Discharge from Bankruptcy
What debts survive my bankruptcy or proposal?
The following debts will survive your bankruptcy or proposal. The onus is on the creditor to prove that their debt falls within one of the areas outlined in the Act. You should therefore discuss with your trustee any debts that you have that may survive a bankruptcy or proposal.
- Fines, penalties or restitution orders issued by a court
- Damages assessed in a civil court for bodily harm, sexual assault or wrongful death
- Alimony, maintenance or child support
- Fraud, embezzlement, misappropriation or misrepresentation
- Dividend a creditor would have been entitled to receive in a bankruptcy if you intentionally failed to disclose the creditor
- Student loans within seven years of the date of bankruptcy
How do I rebuild my credit after my proposal or bankruptcy?
The fact that you were bankrupt or filed a proposal remains listed at the credit bureau for a minimum of 6 years following your discharge from bankruptcy or 3 years after the completion of your proposal. Logically this information will impact the decision of anyone investigating your credit rating, and therefore, you may find it more difficult to obtain credit. The following options may assist in re-establishing your credit rating:
- It is important that you retain a copy of your discharge order (Bankruptcy) or Certificate of Full Performance (proposal) and the final statement of receipts and disbursements you received which shows the total distribution to your creditors. This information may be required to update your credit bureau for errors or omissions you find on your credit report. It may also be useful to provide to your lender, particularly where your creditors received a significant distribution.
- File a personal statement at the credit bureau. The credit bureaus will accept a 100 word statement by you that is provided to any party requesting a credit report. If you have particular circumstances that you believe should be disclosed, you may wish to assess the credit bureau links to investigate this option further.
- Pay all your bills on time to avoid your creditors filing negative reports at the credit bureaus
- Open a savings account to demonstrate your financial stability. You may find it useful to open this account at a separate bank where access is not convenient. Deposit regular payments to build the balance (a portion of your next raise, bottle recycling fees, rolled coins, etc. that are not readily missed). You may also want to investigate your company payroll benefits as some employers offer payroll deductions for Canada Savings Plans.
- Apply for any credit card you can obtain. If you are experiencing difficulty obtaining a credit card, please refer to the next question “How do I obtain a credit card after my bankruptcy?” for assistance.
How do I obtain a credit card after my bankruptcy?
It is possible to obtain a credit card after bankruptcy. You should consider the following options in obtaining your credit card:
- Obtain a debit/credit card from your bank.
- Ask your bank if they have options for a secured credit card where you provide a balance to secure payment.
- Obtain a credit card in your name that is co-signed or guaranteed by a third party.
- Apply for a credit card that was not included in your bankruptcy.
- To find out what credit card may be right for you, please follow the link below:
There is an objection to my discharge and mediation has been requested by my Licensed Insolvency Trustee – What is this?
Where you are bankrupt and have complied with all your duties with the exception of payment of your surplus income OR where you elected to file bankruptcy instead of a proposal as determined by the trustee, the trustee is required to object to your discharge and make a request to the Office of the Superintendent of Bankruptcy for mediation. This request is made within 5 days following the date you would have been entitled to an automatic discharge. The purpose of this meeting is to reach an agreement for payment of the surplus income. If mediation fails or you do not comply with the terms of the mediation, a court hearing will be set and an order granted at the discretion of the court.
Prior to your mediation, you should review your budget and determine what you believe that you can pay on a monthly basis. This will determine how long your payment period will be. It is important that you set a payment plan that is reasonable to prevent default and a court hearing.
You have alternatives to your mediation hearing. You can participate via email, telephone conference or in person.
Email mediation: If you are in agreement with the calculation of your surplus income and just require more time to pay, you can elect to sign a mediation settlement agreement with the trustee prior to your automatic discharge date. The trustee will submit this agreement to the Office of the Superintendent of Bankruptcy with the request for mediation and you may be eligible to participate via email at the discretion of the government.
