Prince Edward Island Bankruptcy Exemptions
On Prince Edward Island, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have a car worth $6,000 and you still owe $3,000 on the loan, the equity you have in the car is $3,000. In P.E.I., the exemption for a car is $6,500. In this case, you are entitled to keep the car and the creditors included in your bankruptcy claim cannot take it from you.
Bankruptcy Restriction Order Bro
A BRO is an order that can be made against you when you have been made bankrupt and it is found that your behaviour prior to bankruptcy is dishonest, reckless or fraudulent.
A BRO can extend certain restriction of bankruptcy for up to 15 years.
The effects of a BRO includes:-
- Obtaining credit beyond £500 without Courts permission is a criminal offence
- The Bankrupt has to trade in the name under which the they were adjudged bankrupt
- Prohibition from acting as a director of a limited company
Restrictions will also be placed upto you in your everyday life including but not limited to being unable act as a local councillor or a school governor, exercise a right to buy or be a Member of Parliament in England or Wales.
If a BRO is made against you and you break any of the restrictions, youll be committing a criminal offence. You could be fined or even sent to prison.
The period of the BRO will depend on how culpable the bankrupt is deemed to be. As a guide the period for the restrictions is imposed as follows:
- 2 5 years Culpable Behaviour incurring debt knowing you could not settle it
- 5 10 years Reckless Behaviour for example racking up debts by gambling
- 10 15 years Dishonest Behaviour getting involved in fraudulent activities
What can lead to a BRO?
The official receiver can ask the court to look at any of the following behaviour when deciding if a BRO should be made
What Does Bankruptcy Discharged Mean: Debts Eliminated By Bankruptcy Discharge
A bankruptcy discharge means that you have completed your personal bankruptcy process and are no longer legally liable for any outstanding debt you included in the bankruptcy filing . Upon receiving an absolute discharge from bankruptcy , you are no longer responsible for any discharged debts.
The discharge in bankruptcy eliminates most of your debts, including unsecured debts such as , medical bills, and payday loans. When you are discharged from bankruptcy, not the fact that you filed for bankruptcy, is what eliminates your debts. You need your discharge to get rid of your debts, which explains why its so important. That is what does bankruptcy discharged mean, really means.
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Advantages And Disadvantages Of Bankruptcy
If you’re trying to decide whether you should file for bankruptcy, your credit is probably already damaged. But it’s worth noting that a Chapter 7 filing will stay on your for 10 years, while a Chapter 13 will remain there for seven. Any creditors or lenders you apply to for new debt will see the discharge on your report, which can prevent you from getting any credit.
What Restrictions Will Be Placed On You
A Bankruptcy Restriction Order keeps all of the usual bankruptcy restrictions in place, as well as a few more:
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Who Can File Bankruptcy
To go into personal bankruptcy in Canada, a person must have lived or done business in Canada within the last year or, have the majority of their property in Canada, and must be insolvent.
To be insolvent essentially means:
Alternatives To Chapter 7
Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707.
Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.
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What Does A Bankruptcy Restriction Order Do
When a court imposes a Bankruptcy Restriction Order , it will subject the debtor to certain restrictions, for a set period of between 2 and 15 years.
The restrictions are the same restrictions as every bankrupt will experience during a normal bankruptcy period, which are set out in the insolvency law, however the BRO will lengthen the time period of the bankruptcy restrictions, stopping them from being lifted when the bankrupt is discharged, as is normally the case.
What Is The Effect Of A Bankruptcy Restriction Order
Restrictions involve your personal and business life and include, but are not limited to, the following:
- Having to inform potential lenders of your Bankruptcy Restriction Order if youre seeking credit in excess of £2,000 , or youve incurred debts in excess of £1,000 since being made bankrupt, and are seeking any amount of further credit.
- Not taking office as a local authority member
- Not acting as a company director or taking an indirect role in forming, managing, or promoting a company, without express permission from the courts
Breaking these restrictions is a criminal offence, and can result in a prison sentence.
