Your Bankruptcy Discharge
Canadian Bankruptcy Discharge
Although bankruptcy can be one of the best solutions for unmanageable debt, many people are unaware of exactly what bankruptcy means and how it works.
Simply filing for bankruptcy won’t make your debts go away, for example.
Instead, you’ll need to wait for your bankruptcy discharge for your debts to be eliminated.
When does a bankruptcy discharge happen?
When you file for bankruptcy, creditors can no longer collect money from you.
Despite this, your debts still exist, and you remain technically liable for them.
At the point of your bankruptcy discharge, however, your debts are eliminated, and you are no longer liable to pay them off.
However, the point at which a bankruptcy discharge occurs can vary.
Due to this, it’s important to understand which rules apply to you and when you can expect your bankruptcy discharge to happen.
First time filing for bankruptcy
If you’ve never filed for bankruptcy before, it’s highly likely you will be eligible for an automatic discharge nine months after you file for bankruptcy.
The vast majority of bankruptcies are dealt with in this way, so it shouldn’t take long for all your debts to be eliminated once and for all.
If you have been bankrupt before
If you’ve been declared bankrupt in the past, you won’t be eligible for an automatic discharge after nine months.
Instead, you’ll have to wait at least 24 months until your bankruptcy discharge can occur.
Being a second-time bankrupt does mean that you’ll need to wait a little longer for your debts to be written off but this doesn’t necessarily mean that filing for bankruptcy isn’t the best option.
If you have surplus income
The Government issues various rules and regulations regarding the bankruptcy.
One of these rules states that if you have surplus income over a specified minimum amount, your bankruptcy can be extended.
However, various costs and expenditures can be deducted from your total income before your surplus income is taken into account.
By assessing your income in relation to the latest directive to reflect the Superintendent’s Standards, you can determine whether this regulation will affect your bankruptcy.
If this is the first time you’ve ever filed for bankruptcy and you have surplus income, your bankruptcy could be extended from the nine-month automatic discharge to a 21-month discharge.
Alternatively, if you have previously filed for bankruptcy, your discharge could be extended from a minimum of 24-months to a period of 36-months.
If you are not eligible for an automatic discharge
Most bankruptcies are discharged automatically, in accordance with the time limits cited above.
There are instances, however, in which individuals cannot be discharged from bankruptcy automatically.
This generally occurs when:
The individual doesn’t follow their duties
During the bankruptcy process, you will be required to complete duties, such as providing proof of your income to your trustee.
If you fail to do this, it’s unlikely that you will be automatically discharged from your bankruptcy.
A creditor opposes your discharge
This doesn’t happen often but if a creditor opposes your discharge, a court hearing may be held to determine whether they have a viable argument.
This would prevent an automatic discharge occurring and mean that your discharge would be determined by the courts instead.
This is your third bankruptcy
If you have been declared bankrupt twice previously and this is your third time filing for bankruptcy, you won’t be eligible for an automatic discharge.
In such cases, a bankruptcy discharge can only be ordered by the court.
Is bankruptcy right for you?
Although bankruptcy can sound fairly complicated, the process can be simpler than you think.
As all bankruptcies in Canada are handled via a licensed insolvency trustee (LIT), you’ll always have someone to turn to for advice and assistance.
As a regulated professional, a licensed insolvency trustee has the qualifications, experience and expertise to help you navigate the bankruptcy process and provide any information you need.
If you’re trying to find out more about debt solutions or decide which option is right for you, why not talk to a trustee today?
With tailored and personalized advice, you can determine what bankruptcy would mean for you and your family.
Contact Bankruptcy Canada Now
At Bankruptcy Canada, we’ve been helping people to overcome debt issues since 2004 and we can provide the confidential and professional support you need.