Assets and Property – You must assign all assets to your trustee, with the exception of exempt property.
Bankruptcy and Insolvency Act (The Act) – This is the federal law that regulates business and consumer proposals and bankruptcies in Canada. It falls under the responsibility of the Office of the Superintendent of Bankruptcy at Industry Canada.
Bankruptcy Court – This is a court in which a judge or registrar will decide on the bankrupt’s application for discharge and other insolvency matters.
Co-signers – Your bankruptcy does not cancel the responsibility of anyone who has guaranteed or co-signed a loan on your behalf.
Creditor– A creditor is a person, institution or business to which money is owed. Secured creditors are creditors who have taken some measure to protect themselves and hold a mortgage, pledge, lien or similar instrument on, or against, the property of the debtor. If they are not paid, they can enforce their claims by recovering the assets on which they hold security.
Note: Unsecured creditors are creditors who do not have any security for the debt owing to them.
Credit rating – Your bankruptcy is a matter of public record and is available to any interested party (such as a credit reporting agency). To obtain credit after your discharge you may have to demonstrate to the potential lender that you have sufficient income and the ability to handle a reasonable level of debt.
Debtor – A debtor is a person who receives a loan or an advance of goods and services in exchange for a promise to pay at a later date.
Harassment – One of the objectives of the Act is to relieve you of pressure from your creditors. If you receive phone calls or letters from creditors, tell them that you are bankrupt, or have made a proposal, and refer them to your trustee or administrator.
Income tax returns – Two income tax returns must be completed for the calendar year in which you become bankrupt. The pre-bankruptcy return covers the period from the beginning of the year to the date of your bankruptcy. You will be required to provide details and documentation to support this return to your trustee. The post-bankruptcy return covers the period from the date of bankruptcy to the end of the calendar year.
You may be asked to give any possible refund from these income tax returns to the trustee for distribution to your creditors. The trustee or a creditor may apply for a court order in this respect.
Inspector – Inspectors are appointed by creditors to represent them before the trustee during the administration of proposals and bankruptcies. They are expected to assist the trustee by virtue of their experience and are required to supervise certain aspects of the trustee’s administration.
Insolvent person – A person who is unable to meet financial obligations as they become due is insolvent.
Legal action – Although legal actions or most garnishments against you stop on the date you declare bankruptcy or file a proposal, criminal actions and some civil matters, such as actions in matrimonial matters, are not affected by the bankruptcy or proposal. Give the trustee or administrator copies of all legal documents that you have received before and after the date you became bankrupt or filed a proposal. In a proposal, no creditor can, without permission of the court, start or continue any legal action until the proposal is either withdrawn, refused, annulled or until the administrator has been discharged. In the case of a bankruptcy, no creditor may, without permission of the court, start or continue any legal action until the trustee has been discharged.
Mediation – In the course of the bankruptcy, the parties involved in a disagreement can agree to work with an impartial and independent person called a “mediator”, who will help them settle their dispute instead of going to court. Generally, the mediator is an employee from one of the Superintendent of Bankruptcy’s Division Offices. Mediation is more flexible, speedier and less costly than a formal court decision. It allows people affected by the bankruptcy to be directly involved in deciding how their disagreement will be settled.
Official Receiver – The Official Receiver is a federal government employee in the Office of the Superintendent of Bankruptcy and officer of the court with specific duties under the Bankruptcy and Insolvency Act. The Official Receiver, among other things, accepts the documents that are filed in proposals and bankruptcies, examines bankrupts under oath and chairs meetings of creditors.
Payments and Surplus Income – Immediately after becoming bankrupt, you should no longer be required to make payments to your creditors. However, while you are an undischarged bankrupt, you are expected to deposit a portion of your income with your trustee for distribution to your creditors. These payments are made according to guidelines issued by the Superintendent of Bankruptcy. If you fail to make these payments voluntarily, the court may order you to do so, or your discharge may be affected.
Superintendent of Bankruptcy – The Superintendent of Bankruptcy is a federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada.
Trustee in bankruptcy – A trustee in bankruptcy is a person licensed by the Superintendent of Bankruptcy to administer proposals and bankruptcies. The trustee represents your creditors and is an officer of the court. However, the trustee can give you information and advice about both the proposal and bankruptcy processes and make sure that your rights, as well as those of the creditors, are respected.
Windfalls – You must give all windfalls, such as lottery winnings and inheritances, occurring during the period of your bankruptcy, to the trustee for distribution to your creditors.
Other Considerations – You cannot be the director of a company while you are in bankruptcy. If you obtain credit or borrow money while in bankruptcy you must disclose that you are an un-discharged bankrupt.