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What Does It Mean To Be An Undischarged Bankrupt
In the event, you were unable to fulfill your obligations under your personal bankruptcy proceedings, your Trustee, and maybe a creditor or two would have opposed your discharge from bankruptcy. A bankrupt who has not been discharged poses many potential problems. Therefore, if you are an undischarged bankrupt, it is because you have failed to fulfill one or more of your obligations as a bankrupt.
what does bankruptcy discharged mean
Why You Might Get A Bro
Examples of behaviour that can lead to a BRO include:
- giving away assets or selling them for less than their value
- paying some creditors in preference to others
- borrowing money that you know you cant repay
- neglecting your business so that your debts increase
- not cooperating with the official receiver
- behaving fraudulently eg giving false details to obtain credit
This is not a complete list. Any dishonest or blameworthy behaviour could lead to a BRO. The court may consider conduct that occurred before or after your bankruptcy order.
Being bankrupt for a second time in six years is also a matter to be considered but is not, in itself, sufficient reason to apply for a BRO.
The fact that you have done one of these things doesnt mean that you will be automatically subject to a BRO, but it does mean that the official receiver needs to look at the conduct and decide whether the public needs protection.
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Newfoundland & Labrador Bankruptcy Exemptions
In Newfoundland and Labrador, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have a car worth $6,000 and you still owe $4,000 on the loan, the equity you have in the car is $2,000. In Newfoundland and Labrador, the exemption for a car is $2,000. In this case, you would be entitled to keep the car and your unsecured creditors cannot take this from you when you file for bankruptcy.
Bankruptcy Restriction Order During Or After Discharge
A Bankruptcy Restriction Order can be made during or following your discharge from bankruptcy. The Accountant in Bankruptcy will let you know in writing about the potential BRO, and you have 14 days in which to respond.
If you feel it is incorrect you should let the Accountant in Bankruptcy know in writing, and include any evidence to support your case. This will then be investigated, a decision made as to whether to impose bankruptcy restrictions on you, and for what length of time.
If a Bankruptcy Restriction Order is imposed, it will be added to the Register of Insolvencies – a public register that is free to access via the AiB website.
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Why Would A Bankruptcy Restrictions Order Be Granted
A BRO may be made for failing to cooperate with the trustee at any stage – not supplying the information required for sequestration, for example, or misleading the trustee on the level of debt you owe.
Other examples can include:
- Selling assets at below their market value
- Incurring additional debt when you know that it cannot be repaid
- Fraudulent activity
- Giving preference to certain creditors over others
- Failing to keep proper financial records
How Long Do Bankruptcy Restrictions Last
Bankruptcy restrictions will last as long as the bankruptcy order does, which is usually 12 months to the day from your declaration of bankruptcy.
However, the length of these restrictions may well be extended for certain reasons.
If, in any way, you fail to co-operate with the parties involved during the course of your bankruptcy order, then the length of your restrictions may be extended.
If your restrictions are to be extended then you will be notified by your trustee or official receiver who is taking care of your bankruptcy case. You can reject the extension but if you do, then the relevant parties will get in touch with the courts to have a legally binding Bankruptcy Restrictions Order taken out against you.
If youre bankrupt and want to find out when your restrictions will be lifted, then have a look at the Individual Insolvency Register online, where all of the relevant information will be displayed.
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When Can A Bankruptcy Restriction Order Be Administered
If during their investigation of their bankruptcy the official receiver finds that the individual acted either dishonestly or recklessly before or after bankruptcy, they could ask the court to impose a BRO.
While all conduct and behaviour can be considered for legal action, in particular, the court will examine whether:
- The restrictions imposed during the initial 12 months of bankruptcy were broken.
