Bankruptcy and the time lines..
Hi,
I am just confused over the time lines involved. IS it correct that you are in bankruptcy for 9 months, then you are discharged, and your credit is still affected for an additional 6 years. In that 7 years total does the trustee file all tax returns or just the one that corresponds to when bankruptcy was filed(before and after. i thought the trustee did the taxes for the entire 7 years. So is it also 9 months or 7 years that one can not claim an inheritance?
I am unclear as to how the time lines all work.
Thanks
At the end of 9 months you are eligible for an automatic discharge from bankruptcy (i.e. a discharge without a court hearing) if you have fulfilled all your obligations by this point and have never previously been bankrupt. The typical bankruptcy takes somewhere between 9 and 12 months before a discharge is granted. Once you have obtained a discharge you will have an R9 listed on your credit history for a maximum of 6 years from the date of the discharge, but by following some simple steps you will find you can often rebuild your credit in a much quicker fashion.
As for tax, the only year that is affected is the year you file a bankruptcy. In this year the trustee does a pre and post return and any refunds or GST cheques are forfeited.
You also mentioned an inheritance. It makes no difference when you claim the inheritance, if it was available or you knew it was going to become available you are required to disclose this to your trustee as it is an asset that legally will need to be part of the bankruptcy estate. Failure to disclose this to the trustee is considered fraud and if discovered your discharge will be over turned, you will have to pay the full amount of the inheritance into the bankruptcy estate and due to your dishonesty it will become substantially more difficult to be discharged from bankruptcy.