What Is In The Bankruptcy And Insolvency Act
The bankruptcy act details how different financial options work legally, and defines the roles that the Superintendent of Bankruptcy, the representatives of the Superintendent of Bankruptcy , the court, trustees, creditors, and you, the consumer, have.
The BIA is organized into 14 parts:
|1||Administrative Officials||Responsibilities of the Superintendent of Bankruptcy , the official receivers , and the trustees|
|2||Acts of bankruptcy and how to apply for bankruptcy|
|3||Proposals||Proposals to your creditors, including consumer proposals discusses what they are and the roles of the trustee and you, the consumer|
|4||How your property is dealt with|
|5||How your estate will be handled by creditors and trustees|
|6||Your rights, responsibilities, and duties, and how the law will help you|
|7||The courts duties, roles, and authority|
|8||The consequences of not following the laws and procedures of the BIA|
|9||Items that do not fit in any other category, like the rights of banks|
|10||Discussion of an alternative to bankruptcy an Orderly Payment of Debt|
|11||How property is handled with secured creditors|
|12||How to deal with security firms in bankruptcies|
|13||How to deal with the international filing of bankruptcies|
Types Of Bankruptcy Filings
Bankruptcy filings in the United States fall under one of several chapters of the Bankruptcy Code, including Chapter 7, which involves the liquidation of assets Chapter 11, which deals with company or individual reorganizations and Chapter 13, which arranges for debt repayment with lowered debt covenants or specific payment plans. Bankruptcy filing costs vary, depending on the type of bankruptcy, the complexity of the case, and other factors.
Consequences Of Filing For Bankruptcy
As mentioned above, your will be impacted for at least six years after you are discharged from your bankruptcy. Take heart, though you can begin to improve your credit rating as soon as your bankruptcy is discharged, and your credit options will improve in step with your credit rating. Read more on our page: When Does a Bankruptcy Clear from My Credit Report?
While your bankruptcy is in progress, you may not be a director in a corporation. Certain professional designations and board memberships are also affected while you are bankrupt your Trustee can help you source the relevant information, or you may check with the specific professional association or board.
Some financial and professional applications will require you to declare whether you have been bankrupt you will need to answer truthfully. This does not necessarily mean your application will be denied. Note that if you have filed a consumer proposal but have never been bankrupt, you will answer no to this question.
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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 making 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 lasts will depend on the details of your case. Twenty-one months is typical when the bankrupt individual makes a higher salary .
What A Stay Of Proceedings Will Stop
Regardless of the process you choose, a stay of proceedings will be filed on your behalf. You will receive creditor protection, which means that creditors cant take any further legal action against you. Essentially, a stay of proceedings tells creditors that you are working with an LIT to resolve your debt, and so legal actions against you should be stopped. That means a few practical things for you, as a debtor:
- Interest payments are frozen.
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The Remaking Of Thebankruptcy Regulations
On 1 April 2021, the Bankruptcy Regulations 2021 commenced to address the sunsetting of the Bankruptcy Regulations 1996.
The Bankruptcy Regulations 2021 remade the Bankruptcy Regulations 1996 in substantially the same form with minor and technical amendments aimed at modernising references and ensuring alignment with the Bankruptcy Act.
The Bankruptcy Regulations give form to many administrative requirements of the Bankruptcy Act necessary for the efficient administration of bankruptcies, debt agreements and other formal personal insolvency options governed by the Bankruptcy Act.
More information about key changes implemented by the Bankruptcy Regulations 2021 is available on the AFSA website.
Bankruptcy Process And Outcomes
There are several steps you must take when you have decided to make yourself bankrupt. While instructing a solicitor is notnecessary, the ISI considers it advisable to get professional legal advice inadvance of declaring yourself bankrupt or defending any bankruptcy proceedings.The Irish Mortgage HoldersOrganisation provides a free service in relation to bankruptcy.
The process is summarised below:
- Lodge 200 with the Official Assignee
- Complete your petition, which must be verified by a sworn affidavit and a sworn statement of affairs
- File the relevant bankruptcy application documents in the Examiners Office
- Attend the court hearing on the date given, where the judge, if satisfied, will adjudicate you bankrupt
- Meet the Official Assignee or Bankruptcy Inspector to be interviewed about all your assets and debts
- Place a notice of your adjudication as a bankrupt in Iris Oifigiúil
- Place a notice of your adjudication as a bankrupt either on the ISIs website or in a national daily newspaper
Before 2016 a statutory High Court sitting was also required, but thisrequirement was removed by the Bankruptcy Act 2015.