- Some creditors were deliberately paid off instead of others within 2 years of becoming bankrupt
- The person in question failed to keep a record detailing losses made on properties or businesses
- Assets were given away for less than their worth any time during a 5 year period before bankruptcy
- Collecting deposits for goods or services which they have then failed to provide
- Excessive pension contributions were made before applying for bankruptcy
- Additional debts were accrued that could not be repaid in full
- They continued to trade with a business in the knowledge outstanding debts could not be paid
- Debts continued to increase through neglect of their business
- Money was spent in an extravagant manner or gambling debts were accrued
- Fraudulent activity took place such as making false claims when applying for credit
- They refused to co-operate with the bankruptcy trustee or official receiver
- The individual had been found guilty of committing a bankruptcy offence, which could incur further legal punishment
What Does Bankruptcy Discharged Mean: Absolute Discharge Vs Conditional Discharge And So On And So Forth
In order to obtain a discharge, a bankrupt person must have fulfilled all of their bankruptcy duties. These personal bankruptcy duties include:
- providing all books, records or documents to the Trustee that identify the assets and liabilities of the debtor
- prepare and submit to the Trustee within 5 days after filing for personal bankruptcy, unless the Office of the Superintendent of Bankruptcy Canada extends the time, a sworn statement of affairs detailing the persons assets and liabilities, and for each of the bankrupts creditors, their respective names, addresses and the amount owing
- disclose to the Trustee complete details of all dispositions of property within 1 year before the date of the bankruptcy
- make a disclosure to the Trustee of all the details of property disposed of by gift or settlement without adequate valuable consideration within a 5 year time period before the date of bankruptcy
- if a creditors meeting is called, attending it
- making any required surplus income payments to the Trustee
- participating in two mandatory financial counselling sessions and
- offering whatever assistance is requested by the Trustee.
If the bankrupt fulfill all of their duties, then the Trustee will not have a reason to oppose the discharge. If no creditor opposes, then the bankrupt is entitled to an absolute discharge. As already stated, the discharge is what eliminates unsecured debts.
- conditional discharge
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What Is A Bankruptcy Restriction Order
A Bankruptcy Restriction Order or BRO, is a Court Order made against a bankrupt once a court has decided that the bankrupt’s conduct has been culpable or dishonest.
Whilst not intended to be a punishment, a BRO is only imposed in circumstances where the Court believes the debtor’s actions have had a significant impact on the cause and depth of a bankrupt’s indebtedness.
Subjecting a bankrupt to a BRO is done, primarily, to extended the period of protection bankruptcy gives creditors from the future financial activities of the bankrupt.
How The Court Decides Whether To Make A Bro
When it is deciding whether to make a BRO, the court and the official receiver will look at your behaviour before and after the bankruptcy order was made. They will ask themselves whether the public needs protecting from you, looking at things like:
- the extent to which your creditors have lost out
- how aware you were of your situation at the time of the behaviour
- the likelihood of you doing it again.
If a BRO is made, the length of it will depend on how serious the court thinks your behaviour was. The worse your behaviour, the longer the BRO is likely to last.
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Exceptions To Discharge From Personal Bankruptcy In Nine Months
The length of your bankruptcy will be nine months, unless one or more of the following is true:
- You fail to perform all your bankruptcy duties, such as regular payments of surplus income to the trustee.
- You have surplus income .
- You have been bankrupt before.
- There is an objection filed to your discharge.
How much longer your bankruptcy period will be depends on the details of your case. Twenty-one month is typical when the bankrupt individual makes a good salary .
If You Accept The Bro Application
If you accept the allegations that are made against you by the official receiver, you can offer to enter into a bankruptcy restrictions undertaking . This has exactly the same effect as a BRO but means you won’t have to go to court. If you offer to go into a BRU, this will normally be shorter than if the court made a BRO.
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After The Bankruptcy Order
After the bankruptcy order, you may open a new bank or building society account but you should tell them you are bankrupt they may impose conditions and limitations. You should ensure you do not obtain overdraft facilities without informing the bank that you are bankrupt, or write cheques which are likely to be dishonoured. Tell your trustee about any money that you have in the account which is more than you need for your reasonable living expenses. Your trustee can claim the surplus amounts to pay your creditors.
How Should I Respond To The Official Receiver
The consequences of a breaking your bankruptcy restrictions can be huge. Doing so could see you enter bankruptcy restrictions for a period up to 15 years, which can severely affect your ability to gain credit and perhaps even a job particularly if you were a former director or work within the finance industry. Breaches of the BRO can result in fines or even a prison sentence, should the offences be severe. Generally, the punishment fits the offence.
If you receive a letter from the official receiver advising they are going to apply for a BRO you can either challenge this when the matter goes before the court or you can accept the findings and negotiation a bankruptcy restriction undertaking . A BRU is generally shorter than a BRO and avoid the need to go to court. It is sensible to agree to this if you accept the actions you have taken were inappropriate.
If you are seeking debt management advice regarding a bankruptcy situation, our business rescue experts can help to identify a solution to your financial issues.