Customer bankruptcy in Canada is governed by the Bankruptcy and Insolvency Act ("BIA"). This law is supplemented by regulations, as well as directives from the Office of the Bankruptcy Controller which provides guidance to trustees in bankruptcy on various aspects of the BIA.
Video Consumer bankruptcy in Canada
Consumer base concept
For BIA purposes, it is important to be able to distinguish between the legal definition of "insolvent person" and one "bankrupt". In general, a person who is bankrupt is a person who is unable to pay his debt and may then become bankrupt, either by placing himself in bankruptcy, being filed into bankruptcy by the creditor, or presumed to place himself in bankruptcy for failing in the proposal of Division I.
People who can not afford to pay their obligations are considered bankrupt under the BIA. Under s. 2 of the BIA, an insolvent person is a person who is not bankrupt and who lives, runs a business, or owns property in Canada, whose obligations to creditors can be proven as a claim under this Act totaling $ 1,000, and
The bankrupt consumer, according to BIA, has three main options
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- Declare bankruptcy;
- Submit a consumer proposal to the creditor, proposal of Division II;
- Submit a Division I proposal to the creditor;
The four major players involved in consumer bankruptcy are the Insolvency of Licensed Trusts, Debtors/Insolvents, Creditor, Bankruptcy Control Office.
Under s. 2 of the BIA, an "insolvent person" can become "bankrupt" for BIA purposes in three ways:
- by voluntary assignment in bankruptcy
- apps for bankruptcy orders
- by default on Division I Proposals
Maps Consumer bankruptcy in Canada
Bankruptcy process
The bankruptcy process can be divided into three stages:
Initiation of bankruptcy proceedings
- Where a person's debt, excluding debt guaranteed by the individual's primary residence, is not more than $ 250,000, the bankrupt debtor may file a Consumer Proposal with its creditors.
- For debts greater than this amount, Proposals for Division I may be submitted.
- Prior to submitting a Proposal under Division I, the bankrupt individual may file a notice of intention to remain a creditor so that the Proposal of Division I may be submitted to the Office of the Bankruptcy Superintendent before the expiration of 30 days from the filing of the Notice of Intent.
- Submitting Proposals under Division I is a serious decision, because the person who is insolvent will be bankrupt if the proposal is rejected by the creditor or not approved by the Court.
- If the Consumer Proposal is not accepted by the creditor or consumer proposal is not a viable option, the disadvantaged person may voluntarily submit himself into bankruptcy or inadvertently petition into bankruptcy by his creditors
- The legal process and efforts of creditors to enforce debt remain, no one is allowed to initiate or continue existing legal action against a bankrupt party or to enforce an existing court order (other than a secured creditor is allowed to enforce their security)/li>
Between bankruptcy and debit
Bankruptcy must:
- assigns all of its properties, credit cards, and records that are under its ownership or control to the trustee
- is present before the official recipient (if asked to do so) for an oath under examination in respect of his conduct, the cause of his bankruptcy and the disposition of his property
- prepare and submit to the trustee a statement about the bankruptcy affairs in the prescribed form (also known as the Declaration of Affairs)
- assists the guardian in creating his asset inventory;
- discloses to the trustee of all property disposed of in the previous year (including how, to whom and for how much) is not in normal business or for reasonable personal expenses
- discloses to the trustee of all properties granted or resolved without sufficient precious considerations in the preceding five years
- attend the first meeting of its creditors, and, when necessary, attend another meeting of its creditor or inspector, or attend a trustee
- subject to another examination under oath in respect of the property or its affairs as required
- fully assists its strength in realizing its properties and sharing of results among its creditors
- run any document that may be required
- checks the truth of all claims filed, if requested by the guardian
- if any person has the knowledge of filing a false claim, immediately disclose the fact to the guardian
- notifies the guardian of any material changes in a bankrupt financial situation
- generally undertakes all such actions and matters in relation to its property and the distribution of proceeds among its creditors that may be reasonably required by the trustee, the rules of bankruptcy, or by a court order, and
- until his application for disposal has been disposed of and the estate administration is completed, keeping the trustee always suggesting his residence or address.
