The Legal Process

The Trustee will prepare the necessary documents from the information you submit. Once the documents have been filed with the Official Receiver, you are legally bankrupt.

Once the Bankruptcy has been filed, if contacted by your creditors, inform them that you are bankrupt and refer them to the Trustee. This should relieve you of any harassment.

Within seven days of the date of bankruptcy, the Trustee will send written notice of your bankruptcy to your creditors. The notice will advise them of the procedure for requesting a "First Meeting of Creditors" and will enclose a "proof of claim form" to be completed and returned to the Trustee. If the proof of claim form is not returned to the Trustee prior to the distribution of dividends when the administration of the estate has been completed, then the creditor will not be entitled to share in the distribution.

If required, you will be examined under oath by the Official Receiver. The average person has little reason to fear this exam. Substantially less than half of all bankrupts are asked to attend and the questions should not concern an honest debtor.

The First Meeting of Creditors, which you are legally required to attend, will only occur if the Official Receiver or 25% of the creditors (by $ value) request one. This meeting is normally very poorly attended. Its purpose is to allow interested creditors to obtain information pertaining to your bankruptcy and have input into the process. It is not a confrontational situation. In most cases it is held at the office of the Trustee. However, if circumstances warrant, it can also be held at the office of the Official Receiver so that the Official Receiver is able to chair the meeting.

Inspectors can be appointed at the First Meeting. They are creditors who are nominated to assist the Trustee with the administration of the estate. They work on behalf of all creditors and ensure the fair and equitable distribution of any assets in the estate. Inspectors are more commonly appointed in corporate bankruptcies where there are more substantial assets to deal with.

The Bankruptcy and Insolvency Act imposes certain duties on a bankrupt. These duties are reasonable and are based on common sense. The Trustee will provide you with a copy of the relevant sections of the Act.

While you are in Bankruptcy, you must keep the Trustee informed of any change in your address, telephone number, or family finances. Failure to do so may prevent the Trustee from being able to obtain your discharge. It is also one of your duties under the Act.

If you are a first-time bankrupt, you will receive your discharge nine months after the date of your bankruptcy, provided you have fulfilled your duties and your discharge has not been opposed by a creditor, the Trustee, or the Official Receiver.