THE ULTIMATE GOAL – DISCHARGE
Ultimately, a person who is filing bankruptcy wants a discharge from bankruptcy. It is the discharge that eliminates the obligation to repay the debts, and upon becoming discharged from bankruptcy, or released from bankruptcy, a person can apply for credit again and essentially is given a fresh start.
If there are no extenuating circumstances, you are usually eligible for an automatic discharge as follows:
- First time bankrupt with no surplus income after 9 months;
- First time bankrupt with surplus income after 21 months;
- Second time bankrupt with no surplus income after 24 months; and
- Second time bankrupt with surplus income after 36 months.
Bankruptcy is a rehabilitative process, and therefore an individual will need to demonstrate that they have been rehabilitated. It is little things like attending financial counselling or paying your debt obligations after bankruptcy that show you are taking steps to be rehabilitated. Accordingly, a Trustee must oppose the bankrupt’s discharge if the bankrupt failed to:
- pay the Trustee for its services;
- pay the required surplus income (see below);
- disclose all assets and earnings to the Trustee;
- provide the necessary information to file the pre-bankruptcy income tax return and post-bankruptcy income tax return; or
- attend the first and second counseling sessions.
The Bankruptcy Court will decide upon your discharge in one of the following ways:
Absolute Discharge: This official document discharges you from the bankruptcy and relieves you of the debt obligations incurred prior to your assignment into bankruptcy.
Order of Conditional Discharge:The Court may impose certain conditions that must be met before your discharge becomes absolute. For example, the Court may require you to pay an amount to your Trustee for distribution to your creditors. Upon complying with the terms set out by the Court the Trustee will then proceed back to Court to obtain an Absolute Order of Discharge.
Order of Suspended Discharge: Generally in the case of a second and/or third time bankrupt the Court orders a suspension delaying the discharge so it will not be effective until a later date.
Refused Order of Discharge: Generally in the case of a bankrupt refusing to co-operate with the Trustee, or has committed an offense under The Bankruptcy and Insolvency Act, the Court may refuse the discharge of the bankrupt.
We at Adamson & Associates Inc. have informed many people of the option for debt consolidation and have provided guidance to people seeking personal bankruptcy. We know how to help you alleviate your debt and can get you through your personal financial crisis.