Frequently asked questions:

Personal Bankruptcy

Q. Will I have to come to a meeting of my creditors?

A. Not unless the creditors or Industry Canada wish a meeting to take place.

Q. Will I be able to get credit again?

A. Credit Grantors will decide that when and if the time comes, however you should know that most Credit Bureaus maintain a record of bankruptcy for several years and some institutions will not extend credit to a previous bankrupt.  There are strategies available to help you to rebuild your credit following your discharge from bankruptcy, such as providing a cash deposit to be held by a credit card providor to secure purchase transactions.

Q. Will my spouse be responsible for my debts if I go bankrupt?

A. If he or she has provided an lending institution with a guarantee or acknowledgement of responsibility for use of credit in your name, the answer is yes.  If not, your spouse will not be responsible for your debt.

Q. My parent co-signed on my car loan.  Is he/she going to have to pay the loan if I go bankrupt?

A. The answer is yes, unless there is security behind the loan that will pay off the loan when liquidated, or if you continue to pay, for example a secured auto loan.

Q. How long will my bankruptcy take to complete?

A. A first time bankruptcy normally takes 9 months to complete, and if no creditor objects, will usually result in an absolute discharge.  If you have been bankrupt before, you should expect a longer period and with specific requirements for you to adhere to.

Q. What assets are exempt from my creditors?

A. As of May 1, 1998, exemptions limits in B.C. are as follows:

Q. Can I operate my business while I am bankrupt?

A. Yes, but you cannot be a director of a corporation while you are bankrupt, and you must remit quarterly installments to Canada Customs and Revenue Agency, (formerly Revenue Canada) if you are self employed. You must disclose to any prospective creditor that you are a bankrupt before you request credit in your personal capacity while you are bankrupt.

Q. Can I be a director during my bankruptcy?

A. You can not hold office as a director during your bankruptcy.

Q. Will I lose my professional designation when I file for bankruptcy?

A. You need to contact your professional association or relevant regulatory body to determine what their position will be.

Q. Can I run for or continue to hold an elected office?

A. You need to check the qualifications to hold office in the organization or jurisdiction involved.

Q. What happens to my RRSP when I file an assignment?

A.   Your RRSP is available to your creditors to the extent that you can access it yourself.  If you can cash it in, then the Trustee will do so.  Some RRSP's under the administration of a life insurance company are not available to the Trustee, but the Trustee will likely ask you to make a contribution to the creditors or will seek to obtain a conditional discharge order requiring that you make such a contribution.

Q. Are student loan debts discharged by bankruptcy?

A. Effective from June 18, 1998, Canada Student Loans Act and Canada Student Financial Assistance Act loan advances will not be discharged by a bankruptcy.  The exception is loans due related to studies completed more than ten years before the date of bankruptcy.  Proposed amendments to the Bankruptcy & Insolvency Act would reduce this period to five years.

You should know that bankruptcy may trigger a loss of any rights you may have to interest relief.  Please check Justice Canada's Website for particulars and additional information.

Q. Can I apply for relief from my Canada Student Loan?

A. You may be entitled to relief as long as you are not in arrears of payments to your Canada Student Loan(s), in certain circumstances.  You can read about the 2003 changes at http://canadagazette.gc.ca/partI/2003/20031220/pdf/g1-13751.pdf, pages 46-62.  It is important to keep in touch with your lender in a change of circumstances, because once the account is in  default, it will be referred to collection, which limits or eiminates your options for relief and for debt reduction.  Q. I am in financial difficulty or already in bankruptcy, but I need more student loans to complete my course of study.  What can I do?

A. Access the link in the above question.  You may be able to continue to borrow from Canada Student Loans to complete your current course of study.  The Office of the Superintendent of Bankruptcy issued a Position Paper to the Trustee Community in May 2004, which addresses the issue of continuing education loans while in bankruptcy or under a proposal under the Bankruptcy & Insolvency Act at http://strategis.ic.gc.ca/epic/internet/inbsf-osb.nsf/en/br01439e.html. 

