Claims Filed After Bankruptcy
Can someone file a claim against you if you filed for Bankruptcy? There are two parts to this that you will need to review.
Stay of Proceedings, as soon as your consumer proposal or bankruptcy is filed, the Stay of Proceeding automatically comes into effect. As a result, legal notices will then be sent out to any persons/companies that have a legal action against you. This covers your unsecured debts. Essentially, the Stay of Proceeding STOPS someone from starting, continuing or enforcing any legal action against you (regarding your unsecured debts). It is important to inform your Trustee of all your debts and to not leave anything out.
Legal Action after Bankruptcy or a Consumer Proposal
If you happen to receive any notice of legal action from your unsecured creditors after your bankruptcy/consumer proposal has been filed, then you should contact your Trustee, inform them of this legal action so they can then send out the Stay of Proceedings to the unsecured creditor;
The Stay of Proceeding is also sent to the court that is handling the legal issue. If you were dealing with wage garnishment for example, the Stay of Proceeding would let the courts/employers know to stop the wage garnishment.
With the Stay of Proceedings, this only helps protect you against your unsecured debts that are covered within your bankruptcy filing or consumer proposal.
Defaulting on your Consumer Proposal
If you fail to meet the terms of your Consumer Proposal and it goes into default, this could cause your Stay of Proceeding to be lifted, and as a result, your creditors will regain their full collection rights, including court action.
There is the chance that the Stay of Proceedings could be lifted via the courts if a creditor applies for this. They do have the right to ask the courts if they are looking to pursue a certain legal action against you. However, the lifting of the Stay of Proceedings would usually only be granted to allow the creditor to seek a court decision on an undecided claim, but once decided, the Stay of Proceedings would usually be reinstated.
Depending on your financial situation, either a proposal or bankruptcy could be a viable option for you to help you get out of your financial hardships. If you are having financial problems, take the time to contact our offices for a free initial consultation. See what your options are and to help get a new start on life.