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Recognition Of Foreign Proceeding
269 A foreign representative may apply to the court for recognition of the foreign proceeding in respect of which he or she is a foreign representative.
Subject to subsection , the application must be accompanied by
a certified copy of the instrument, however designated, that commenced the foreign proceeding or a certificate from the foreign court affirming the existence of the foreign proceeding
a certified copy of the instrument, however designated, authorizing the foreign representative to act in that capacity or a certificate from the foreign court affirming the foreign representativeâs authority to act in that capacity and
a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.
The court may, without further proof, accept the documents referred to in paragraphs and as evidence that the proceeding to which they relate is a foreign proceeding and that the applicant is a foreign representative in respect of the foreign proceeding.
In the absence of the documents referred to in paragraphs and , the court may accept any other evidence of the existence of the foreign proceeding and of the foreign representativeâs authority that it considers appropriate.
- 1997, c. 12, s. 118
- 2005, c. 47, s. 122
Nothing in subsection precludes the commencement or the continuation of proceedings under this Act, the
What Bankruptcy Cannot Do
Bankruptcy can be a lifesaver for someone struggling with an overwhelming amount of debt. There are, however, limitations as to what bankruptcy can do. A few of the things bankruptcy cannot do for a person include:
- Prevent Repossession of Secured Property Bankruptcy typically does not eliminate liens, and if a debtor has a secured debt, the creditor can legally repossess the property regardless of whether bankruptcy has been filed.
- Eliminate Child Support Obligations Child support obligations are not eliminated when a person files bankruptcy. The same is true of alimony. If a court has ordered either of these, the debtor remains responsible for paying them in full, regardless of his bankruptcy status. If filing Chapter 13 bankruptcy, the debtor must include child support and alimony payments in his q repayment plan.
- Eliminate Student Loans It is very rare for bankruptcy to eliminate student loans. In fact, the only time this might occur is when the debtor can prove that repaying the loans would cause him an undue hardship. This requires very strict criteria to be met.
- Eliminate Tax debts Delinquent taxes are rarely discharged in bankruptcy, though it is possible in some circumstances. If the debtor has older, unpaid income taxes, and meets certain specific requirements, such a debt might be discharged.
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Your Responsibilities In Bankruptcy
First, you will have to provide your LIT with a list of your debts and assets. They will then file a declaration of bankruptcy. This is done electronically with the Government of Canada through the Office of the Superintendent of Bankruptcy. Your LIT will also send a copy of the paperwork to your creditors so they can file claims.
What Is The History Of The Bankruptcy And Insolvency Act In Canada
The Bankruptcy and Insolvency Act in Canada has a very interesting history. The Bankruptcy and Insolvency Act of Canada has its origins in the Bankruptcy Act of 1919. The Act changed in 1949. In terms of the history of our country, this means the Act is a relatively young piece of legislation. The reason for the enactment is that every modern society has to realize that some of its citizens and businesses will run into financial trouble. A modern and efficient economy has to have the means to help those people and businesses out of their trouble. Everyone deserves a fresh start. To redeploy a companys assets there must be a formal system to allow this to happen.
The Act changed again in 1992, 1997 as well as 2008-2009. The 1992 reforms concentrated on maximizing value for creditors with reorganization and rehabilitation, boosting the fair distribution to employees and providers of goods and services to the bankrupt company.
The 1997 reforms urged consumer debtor responsibility and boosted the reorganization stipulations as well as the administration of the Act. It introduced new sections dealing with the insolvency of securities firms and dealing with global insolvencies.The 2009 reforms, had 4 primary aims:
- to urge the restructuring of viable, but financially hampered companies
- to better secure workers insurance claims for wages and holiday pay
- making the bankruptcy system fairer and lower abuse and
- to improve the administration of the Canadian bankruptcy system.
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Settlement Of The Insolvent Persons Estate
The trustee/receiver must first realize the amount of the proceeds from the property that is available for payment to the different classes of creditors, and different rules apply according to the type of proceeding. They are summarized as follows:
Starting with the property under the possession or control of the insolvent person
The estate is then settled, using the priority of claims outlined in the BIA.
The BIAs definition of property is quite broad:
property means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property
As a consequence, the Supreme Court of Canada has ruled that direct payment clauses in contracts do not release the contractor from its obligations to the trustee of the estate.
What Is An Act Of Bankruptcy
Before a creditor can commence bankruptcy proceedings against a debtor, they must have a valid act of bankruptcy to rely on. There are numerous ways that a debtor may commit an act of bankruptcy.However, the most common is the failure to comply with a bankruptcy notice. This article explores some of the more common acts of bankruptcy relied on, as well as the requirements for a valid bankruptcy notice.
