THE BANKRUPTCY PROCESS – LEARN THE STEPS
Initially, filing for bankruptcy may look challenging. However, your BDO Kelowna Trustee will help you understand what is happening, the legal terminology being used, and the steps in the bankruptcy process. Below is a step-by-step explanation of the process you will go through when filing for bankruptcy. Your BDO Kelowna Trustee will guide you through this and take care of many of the steps on your behalf.
Deciding to take control of your debt takes a lot of courage and you are taking a positive step toward achieving financial independence.
Set up a free no obligation appointment
BDO Kelowna has federally licensed Trustees in Bankruptcy available to help you through the bankruptcy process. The first consultation is free and there is no obligation to proceed. At your consultation, the Trustee will review your financial situation and ask you for the following information:
- Why you are in financial difficulty
- Your family situation and your responsibilities
- Your income and assets (what you earn and what you own)
- A list of your outstanding debts (who you owe and how much)
Confirm your options
After reviewing your financial situation, the Trustee will discuss with you all of the options to get out of debt to help you make an informed decision about whether bankruptcy is the most appropriate solution for you.
Fill out an application
Once you have decided to proceed with filing for bankruptcy, your Trustee will ask you to fill out a short application. It will take about 20 minutes to complete and your Trustee can arrange for someone to help you do so if you feel uncomfortable tackling it yourself.
File for bankruptcy
When you have completed the application form, the Trustee will prepare documents that you must sign afterwards to ensure that they are correct. The Trustee will then file the documents with the Office of the Superintendent of Bankruptcy (OSB), a department of the federal government. Your bankruptcy does not happen until this filing takes place. During your bankruptcy period, you will stop making payments to your unsecured creditors. You will still owe the money until the discharge happens, however:
- Creditors will not be able to take any legal action against you to collect the debt (except for alimony, maintenance, or support)
- The harassing phone calls from creditors and collection agencies will stop
- You agree to hand over any available assets to the Trustee who will be responsible for turning them into cash and giving the money to the creditors
For more information on what assets you can keep in a bankruptcy in British Columbia, click here.
Creditors are notified
The Trustee will notify your creditors that you have filed for bankruptcy. Then, a meeting of creditors may be called depending on the type of bankruptcy, or if your creditors or the OSB requests such a meeting. The main purpose is to give your creditors a chance to learn the details of your situation and give directions to the Trustee, if they wish. A creditors’ meeting in a consumer bankruptcy is a rare occurrence.
Sale of your assets
During the bankruptcy period, your assets – except for those exempted by federal and provincial laws – will be turned over to the Trustee who will realize on these for the benefit of your creditors. Talk to your BDO Kelowna Trustee in Bankruptcy to find out what possessions you can keep, or visit your provincial site of the Superintendent of Bankruptcy for more information.
Payments to the Trustee
In almost all cases, payments to the Trustee are required. Sometimes, the payments are meant to ensure that the Trustee gets paid for the work that he/she does in your bankruptcy. Where warranted by your income, there may be surplus income payments. The law provides that, when you make a certain amount of money (determined by family size and after considering certain responsibilities), “surplus income” payments will be required. In this event, the length of the bankruptcy period may increase from nine to 21 months. The purpose of surplus income is to balance your need for a fresh start against the creditors’ right to a fair recovery on their debt.
Examination by OSB
This is another step of the bankruptcy process that does not normally happen. However, after you file for bankruptcy, an officer of the OSB could examine you under oath about “your conduct, the causes of the bankruptcy, and the disposition of your property.”
As part of your duties, you must attend two mandatory counselling sessions which are intended to help you understand the causes of your bankruptcy and better manage your finances.
In certain circumstances, the Trustee will be required to prepare a report that is circulated to the OSB and creditors prior to your discharge from bankruptcy. In many cases, the report is not required and, generally, you will receive an automatic discharge from bankruptcy when your duties are complete. In the event that you do not perform your duties, the report will be prepared and a court appearance may be required.
If necessary, it is possible that you will have to attend a discharge hearing. If a creditor, the Trustee, or the OSB objects to the discharge, a court hearing will be held to determine what requirements must be met prior to your discharge.
Receiving your discharge from bankruptcy
This is the part of the bankruptcy process you are looking forward to. Once you are discharged from bankruptcy, you will be released from the legal obligation to repay the debts you had at the date you filed – except for certain types of debts that are excluded. For more information on how long the bankruptcy process can last, click here.