Q. What other debts are not discharged by bankruptcy?

A. Additional debts that are not released are those resulting from:

• Damages from civil proceedings related to bodily harm intentionally inflicted, sexual assault or wrongful death.
• Court imposed fines, penalties and restitution orders
• Any debt or liability for alimony or support for children or a spouse living separate from you.
• Any debt or liability arising from fraud, embezzlement or misappropriation or defalcation while acting in a fiduciary capacity.
• Any debt or liability for obtaining property by false pretences or fraudulent misrepresentation.
• The dividend a creditor would be entitled to as a result of  a bankrupt not disclosing a debt to the trustee.

Q. Can Canada Revenue Agency (CRA), (formerly Revenue Canada and CCRA), claim a security interest over you that effectively requires you to pay them, even if it is for a pre-bankruptcy debt, including director's liability for source deductions?

A. Yes, they can.  Canada Revenue Agency (formerly Revenue Canada) are now arguing that they may assert such a priority for any personal bankruptcy from June 18, 1998, for any debt due including for director's liability for source deductions, under certain conditions.  Before doing so, CRA must obtain a judgement and register it against you.  This is a contentious area and may be subject to challenge in the courts.  

Proposals to Creditors.

Q. Should I consider the Proposal Option as a means of dealing with my creditors as an alternative to Bankruptcy?

A. Yes! You should explore the Proposal Option.

A proposal for an individual or a business may be a good option if you want to make full or part payment of your debts but cannot presently handle your debts.  Ask us for details on the types of proposals available to you and we will be happy to review your situation with you and provide you with your options. 

A Division I Proposal may be an option if your debts exceed $ 75,000 not including the mortgage on your home.  It is a statute mandated method of restructuring or reducing debt but must be approved by a Special Resolution at a meeting of creditors, and anyone considering this course of action must bear in mind that a negative vote results in bankruptcy.  Contact us for more information.

A Consumer Proposal may be a good option to resolve your difficulties with your creditors if you have consumer debt of less that $75,000 not including mortgage debt on you home, you find yourself unable to pay them, or if you wish to negotiate your debts with your creditors but you do not wish to file a bankruptcy assignment.  In order for your creditors accept your proposal, they have the right to require a meeting to consider your proposal, or they may accept by doing nothing.  If your proposal is approved by your creditors at a properly constituted meeting, it is accepted; if no creditor objects or requests a meeting within 45 days of filing your proposal, it is deemed to be accepted.   Further, if your proposal is accepted, it is binding on all of your unsecured creditors, but you will still have to pay your debts to Canada Customs and Revenue Agency (formerly Revenue Canada), as well as any secured debt you may have, such as a mortgage.  If your proposal fails, you are not deemed to be bankrupt as a result.

Discharge of first time bankrupts

A first time bankrupt can expect to receive an automatic discharge nine months from the date of making an assignment unless that discharge is opposed by a creditor, the Superintendent of Bankruptcy or the Trustee.

Payment of Surplus Income to the Trustee during bankruptcy

A bankrupt person is expected to make surplus income payments during their period of bankruptcy, for payment to the creditors.  We will provide you with a copy of the guidelines we are required to use to calculate the surplus income payments that will be required during your bankruptcy, based on your level of income and your dependents.

Credit Counselling

Q. Do you provide Counselling as required under the Bankruptcy & Insolvency Act to your Clients?

A. Yes, we have taken the prescribed course of study and are accredited by Industry Canada to provide credit counselling.  

Mediation

Q. Are Mediation services available to me under the Bankruptcy & Insolvency Act ?

A. Yes, effective June 1998, mediation is available to all stakeholders in the bankruptcy process. Mediation is available as a method of resolving certain disputes that sometimes arise from the administration of an Estate administered under the Bankruptcy & Insolvency Act.  Mediation is available for matters relating to Surplus Income Payments as well as for matters relating to Bankrupt's discharge and is administered by the Superintendent of Bankruptcy..

Here is a link to Industry Canada's Mediation Policy

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How to Contact Us:

Telephone:
(604) 683-8030

FAX:
(604) 683-8327

Postal address:
Suite 520 - 625 Howe Street
Vancouver, B.C. Canada, V6C 2T6

Electronic mail:
General Information: info@manning-trustee.com
William Choo: wc@manning-trustee.com
Don Manning CIRP*: dnm@manning-trustee.com