Bankruptcy Discharge

July 26th, 2013 by Questions

I declared bankruptcy in 2008. I paid the trustee everything I needed to over the course of the next 9 months. After that I received a letter from the trustee, to my surprise, indicating I had to go to court due to the fact I did not pay off everything. The judge then decided that I had to pay an additional $2500 in order to have the bankruptcy discharged.

Recently I received an email from my trustee indicating that if I did not pay off $2500 by a certain date that they would open up my bankruptcy to me creditors. That dealine has now passed and I have tried to communicate with my trustee however they have not responded. Therefore I am unsure what to do at this point in order to get the bankruptcy discharged. I was also wondering why there was a deadline in paying off the additional $2500 since I was never advised of this. Also what does opening up the bankruptcy to my creditors mean? Can you please help me with my situation?

Thank you

Posted from: Ontario


One Response to “Bankruptcy Discharge”

, A licensed trustee said:

Normally, we delete this type of question since you are already dealing with a trustee and you really need to speak to them about your file…

I suspect what happened back in 2008 was your income exceeded the Surplus Income rules and therefore you were required to make additional payments into your bankruptcy (ie you made more than you were allowed so had to pay extra).

The Court usually sets specific repayment terms – like $250 a month for 10 months to deal with the outstanding balance. If no terms were set in your case then the practice is to allow you up to a year to start dealing with the balance. It sounds like your trustee has given you 4 years to deal with it and for whatever reason you haven’t.

At some point, your trustee is required to close your file – they cannot keep it open indefinitely. If you haven’t done all that you were required to do by the time your trustee goes to close your file then you remain in bankruptcy indefinitely, BUT you lose the protection from your creditors. Once your trustee closes your file your creditors have the right to start pursuing you again – they may take you to Court themselves and/or try and garnishee your wages (if you have any).

In order to be released from your bankruptcy you need to pay whatever balance remains – if your trustee has closed your file there may now be additional amounts due to re-activate it, but there is no way to turn on the protection from your creditors again – except a Court Order, which you won’t receive since you failed to satisfy the Order that was issued 4 years ago…

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