Discharge from Bankruptcy – explained.
Filing for bankruptcy is one thing, getting a discharge from bankruptcy is quite another. A great advantage of filing for bankruptcy is that you get immediate protection from legal actions by your creditors. Your creditors cannot proceed with legal remedies to collect any amounts owing except in very specific circumstances or with leave of the court.
After you have filed for bankruptcy, you still owe your debts until they are “discharged” usually at the end of the administration. During the bankruptcy there are certain duties and obligations imposed on you, that if not complied with can result in your discharge being refused, suspended, or made conditional upon the completion of those obligations.
As long as you do everything that is required of you in a timely manner, the majority of bankruptcies are automatically discharged, without the requirement of a court hearing, upon the passage of time. Although the Bankruptcy & Insolvency Act sets out time frames for issuance of “automatic discharges” you may apply to court for a court ordered discharge at any time, and if the court believes there is a strong reason to grant such an application, you may get an early discharge.
Although all of the “duties of a bankrupt” appear quite complex, the main reasons that people have problems with getting a discharge include; failure to attend at counselling sessions, failure to report income, failure to pay trustee’s fees, failure to provide information for the completion of tax returns, or failure to cooperate with the trustee.
Consequences of No Discharge.
It is easy for some folks to become complacent after experiencing the relief that comes with filing for bankruptcy, but it is important to stay in touch with your LIT in order to ensure that all of your responsibilities have been performed. If you do not get your discharge from bankruptcy your creditors rights will be revived and they may resume collection activities including suing you and garnisheeing wages, and they may add in any interest that has accrued during the administration of the bankruptcy.
If you have an older, undischarged, bankruptcy you may still be able to make an application to court to have it discharged by court order. In some cases, this may a complex and expensive process. Some LITs will require that you pay an additional fee into the bankruptcy, for the benefit of creditors, in addition to any amounts that may be outstanding. In some situations, you may be required to retain the services of a lawyer to help unravel outstanding obligations.
The Bottom Line.
Make sure you stay in communication with your LIT, do the things that are asked of you in a timely manner and there is no reason why you should have a challenging time.