A bankrupt must also submit to the trustee the amount of his income determined to be a surplus for his needs, for the benefit of the estate.
Determination of properties in bankruptcy properties
Contributions made for the Registered Retirement Pension Plan (RRSP), the Registered Revenue Retirement Fund (RRIFs) and the DPSP within twelve months prior to the date of bankruptcy will be reinstated for the benefit of insolvency in other provinces. from British Columbia, Alberta, Ontario, New Brunswick, and Nova Scotia (where they are exempt from foreclosure under applicable provincial law). The court may extend a one-year recovery period in which it is deemed appropriate.
Period is valid until debit
Bankruptcy may apply to court at any time to exit bankruptcy (provided that it has fulfilled its duties), and the court may grant it, either fully or conditionally.
In the first or second case of bankruptcy, discharge occurs automatically (provided they have attended the counseling session as regulated by the trustee) as follows:
The above does not apply to bankruptcies having personal income tax payable of $ 200,000 or more, representing 75% or more of total unsecured claims. In this case, the hearing for the request for exemption can not be made before the end of the period applicable below:
The following debts are not released on exit:
- any injunction, punishment or damages imposed by the court in respect of any breach, or any debt arising out of acknowledgment or guarantee
- any remedy by court in a civil proceeding with respect to
- harms a deliberate body, or a sexual assault, or
- wrong deaths generated from it
- pension or alimentary allowance
- support or maintenance payments
- any debt or liability arising from fraud, embezzlement, misuse or defalitation while acting in a fiduciary capacity (or, in the Province of Quebec, as the trustee or other property administrator)
- any debt or liability resulting from obtaining property or services under false pretenses or misleading misinterpretations (other than the debt or liability arising out of equity claims) liabilities
- for dividends to which the creditor shall be entitled to receive on any claim which can be proven not disclosed to the trustee (unless the creditor has notice or knowledge of bankruptcy and fails to take reasonable measures to prove his claim)
- student loans, where the bankruptcy date occurs
- before the date when the bankruptcy stops being a full-time or part-time student (as is likely to happen), or
- within seven years after the date when the bankruptcy stops being a full-time or part-time student
- any interest imposed on any of the above
In the case of student loans, the above-mentioned seven-year period, when applying to court, may be reduced to five years, if the court is satisfied:
- that bankruptcy has acted in good faith on this matter, and
- he is still in financial trouble, to the extent that he can not afford to pay the debt.
Goals and objectives of bankruptcy proceedings
The purpose of the bankruptcy process is to introduce a legislative mechanism that will provide a fair and peaceful settlement of financial conflicts between debtors and creditors, lenders competing among themselves for their loan recovery and balancing public interest in protecting the financial security of creditors on the one hand. and the public interest in enabling the insolvent individual to make a new start. In general, the purpose of bankruptcy proceedings can be summarized as follows:
- To allow an honest debtor, but not to be lucky to get his debt settled and make a "fresh start";
- Not only to allow honest debtors to make a fresh start, but also to rehabilitate the debtor by providing counseling to the insolvent party in managing its financial affairs after being repatriated to prevent the subsequent bankruptcy of the bankruptcy;
- To promote the sense of commercial responsibility of the insolvent party and to prevent the bankruptcy of subsequent bankruptcy by introducing stricter legislative and judicial care against the second and subsequent bankruptcy;
- To permit the investigation of the bankruptcy of bankrupt financial affairs, a bankruptcy trustee, who is given wide powers to facilitate the settlement of claims by way of a consumer proposal, to require compliance with bankruptcy procedures, to exclude fraudulent transactions and preferences among creditors and to discontinue various things under the BIA;
- To protect creditors from competing against each other and to secure debtors from excessive pressure from creditors who try to collect their debt first by introducing the priority distribution of a bankrupt property scheme in which all creditors are treated equally according to the scheme.
The consequences of bankruptcy
References
Source of the article : Wikipedia
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