In Canada, the bankruptcy procedure consists of three phases:
Initiation Interim Discharge
A person who is insolvent may avoid bankruptcy by establishing mutually agreeable arrangements with creditors or by filing a consumer proposal that, in the event of a default, would render that person """"bankrupt"""".
If the consumer proposal is not accepted by the creditors or if it is determined not to be a viable option, the insolvent person may consider the repercussions of declaring bankruptcy. In either case, this can be done voluntarily or by creditors filing a petition for involuntary bankruptcy.
Existing legal actions against the insolvent cannot be continued, new actions cannot be initiated, and court orders cannot be enforced during a stay of proceedings. The only exception applies to secured creditors who may enforce their collateral.
The bankrupt transfers his property to the bankruptcy trustee, who coordinates for its liquidation and distribution among creditors according to the Bankruptcy and Insolvency Act's (BIA) priority of distribution scheme.
The bankrupt offers every assistance to the bankruptcy trustee in the process of securing and making available all of his assets, eradicating any transactions deemed improper, and attending meetings with the creditors.
He consents to mandatory counseling regarding the administration of his financial affairs following his final discharge.
He updates his creditors on any changes to his financial situation and the acquisition of additional assets.
Transfers a portion of his surplus income and any assets acquired before his discharge to the bankruptcy trustee for liquidation and distribution among creditors.
A person who declares bankruptcy for the first time is automatically discharged after nine months if creditors, the official receiver, or the bankruptcy trustee do not submit a notice of opposition to discharge. This individual may also petition for discharge prior to the expiration of the nine-month period.
In the case of an individual who has previously declared bankruptcy, the bankruptcy trustee may petition the bankruptcy court for an order of discharge between three months and one year after the date of bankruptcy. Alternatively, if the insolvent declines the trustee's application, he may make his own application to the court.
The debtor has the right to defend himself in the event of an opposition to discharge, which will endeavor to convince the bankruptcy court that there is a case to be answered.
First-time bankrupts who are eligible for an automatic discharge may obtain a certificate of discharge from the bankruptcy trustee. An order of discharge may be obtained from the bankruptcy court by individuals who have previously declared bankruptcy. This discharge absolves the debtor of all bankruptcy claims, excluding those enumerated in section 178(1) of the Bankruptcy Code.
In the event that a conditional discharge is granted, the insolvent must adhere to the terms established by the bankruptcy court. Any failure to comply could result in the annulment of the discharge and the imposition of fines or other measures. A bankruptcy court has the authority to deny a discharge.
How to Survive Bankruptcy""
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