- You owe substantial funds to the Canada Revenue Agency.
- Creditors believe you obtained credit fraudulently.
- Creditors believe you have disposed of assets prior to filing for bankruptcy so they are not seized.
- A creditor has specific questions about the information in your bankruptcy documents e.g. your income.
Remember – a meeting can only be called if creditors who are owed more than 25% of the total debt, the Official Receiver or your trustee request it.
If a first creditors’ meeting is requested, it must be held within 21 days of you filing for bankruptcy.
This means you’ll know relatively quickly if a creditors’ meeting will take place.
What is the Purpose of a Creditors’ Meeting?
The bankruptcy process is governed by the Bankruptcy and Insolvency Act.
This Act sets out the purpose of the first creditors’ meeting, if one is held.
- To consider the affairs of the bankrupt (you).
- To affirm the appointment of your bankruptcy trustee.
- To substitute another bankruptcy trustee.
- To appoint estate inspectors.
- To enable creditors to give the trustee directions relating to the administration of the estate.
How Does a Creditors’ First Meeting Work?
Both you and your trustee will need to attend the creditors’ meeting, along with any creditors that choose to attend and the Official Receiver (if he or she chooses to attend).
If the Official Receiver is present, he or she will act as chairman of the meeting.
If they are not present, your trustee will act as chairman.
Your trustee will present a pre-prepared report that provides details of your financial circumstances, including the causes of your bankruptcy, assets and liabilities, expects value of assets etc.
Creditors have the right to ask you questions at the meeting.
They may ask about your financial decisions in the lead up to the bankruptcy or the expenses you have detailed in your bankruptcy documentation, for example.
You are required to answer these questions honestly, although you can request not to answer questions that you do not believe are relevant to the proceedings.
Although some people feel nervous at the thought of answering creditors’ questions, the process is far less daunting than it might seem.
If additional documentation is required by creditors, your trustee will explain what you need to supply.
If necessary, the meeting can be adjourned until this information can be obtained.
If you’re filing a consumer proposal, rather than a bankruptcy, the creditors will also be invited to vote on your proposal as the meeting.
However, if a meeting doesn’t take place, the consumer proposal will be automatically approved.
Does a Trustee Represent You at a Creditors’ Meeting?
The trustee’s role is to ensure that all parties are treated fairly, not to represent your interests.
However, they will ensure that your rights are upheld, in the same way that they will make sure your creditors are able to exercise their rights.
In addition to this, your trustee will guide you through the process and answer any questions you may have.
You may choose to attend a creditors’ meeting with a lawyer.
If so, your attorney can represent your interests.
However, you will still be required to answer questions, if the creditors have any, and you are certainly not required to have legal representation.
Is a Creditors’ Meeting a Bad Sign?
A creditors’ meeting is merely a way for relevant parties to be able to access more information and deal with the formalities of your bankruptcy.
As it’s rare for a creditors’ meeting to be requested during the course of a personal bankruptcy, it’s unlikely you will need to attend one while you are going through the bankruptcy process.
However, if you do, you’ll simply need to answer any questions honestly and provide the information you’re asked to supply.
To learn more about creditors’ meetings and filing for bankruptcy, talk to a trustee today.
Simply contact Bankruptcy Canada at (877) 879-4770 and we’ll be happy to answer any questions you have about the process.
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