What must I Do During Bankruptcy?

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There are a number of duties you must complete while you are bankrupt.

Duties at start of bankruptcy

As soon as your bankruptcy begins, you must surrender to your trustee:

Creditors meeting

You must attend the meeting of creditors, if one is held. At this meeting, your creditors will have the opportunity to ask questions about your bankruptcy. However, in most personal bankruptcies, no creditors’ meeting is held.

You must attend the meeting of creditors if one is held. At this meeting, your creditors will have the opportunity to ask questions about your bankruptcy. A meeting of creditors is held if requested by the Superintendent of Bankruptcy or by creditors with an aggregate of at least 25% of the proven claims. These meetings are usually held at the office of the trustee.

However, in most personal bankruptcies, no creditors’ meeting is held.

Income tax

You must give the trustee your T-4 slips and any other information necessary to complete any outstanding tax returns to the date of bankruptcy.

When you file for bankruptcy, the day you file is treated like the end of your tax year so that in the year you file bankruptcy you actually have to file two different tax returns.

Any income tax debt will be included in your bankruptcy, although you may be required to pay it separately. Any refund to which you are entitled will be an asset that will come to your trustee for your creditors.

Monthly reporting

Each month, you must report your household income and living expenses and any change in your family situation to your trustee, along with copies of your pay stubs. Your trustee will give you appropriate forms to fill in in order to provide him or her with this information.

From your income and expenses, your trustee determines if your net income was higher than the limit allowed by law for you to live. If you have any “surplus income”, you will be required to make a payment each month to the trustee. In a bankruptcy the more you earn, the more you are required to contribute to your estate for the benefit of your creditors.

For most people it is the monthly income reporting that requires the most homework. However, the monthly income and expense reporting throughout bankruptcy is usually very helpful for most people, as they now keep track of the money coming into the household and how they spend it and when.

Credit counselling

To be eligible for an “automatic nine month discharge“, you must take two credit counselling sessions. The counselling can be one-on-one, with yourself and your trustee, or if you prefer, it can be in a group consisting of other bankrupts and your trustee.

The first counselling session must be held between 10 and 60 days following the start of bankruptcy; the second counselling session must be held no later than 210 days following the date of bankruptcy. The cost for for each individual counselling session is $85, plus GST.

This credit counselling is designed to teach you budgeting and good money management so that you are less likely to have financial problems in the future. Each session is about an hour long and discusses budgeting and the causes of your financial difficulties.

Experience shows that the credit counselling reinforces your income and expense reporting, in giving you better control of your finances.

Other duties

You must keep the trustee informed as to where you are living.

You must respond to the trustee’s requests, assist him or her as required, and provide whatever information is requested.

If you borrow more than $500, you must tell the lender that you are bankrupt.

You may not be a director of a company.

Timely completion

It is essential you complete these duties in a timely manner, so that your bankruptcy can be completed as soon as possible. For example, if you miss a payment to your trustee, your discharge date will be postponed. The earlier you obtain your discharge, the earlier you will be able to rebuild your credit and live life normally again.

As you can see above, what you must do during bankruptcy is designed partly to help you manage your money better. If you are ready to put your financial problems behind you, please contact a Licensed Insolvency Trustee near you.