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Is Personal Bankruptcy The Only Solution
No. There are alternatives to bankruptcy in Canada. When your Licensed Insolvency Trustee completes their assessment of your financial situation, they will discuss any alternatives that may work for you. In some cases, the Trustee may recommend a debt consolidation loan, a credit counselling program or a consumer proposal. Each of these options has its own set of pros and cons, and not everyone will qualify for all of them.
Disadvantages Of Filing For Bankruptcy:
The Bankruptcy and Insolvency Act is the legislation by which Licensed Insolvency Trustees administer bankruptcy files. The laws and regulations of the Act are meant to balance the scales between the need of an honest but unfortunate debtor for a fresh financial start, and the rights of the creditors. For this reason, filing for bankruptcy in Canada has some disadvantages:
- Filing for bankruptcy will lower your credit score for a minimum of six years from the time your bankruptcy is completed
- Some of your assets may need to be surrendered, and/or a portion of your income above a certain level may need to be paid into your bankruptcy
- In bankruptcy, you must provide the Trustee with detailed income and expense information
- Your income tax refund, if you get one, is part of the bankruptcy and is forfeited to the Trustee for the year of bankruptcy
If you have reached the point where you are over-extended and can no longer afford your debt, the advantages of filing for bankruptcy or consumer proposal likely far outweigh the disadvantages.
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How Does Bankruptcy Work
In plain language, this is what happens in personal bankruptcy in Canada: you assign your non-exempt assets to a Licensed Insolvency Trustee in exchange for the elimination of your debts. Certain exemptions that vary by province may allow you to keep some assets such as your home , car, RRSPs, pension plans, furnishings and effects, etc.
As soon as your bankruptcy papers are filed, your creditors are barred from attempting to contact you, and most legal proceedings and garnishments related to your debts will cease. Once you are released from bankruptcy , the debts included in the bankruptcy will be extinguished. Those creditors are legally blocked from approaching you for any further payments.
H New Provisions Of The Civil Code Of Qubec
Although the new provisions are not part of the subject of this paper, it seemed useful to reproduce them in Table No. 3 of the Appendix. Some have been discussed above. As for the others, in particular, article 1392 on lapse of offer in the event of bankruptcy, article 2159 on the liability of the mandatary, article 2775 on the continuation of a hypothecary creditors administration even in the case of the debtors bankruptcy, and finally article 2990 on the trustees certificate for publication purposes, they pose no problems of a constitutional nature in my view, except that they could, in certain cases, come into conflict with federal legislation.
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Why You Should Not Be Embarrassed By Bankruptcy
According to the Office of the Superintendent of Bankruptcy, approximately 100,000 Canadians every year turn to bankruptcy or consumer proposal as a way to deal with their debt problems.
It is important to recognize that there should be no shame associated with declaring personal bankruptcy. People find themselves in this stressful position for a wide variety of reasons, from a sudden loss of employment to large, unexpected bills.When your bankruptcy is completed , the debts included in your bankruptcy will be extinguished and you can begin to improve your right away.
Being Discharged From Bankruptcy
When a debtor receives a discharge order, they are no longer legally required to pay the debts specified in the order. What’s more, any creditor listed on the discharge order cannot legally undertake any type of collection activity against the debtor once the discharge order is in force.
However, not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, and debts to the government. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that the lien is still valid.
Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in court before the deadline. This leads to the filing of an adversary proceeding to recover money owed or enforce a lien.
The discharge from Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical.
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Does The Discharge Clear All Debts
When you receive your bankruptcy discharge all your eligible unsecured debts, such as credit cards, payday loan debt and income tax arrears are erased.
Secured debts cannot be eliminated in bankruptcy unless the security is given up.
1) child support payments, 2) alimony payments, 3) court ordered damages and awards, 4) debts obtained by fraud and 5) student loan debt if you have ceased being a part time or full time student less than 7 years ago.
Secured creditors are not impacted by your bankruptcy, as secured debts cannot be discharged through going bankrupt.
Exceptions To The Discharge Of All Debts
Some debts are not erased. Bankruptcy generally only extinguishes unsecured debts such as those to credit cards, personal loans, income taxes, overdrafts, etc.
A secured debt, such as a car loan or mortgage, may not be included. This is because this type of creditor can recover the amount owing to them via the collateral you posted as security. Your Trustee can advise further if you have a secured loan you want to include in the bankruptcy.Some unsecured debts are also not discharged in a bankruptcy. An example is student loans, if you attended school less than seven years from the date of bankruptcy. Alimony or child support obligations, fines or penalties imposed by the Court, as well as any debt arising from fraud are not discharged in a bankruptcy.
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