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Joint Bankruptcies and Proposals

January 9, 2018

The Bankruptcy & Insolvency Act has provisions that allow for both joint bankruptcy and joint proposal filings. The filings can be between individuals who are related and financially codependent or individuals who are conjoined only by the debts they owe.

Interestingly the Act does not prescribe a limit to how many people can be considered “joint”. Conceivably then a mother and father as well as a son and daughter-in-law could all file a joint proposal, if they are financially related to the debts and the means of support.

The courts have interpreted Corporations to be persons for the purpose of the Bankruptcy & Insolvency Act thereby facilitating the filing of joint estates with consumers.  Business partners may also make joint filings but there are rules regarding the distribution of joint and individual property.

Trustees have an aversion to filing joint estates because many relationships break down over time, even family relationships. If the joint filers don’t cooperate they can jeopardize the outcome(s) for the other filers. Nonetheless, joint filings can be cost saving, since only one set of fees will be paid, and convenient for the debtors and creditors involved.