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Second Bankruptcy

I need to know how will a second bankruptcy effect my ability to obtain future credit. I was put out of business by changes made within proviencal regulations, and remain unable to pay off the credit cards e used to run our business. We need to move on but do not want to put yourselfs in a no win position.

5 Responses to “Second Bankruptcy”

Barton Goth, GCO Inc. Bankruptcy Trustees said...

While there is no “limit” to the number of times a person may file bankruptcy as far as the Bankruptcy and Insolvency Act is concerned a second bankruptcy is more involved than the first.

In a first bankruptcy, if you perform all of your duties properly, you are eligible for an Automatic Discharge 9 months and 1 day from the date that you file bankruptcy.

In a second bankruptcy, even if you perform all of your duties properly, you are not eligible for an Automatic Discharge. You must apply to the Court to obtain a Discharge Order. The Registrar will consider the time that has elapsed since your first bankruptcy, the events that lead up to your first and second bankruptcies, and the types of debt that where included in both procedures. In most cases the bankrupt will receive a Suspended Order of Discharge. That means the Court is extending your bankruptcy beyond the Court date. It may be as little as a day, but mostly likely it will be for a number of months (the practice in Toronto seems to be 6 additional months).

However, as a second bankruptcy is more complicated than a first bankruptcy you may want to look into a consumer proposal as it could prove very beneficial. Which ever direction you decide it is important that you speak to a trustee so that he can outline the pros and cons of each option (see Find A Trustee on the right hand side of this page).

Barton Goth, GCO Inc. Bankruptcy Trustees said...

Yes! You most defiantly do. If you fail to do so you will have essentially lied under oath, and opened yourself up to significant criticism in the discharge process. There are some subtle differences when you file a second bankruptcy that you should discuss with a licensed trustee and I recommend you do this right away as there are some significant amendments to the legislation that will ultimately make a 2nd time bankruptcy more difficult.

Anonymous said...

I just read about your situation and i swear this could be me-i had to double check it! Everything you said-including the 10 year old child-the mis advice from your previous acct and now owing Revenue Canada back payroll taxes-I even owe the same amount.I also have two employees PLEASE tell me what you found out!!!!I also had health problems and got behind and trying to stay current and pay the arrears-it’s going nowhere.Please respond!!!

A licensed trustee said...

In some cases Revenue Canada will accept a proposal; in other cases they won’t. Agree with the first comment; our best advice is to contact a trustee to review your situation, and help you assess whether or not bankruptcy is the correct option, or if a proposal is a better way to go.

Barton Goth, GCO Inc. Bankruptcy Trustees said...

The consequence of filing bankruptcy a second time is two fold:

1. You are not eligible for an automatic discharge so a court application will have to be made and you can expect the court will keep you in bankruptcy for an extended period of time (in Alberta the norm is an additional 12 months on top of the original 9, but you should discuss this with a licensed trustee in your area, he will be better able to advise you on the practice of your local courts); and
2. In terms of credit, you will have an R9 listed with the credit bureau for a maximum of 14 years from the time you are discharged from bankruptcy (obviously a significant period of time so this is often an incentive for people to consider filing a consumer proposal as opposed to a second bankruptcy).