November 12th, 2007 by Questions
I just went bankrupt, first time, surplus income and will be making payments for 21 months. I understood the law was going to change to do this, but it was stalled indefinitely. All info I find on the internet is ambiguous and keeps referring to a possible change that has not taken place. Even the government site still reads 9 months automatic for first time bankrupt, regardless of surplus or not. I have read postings here from the beginning of this year still referring to changes in the law that were stalled and not yet law. Obviously the reform took place, when exactly did it take place, why is it so difficult to get the updated info on the internet? I have checked around ten sites including the government and none refer to the change having taken place.
One Response to “bankruptcy reform”
Please post a follow up comment below:
(Note: comments are reviewed by moderators and then posted after approval. In addition, due to high volume some of the comments might not be posted.)
You must be logged in to post a comment.
November 12, 2007 at 9:41 am, A licensed trustee said:
The reason you can’t find a definitive answers is because right now there isn’t one.
Bill C-55 was passed in Nov 2005, then we had a federal election and it was never enacted. The government has taken a couple of swings at resurrecting this legislation, the most recent is Bill C-12 (a Bill to amend the law from2005). This new bill has cleared the Commons and is now waiting for hearings to be scheduled in the Senate.
What are your rights? Well, your bankruptcy is going to run 9 months – after that it comes down to your trustee’s recommendation and the Court. Trustees may recommend an extension of up to 12 addtional months (that’s where the 21 months comes from). There are no rules or guidelines as to how a trustee may make this recommendation.
For instance, our policy is to extend beyond 9 months if a bankrupt has to pay more than $2500 in surplus. Anyone paying more than $6,000 in surplus in the first nine months gets the full 12 month extension.
Here’s where it gets tricky – as a bankrupt, you don’t have to agree/accept your trustee’s recommendation. You have the right to as the Court to decide. The problem with this strategy is that in the vast majority of cases, the Court (which is not limited to a 12 month extension) levies a longer extension that the trustee. In other words, for many people, going to Court results in a greater penalty…
If you want to put all of this is perspective, before you filed for bankruptcy you probably owed a lot of money to your creditors. Even with the extension you are likely only repaying a fraction of the debt – you are still better off than you were when you started.
Alternatively, file a proposal to your creditors to voluntarily repay a portion of your debt – you will end up repaying more than you would in bankruptcy, but the payment and the total amount you are required to pay will be fixed from the start and won’t change 9 months in to the procedure…