What duties are required during the bankruptcy process?

Personal bankruptcy laws in Canada are governed by the Bankruptcy & Insolvency Act.  Failure to complete your duties will delay your bankruptcy discharge so it is important you understand fully your requirements once you declare bankruptcy.

Duties at the start of bankruptcy

As soon as your bankruptcy begins, you must complete the following:

  • Disclose all property (assets) in your possession and deliver non-exempt assets to the trustee;
  • Hand over all credit cards to the trustee for cancellation;

 Creditors meeting

  •  Attend any required meeting of creditors or examinations by the Official Receiver.  At this meeting, your creditors will have the opportunity to ask questions about your bankruptcy. A meeting of creditors is held if requested by the Superintendent of Bankruptcy or by creditors with an aggregate of at least 25% of the proven claims. These meetings are usually held at the office of the trustee.

Income tax/other documentation

  •  Provide any documents requested by the trustee including all forms, tax returns, insurance policies etc. When you file for bankruptcy, the day you file is treated like the end of your tax year so that in the year you file bankruptcy the trustee will file two different tax returns. Any income tax debt will be included in your bankruptcy up to the date of bankruptcy.  Any refund to which you are entitled will be an asset that will come to your trustee for your creditors.

Monthly reporting 

  • Report your household income and expenses each month to the trustee, along with copies of your pay stubs; and
  • Make all required payments, including surplus income. The trustee will determine if your net income was higher than the limit allowed by law for you to live. If you have any ” surplus income”, you will be required to make a payment each month to the trustee. These funds are held in trust for the benefit of your creditors.

Credit counselling

  • Attend two mandatory credit counselling sessions. This credit counselling is designed to teach you budgeting and good money management skills so that you are less likely to have financial problems in the future.

Other duties 

  • You must keep the trustee informed as to your whereabouts (ie change of address/phone number).
  • You must respond to the trustee’s requests, assist him or her as required, and provide whatever information is requested.
  • You cannot apply for credit of more than $1,000.00 without disclosing that you are an undischarged bankrupt. This means that while you are bankrupt you will not have access to credit.
  • You may not be a director of a company.

Timely completion 

It is essential you complete these duties in a timely manner, so that your bankruptcy can be completed as soon as possible. If the duties are not completed, your discharge date will be postponed. The earlier you obtain your discharge, the earlier you will be able to rebuild your credit and live life normally again.

Give us a call for a free consultation, we would be happy to assist you with a new financial beginning.

How do I correct an error on my credit report?

It is important that you request a copy of your credit report from the two credit-reporting agencies at least once a year to verify that your personal information is up to date, that your financial information is correct, and to ensure that you have not been the victim of identity fraud. You can do this free of charge by contacting both credit bureaus in Canada: Equifax and Trans Union.  Lenders will often refuse credit even if it is clear an error has occurred on your credit report, and they will not issue credit until the mistake is rectified.

To correct an error on your credit report, both credit bureaus provide a form to complete and send back to them.  When completing this form, be as specific as possible.  Once the form is received by the credit bureau and after their investigation, they will either correct the error or not, based on their findings.  Should your dispute be valid, the information on your credit report will be changed according.  If you do not agree with an item following the credit bureau’s investigation, Equifax and Trans Union websites inform you as to how you can add an explanatory statement to your report.

The contact information for the major credit reporting agencies in Canada are as follows:

Equifax Canada

Tel: 1-800-465-7166
Fax: 514-355-8502

Trans Union Canada
Tel: 1-866-525-0262 (For all residents except Quebec)
Tel: 1-877-713-3393 (For Quebec residents)

Give us a call for a free consultation, we would be happy to assist you with a new financial beginning.