Filing for bankruptcy is the first step of the bankruptcy process. When you file for bankruptcy, a “stay of proceedings” immediately prevents your creditors from collecting debts directly from you. It is important to understand, however, that your debts continue to exist until you complete the final step in the bankruptcy process: obtaining a bankruptcy discharge. Here is what you need to know about getting discharged from bankruptcy to eliminate your debt.
What Is a Discharge from Bankruptcy?
A bankruptcy discharge is the last step in the process. You are eligible for a discharge once you have fulfilled certain requirements (discussed below). A discharge from bankruptcy means you are released from the legal obligation to repay debts that existed on the day you filed for bankruptcy. Note that there are a few types of debt that are not dischargeable by the bankruptcy process, including child support, spousal support, and student loans if you stopped being a student less than seven years ago.
When Will You Be Eligible for a Bankruptcy Discharge?
The timeline for eligibility depends on a few factors:
Suppose it is a first-time bankruptcy, and you do not have surplus income. In that case, you are eligible for an automatic discharge nine months after filing for bankruptcy, provided you have attended two financial counselling sessions, and no one is opposing the discharge.
The timeline is longer if it is a first-time bankruptcy and you have “surplus income” as defined by the standards of the Office of the Superintendent of Bankruptcy (a Licensed Insolvency Trustee or “LIT” can help determine if you have surplus income and calculate the exact amount that you must pay each month into the bankruptcy estate). In this situation, you are eligible for an automatic discharge after paying surplus income to the estate for 21 months, provided you have attended two financial counselling sessions, and no one is opposing the discharge.
Suppose it is a second bankruptcy, and you do not have surplus income. In that case, you are eligible for an automatic discharge 24 months after filing for bankruptcy, provided you have attended two financial counselling sessions, and no one is opposing the discharge.
If it is a second bankruptcy and you have “surplus income,” you are eligible for an automatic discharge after contributing to the estate for 36 months, provided you have attended two financial counselling sessions, and no one is opposing the discharge.
Remember that those timelines are the minimums; the process can be delayed and take longer if you fail to complete the duties and requirements imposed after filing for bankruptcy. Our Greater Vancouver insolvency trustees https://www.csvan.com/ can help you with the paperwork to file for bankruptcy and then assist you with staying on track to obtain your bankruptcy discharge as quickly as possible.
What If the Discharge Is Opposed?
An “automatic discharge” is granted without having to go to Court; your trustee will send you the discharge certificate and other records at the end of the process to confirm your successful discharge. The situation is different if a creditor, LIT, or the Office of the Superintendent of Bankruptcy opposes your discharge. A Court hearing will be necessary to determine whether the discharge will be granted. While it is rare for a bankruptcy discharge to be challenged, it does happen. Reasons a discharge may be challenged include allegations that the bankrupt has failed to meet duties or obligations or has committed misconduct under the Bankruptcy and Insolvency Act. At the end of the hearing, the Court will decide whether to refuse the discharge or to issue an absolute discharge, conditional discharge or suspended discharge.
What Happens If You Are Not Discharged from Bankruptcy?
An “undischarged bankrupt” is a person who has filed for bankruptcy but has not yet been discharged from bankruptcy. Remember that your debts are still owed until eliminated by a bankruptcy discharge. The discharge from bankruptcy is what relieves your legal obligation to pay the debts that existed when you filed for bankruptcy. There can be significant consequences for an undischarged bankruptcy. For example, an undischarged bankrupt cannot borrow more than $1,000 without notifying the lender, bank, or credit card company. This will seriously hinder your ability to rebuild your credit, get a mortgage to purchase a home, get financing for a new car, etc. Worse still, if you do not fulfil the duties of bankruptcy and obtain a discharge, your creditors’ rights to pursue you for payment of your debts can be revived.
Can Personal Bankruptcy Discharge Your Business Debt?
So far, we have discussed discharges for individuals who file for https://www.csvan.com/debt-help-richmond/personal-bankruptcy-vancouver personal bankruptcy. Greater Vancouver bankruptcy trustees https://www.csvan.com/corporate/bankruptcy also assist with business and corporate debt. If you are unincorporated (e.g., a sole proprietor, self-employed contractor, or unlimited partnership), you can file for personal bankruptcy to deal with both personal and business debts. The timelines for eligibility for discharge discussed above would apply. The bankruptcy rules, including the kinds of assets that are subject to seizure, are different if you file for bankruptcy as a corporation or if you have personally guaranteed business debts of a corporation. Your best bet is to contact the Vancouver Licenced Insolvency Trustees at Campbell, Saunders Ltd. for advice if you seek discharge from any business debt.
Who Can I Contact for Advice on Filing for Bankruptcy in Greater Vancouver?
Insolvency trustees at Campbell, Saunders Ltd. offer guidance and advice on debt solutions, including corporate and personal bankruptcy. Greater Vancouver https://www.csvan.com/debt-help-richmond/personal-bankruptcy-vancouver residents have turned to our experienced insolvency trustees for debt help for over 30 years. We will explore all available options and ensure that all your bankruptcy questions are answered. Get in touch with our insolvency trustees (Richmond, Vancouver, and virtual appointments are available) today to book your free and initial confidential consultation.