What can you Expect After Bankruptcy
Do you owe money after bankruptcy? This is a valid question. Today we will tackle many aspects of bankruptcy and what it covers.
Once your bankruptcy trustee has filed all the forms for your case with the Office of the Superintendent of Bankruptcy, then you are a bankrupt.
So what happens after this point?
From here on, you will be dealing directly with your Trustee. Your trustee will now be dealing with your creditors (with regards to your unsecured debt).
Essentially you no longer deal directly with your unsecured creditors, this is handled by your trustee. Next if there are any wage garnishments against you, this will stop, and thirdly, if there are any lawsuits from your unsecured creditors, these will also stop.
After becoming bankrupt, the next part of the process is your trustee selling your assets. Note that there are some assets that are not included in the sale, some assets that you are able to keep. See here for more info on this.
It is extremely important to notify to your trustee about all your assets, and to also let them know about any of your properties that were transferred and/or sold over the past few years.
What happens next is that your trustee will then hold the money that was gained from the sale of those assets, for distribution amongst your unsecured creditors.
Your Creditors and Your Trustee
When you declare bankruptcy, your trustee will handle the job of letting your unsecured creditors know about your recent bankruptcy. So you will no longer need to deal with them directly.
Possible Surplus Income Payments
Each month, your pay stubs and any other means of income will need to be submitted to your trustee, and they will then calculate your surplus income.
What is Surplus Income?
The Surplus Income level lets the Trustee know if an individual in Bankruptcy earns enough money to be required to make surplus income payments into their Bankruptcy Estate These levels are set by the Superintendent of Bankruptcy, and the income is based on household income total.
Surplus income is simply the amount that you earn that goes over the income amount that a family needs to uphold a reasonable standard of living. The larger your family, the more you are able to keep. See the table below for more information regarding 2015 levels.
If there is a Surplus Income
- For first time Bankrupts – Bankruptcy is increased from 9 months to 21 months
- For Second time Bankrupts – Bankruptcy is increased from 24 months to 36 months
Meeting of Creditors (If Called)
The purpose of the meeting of creditors is to allow your unsecured creditors gain the necessary information on your bankruptcy. Confirm the appointment of the bankruptcy trustee. Assign up to 5 inspectors to oversee the administration of your estate, and to let your creditors provide direction to the trustee.
OSB Examination (If Required)
If required, you may be examined (under oath) by an OSB rep after your bankruptcy filing. This is to ask questions regarding the causes of your particular bankruptcy case, possible questions regarding conduct and the disposition of your property.
An important part of your bankruptcy are the counselling sessions. This is to explore the reason(s) why you ended up in bankruptcy and to provide the necessary knowledge and tools to manage your finances going forward.
After you have completed your bankruptcy, you are then discharged and this releases you from any legal obligations to the unsecured debts that were included in your bankruptcy.
With a first bankruptcy and no surplus income payments, then you are eligible for a discharge from your bankruptcy in 9 months. If there are surplus payments (in your 1st bankruptcy) then you will be eligible for a discharge in 21 months.
You will be automatically discharged from your bankruptcy if
- Your discharge is not opposed by a trustee, the Office of the Superintendent of Bankruptcy or one of your creditors.
- Your financial counselling sessions are completed
- It is your 1st or 2nd Bankruptcy
- You provided monthly all information to your Trustee as requested during your bankruptcy.
What if I am not eligible for Automatic Discharge?
If at the end of your bankruptcy term you do not qualify for automatic discharge, your discharge is considered to be opposed and you will need to attend Bankruptcy Court to have your discharge decided.
With an opposed discharge, your trustee will contact you and let you know the reasons why you are not discharged from your bankruptcy. There may still be certain conditions that need to be completed first.
Before your discharge hearing, your trustee will prepare a report which will let the court know the reason(s) you were not eligible for an Automatic Discharge and suggest conditions that should be met before your bankruptcy discharge will be granted. Generally, the report will;
- Entail details regarding your finances,
- The bankruptcy cause,
- Your conduct both before and after becoming bankrupt,
- If you were convicted of any offence (sections 198 to 208), and;
- State any fact that could let the court know a reason to refuse your discharge from Bankruptcy.
The Court will consider the facts in this report and any facts that you the bankrupt may present at the hearing. Once the Court considers all the facts, they will make a decision as to what, if any, conditions that must be met before you can be granted a discharge. Once these conditions are met, you will be discharged from your bankruptcy.
Debts that are not included from Discharge
When you are discharged from your bankruptcy, you are then released from any legal obligations regarding the unsecured debts covered within your bankruptcy. Note that there are certain debts that a bankruptcy does NOT release you from your obligation to pay. Debts that are excluded are,
- alimony arrears and payments;
- child support arrears and payments;
- student loans, (providing at the date of bankruptcy it was less than 7 yrs. from the time when you ceased to be a full/part-time student)
- a fine or penalty imposed by the court; and
- Any debts from fraud.