Steps in the Bankruptcy Process
In every personal bankruptcy there are certain steps that happen. In an effort to illustrate what you can expect, we have set out below, a diagram outlining the process, or the steps that apply in each personal bankruptcy. Below the personal bankruptcy diagram is an explanation of the various steps listed on the timeline diagram:
Click on each step to learn more
1. Initial Consultation
Free Initial consultation
The purpose of the initial consultation is to provide an exchange of information. During the consultation, we will ask you questions about your situation so that we have a clear picture of your financial situation. Once all of the information is obtained, you will be provided with information on your various options and we will endeavor to answer all of your questions, so you can choose what option is best for you.
2. Signing of Bankruptcy documents (Assignment into Bankruptcy)
Signing of Bankruptcy Documents
If bankruptcy is the option chosen, we will prepare all documents necessary for you to make the assignment into bankruptcy. An appointment will be made for you to sign the documents at our office and once the documents have been signed, they will then be filed with the Office of the Superintendent of Bankruptcy (“OSB”) and notices of your bankruptcy will be sent to your creditors.
3. Notice to Creditors (Within 5 days)
Notice to Creditors
A notice of bankruptcy will be sent to all known creditors within 5 days of “receiving of the Certificate of Appointment”. Upon filing the bankruptcy, most legal proceedings that deal with property matters are stayed or stopped, preventing those creditors from continuing their action against you.
Similarly, any creditor(s) who are garnishing your wages or who are threatening to do so will be stayed, preventing them from garnisheeing your wages, bank accounts etc.
Those annoying telephone calls from creditor or from collection agencies are also stayed and therefore creditors or the agencies must stop calling you. If they don’t stop calling you, you let us know and we will deal with the creditor or collection agency.
However, there are some debts, such as child or spousal support as an example, that are not stayed.
4. General Administration
5. First Meeting of Creditors (25% of proven creditors requesting)
First Meeting of Creditors
Generally, a meeting of creditors is not necessary but there may be instances where such a meeting will be held. Creditors or the Official Receiver may request one or if the Bankruptcy is being administered as an Ordinary administration as explained above.
If a meeting of creditors is called you must attend at this meeting. The purpose of the meeting is to affirm the trustee’s appointment, and provide directions to the Trustee regarding administration of the estate.
Meetings of Creditors are not common in summary administration bankruptcies. If a meeting is required, we acting as Trustee are required to provide a report about your assets and liabilities and creditors may ask you related questions. They may also give directions to the Trustee with reference to the administration of the estate.
6. Duties of the Bankrupt
7. Trustee's Report (Section 170) 8 Months
8. AUTOMATIC DISCHARGE (1st bankruptcy with no surplus income) 9 Months
9. AUTOMATIC DISCHARGE (1st bankruptcy with surplus income) 21 Months
10. AUTOMATIC DISCHARGE (2nd bankruptcy with no surplus income) 24 Months
11. AUTOMATIC DISCHARGE (2nd bankruptcy with surplus income) 9 Months
12. ABSOLUTE DISCHARGE (Court Ordered)
13. SUSPENDED DISCHARGE (Court Ordered)
14. CONDITIONAL DISCHARGE (Court Ordered)
15. REFUSED DISCHARGE (Court Ordered)
16. TRUSTEE DISCHARGE (Court Ordered)
The Trustee Discharge
Upon completing the administration of the bankruptcy, a Trustee must prepare a document known as the Final Statement of Receipts and Disbursements Schedule. This Statement will show the receipts (money collected through realization of assets, tax refunds and monthly payments) and disbursements (money paid for fees, disbursements and dividends to the creditors). It will also include notes outlining the status of all of the assets as well as the status of the individual’s discharge. A copy of this document must be filed with the Superintendent of Bankruptcy and will be sent to the individual who filed bankruptcy and all of their proven creditors.
Once all of the applicable disbursements have been made and all cheques have cleared the trust account, the Trustee will close the bankruptcy estate’s trust account and will seek a discharge from the bankruptcy estate.
It’s important to note that, if the Trustee obtains a discharge but the individual person who filed bankruptcy, fails to obtain a discharge, the stay of proceedings mentioned above, will cease to exist upon the Trustee’s discharge. Accordingly, a creditor will no longer be prevented from pursuing the bankrupt for payment, or start garnishment of wages etc., so it is therefore crucial that a person who chooses to file bankruptcy, perform the few required duties and obtain a discharge from bankruptcy.
People often are worried about counselling and what to expect. Our counselling is usually done in our office and we provide this service on an individualized basis. Although the BIA states that we can provide the service in groups of up to 10 people at a time, we respect your desire to keep your situation as private as possible, and therefore we do individual sessions.
There are only two sessions, and each session will last between half an hour to an hour depending upon your situation. In order to get a discharge from bankruptcy, you must attend two sessions. Generally, we receive very positive feedback about the information that we provide, and most people find it beneficial.
First Counselling Stage – Consumer and Credit Education
The purpose of the first session is to provide information about:
- money management;
- spending and shopping habits;
- warning signs of financial difficulties; and
- obtaining and using credit.
Second Counselling Stage – Identification of Roadblocks to Solvency and Rehabilitation
The second counselling session is to determine the budgetary and/or non-budgetary causes of insolvency or bankruptcy and we generally use this time to provide you with an both the required counselling and provide you with an update on how your bankruptcy is progressing.
In the counselling session, we are required to provide you with:
- Follow up information on the principles presented in the first stage, and therefore we will assist you better understand your strengths and weaknesses with regard to money management and budgeting skills;
- Provide follow up regarding any non-budgetary causes of insolvency and make appropriate referrals and recommendations regarding problems such as gambling abuse, compulsive behaviour, substance abuse, employment and marital or family difficulties that may have contributed to financial difficulties, and if necessary provide you with referrals to professionals, or resources that can help you with non-budgetary causes of financial problems; and
- We will assist you to better understand financial management and consumption habits.