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Bankruptcy Discharges

August 22, 2018

Bankruptcy discharges are the final release of the bankrupt from their obligations to their creditors.  Most bankrupts do get discharged after they have completed the duties that are prescribed under the Bankruptcy & Insolvency Act.  There are four types of discharge from bankruptcy as indicated below with an explanation:

  1. Automatic Discharge. An automatic discharge is one that occurs automatically upon completion of duties within prescribed time frames.  No court attendance or action is required by the bankrupt to obtain an automatic discharge, the certificate is issued by the trustee.
  2. Absolute Discharge. Absolute discharges are ordered by the discretion of the court.  The trustee may make the recommendation, but the court issues the discharge.
  3. Conditional Discharge. The court may order that the bankrupt comply with one or more conditions before being able to obtain an absolute order of discharge.
  4. Suspended Discharge. The suspended discharge is also granted by order of the court, but it requires that the bankrupt remain bankrupt until a pre-determined time frame has passed.  It is not unusual for second or third (or more) time bankrupts to be issued a suspended order.

Finally, if the bankrupt has been found to have committed some malfeasant act or acts the court has the power to refuse to discharge the bankrupt altogether.  This is a drastic step and rarely necessary but it can happen.