Telephone conference mediation: If you are not comfortable with using email, or you want to review the mediation terms in more detail or discuss the process with the mediator who is an employee from the Office of the Superintendent of Bankruptcy, you may wish to attend via telephone conference. Generally, it is useful to attend at the office of the trustee to conduct the conference call so that any changes can be made right there for your review and signature. However, you can conference in from any number. If the mediation is settled, you will be required to sign the mediation settlement agreement.
Mediation in person: You can also elect to attend mediation at the Office of the Superintendent of Bankruptcy in their local office in person to discuss the terms.
There was an objection to my discharge and a court hearing was set – What happens next?
Where the trustee, a creditor or, in certain instances, the Superintendent of Bankruptcy object to your discharge from bankruptcy, you may not receive an automatic discharge or Absolute Order of Discharge. You will be sent notice of a date for a court hearing to consider your discharge. You should attend this hearing and, where there are more complex matters in your bankruptcy, consider consulting an lawyer specializing in bankruptcy matters. The court will grant one of the following types of orders.
Conditional Order of Discharge
This order imposes certain conditions that must be met before making application to the court for a discharge. These generally involve the payment of a sum of money over time and/or other terms that the court may require be satisfied before they consider you ready for a discharge from your debts.
- Until the terms of your conditional order have been met:
- You are required to provide the trustee with such information as requested relating to your earnings, after-acquired property and income
- You must file with the trustee each year a sworn statement providing details on any property or income you have acquired since your order was granted or you last reported to the trustee
- Once you have complied with all the conditions outlined in your conditional order, you should contact your trustee to receive an Affidavit or amended Report of Trustee indicating that you have met the conditions. Your trustee may obtain an Absolute Order on your behalf, but is not obligated to do so.
- Where after the expiration of one year following the granting of the conditional order, your financial circumstances are such that you do not believe you can comply with the terms of the order, you may apply to the court to have the original order varied. You may wish to obtain legal counsel or you can consult with the provincial Supreme Court staff in the district in which your bankruptcy was filed for a self-help package on obtaining your own discharge.
In the event that you wish to file your own application for discharge, the Justice Education Society of BC has published the guidebook Discharge from Bankruptcy which is provided below for your convenience.
Suspended Order of Discharge
In certain instances where the court is unable to grant an Absolute Order of Discharge, (i.e. the debtor has not complied with all the duties or can he held responsible for the bankruptcy) a suspension for a specified period of time may be made. You will have to review the order carefully as often the suspended order will specify that the debts are discharged after the specified time and no further application is required to obtain your discharge.
Adjourned Order of Discharge
A Licensed Insolvency Trustee is required to make an initial application for the discharge of a bankrupt, after your automatic discharge date (9 or 21 months for first time bankruptcy and 24 or 36 months for second or more time(s) bankrupt). Where the trustee is unable to complete the administration of the estate due to you failure to comply with the duties of a bankrupt, the trustee will recommend an adjourned order. The order places your discharge on hold until you are ready to make an application to the court. You are cautioned that once the trustee has obtained their discharge, the stay against your creditors is no longer in effect, your debts are not discharged and your creditors may proceed against you as though you had never filed an assignment in bankruptcy. In the event that you wish to file your own application for discharge, the Justice Education Society of BC has published the guidebook Discharge from Bankruptcy which is provided below for your convenience.
This type of order is granted by the court in extreme circumstances where there is a blatant misuse of the bankruptcy system. It is extremely difficult to obtain a discharge after the court has granted this type of order. You are cautioned that when your discharge has been refused, once the trustee obtained their discharge the stay against your creditors is no longer in effect, your debts are not discharged and your creditors may proceed against you as though you had never filed an assignment in bankruptcy. In the event that you wish to file your own application for discharge, the Justice Education Society of BC has published the guidebook Discharge from Bankruptcy which is provided below for your convenience.
Applying to the Court for an Order of Discharge
Where a discharge is not granted at the initial court hearing, the onus is on you to obtain your own discharge. Although it is recommended that you obtain legal counsel to assist you with an application for your discharge, you may apply on your own. In the event that you wish to file your own application for discharge, the Justice Education Society of BC has published the guidebook Discharge from Bankruptcy which is provided below for your convenience.