Filing Bankruptcy While In Prison?

Filing for bankruptcy is a personal decision, with many different factors that should be considered. Since each person’s situation is different, you’ll need to consult with a Licensed Insolvency Trustee to determine if bankruptcy is a good option for you. That said, your ability to connect with a Trustee may be limited if you are presently located in a Correctional Centre. Admittedly, I’m not familiar with the rules and restrictions that may be applicable to your situation, but assuming you have access to a telephone and are able to schedule an appointment at a pre-determined time to chat with a Trustee by phone, you should be able to complete a free consultation and have the Trustee explain your options to you. Specifically, because of your present incarceration, your Trustee may ask you the following questions:

1. Does your reason for incarceration have to do with your debt? – since there are certain debts that are not discharged in the event of a bankruptcy, your Trustee will ask this question to determine if the debts you are seeking to include in the bankruptcy are eligible. Section 178 of the Bankruptcy and Insolvency Act lists several debts that are not eligible to be discharged by a bankruptcy, such as Child Support, Spousal Support, Court fines & penalties, and debts related to fraud (not an exhaustive list). In the event that your debt relates to criminal activity, it is unlikely to be eligible for inclusion in a bankruptcy. If however, your debt is unrelated to your incarceration, for example it might be for a credit card that you accumulated prior to your incarceration and are now unable to pay, your Trustee can discuss the options you have in dealing with that debt, including a possible bankruptcy.

2. Once you are released, do you anticipate earning income? – If so, you might wish to consider waiting until after your release, and then working with the creditors to pay down the debt, or consider a Consumer Proposal. It is customary that while someone is incarcerated, their creditors have limited means to contact you, and therefore the stress of the debt is less problematic. However, having a plan to deal with the debt once you are released is generally a good idea, to avoid garnishments or other legal proceedings that may then start.

Once your Trustee has assessed your situation, explained your options, and you are ready to make your decision, you can discuss the options available to complete the assessment and sign-up documents. The Office of the Superintendent of Bankruptcy (OSB) specifies the conditions under which debtors and Trustees are able to meet and complete the financial assessment. Traditionally, while financial consultations often took place by phone, the actual signing of documents was to be completed during an in-person meeting between the Trustee and the debtor. During the COVID-19 pandemic, these rules were temporarily suspended, and virtual consultations were permitted, enabling debtors to meet with their Trustee by video, and sign documents electronically. As of early 2022, the OSB has not yet specified what the future requirements for assessments will entail however, they have indicated that debtors are to be fully informed and offered services at a location of their choosing, including remotely. Therefore, it is important for you to ask the Trustee about the regulations in force at the time that you anticipate signing. Many Trustees are able to accommodate electronic signing and virtual appointments in accordance with the rules, but you may need to check the technology available for your use at the Correctional Centre. If video or in-person assessments are not possible, there are special provisions available at the discretion of the OSB to ensure that you have access to the Bankruptcy and Insolvency System, and your Trustee can assist you in applying under those provisions.