Bankruptcy 101: Step 4 - Discharge from Bankruptcy

Bankruptcy ends when an individual receives a discharge from bankruptcy.  In most cases, the trustee issues a certificate of discharge at the expiration of a prescribed period of time (e.g., nine (9) or 21 months for a first-time bankrupt; or 24 or 36 months for a second-time bankrupt). The bankrupt must have fulfilled all of the required duties and obligations before he or she can receive a discharge.

In some cases, the trustee is unable to issue a certificate of discharge and must set a discharge hearing in court.   A court hearing is required where the bankrupt has failed to fulfill his or her duties; where the bankrupt has been bankrupt on more than two occasions; where the bankrupt is a high personal income tax debtor; or where a creditor opposes the bankrupt’s discharge. Where a court hearing is required, the court will decide on the appropriate order of discharge, and it may require that the bankrupt fulfill additional obligations before being discharged from bankruptcy.

Click here to read more about how long it takes to be discharged from bankruptcy in Canada.

Certain debts are not released by a discharge from bankruptcy.  The following are examples of unsecured debts that will not be extinguished in bankruptcy:

• Court fines and penalties;
• Damages for assault;
• Child support and spousal support;
• Debt arising from fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity;
• Any debt resulting from obtaining property or services by false pretences or fraudulent misrepresentation;
• Student loans where the debtor was a full- or part-time student at any time within the seven year period prior to filing the consumer proposal; and
• Interest accruing on those debts.

Also, bankruptcy will not affect secured debts such as mortgages, car loans and other debts secured by your assets.

Stay tuned for Part 5, where we'll discuss the fresh start created by bankruptcy.

All articles in this series:

• Bankruptcy 101:  Step 1 - Meet with a Trustee to Review Your Options
• Bankruptcy 101:  Step 2 - Filing for Bankruptcy
• Bankruptcy 101:  Step 3 - Being in Bankruptcy
• Bankruptcy 101:  Step 4 - Discharge from Bankruptcy
• Bankruptcy 101:  Step 5 - Fresh Start

Lana Gilbertson is a Licensed Insolvency Trustee with MNP Ltd., based in Vancouver, BC  for more about how Lana can help, contact her directly at 604-637-1599 or lana.gilbertson@mnp.ca.

Click here for a list of our offices throughout Greater Vancouver, Fraser Valley and Vancouver Island.

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