You may be contemplating filing an assignment in bankruptcy or a consumer proposal to obtain relief from your unsecured debts.
When you meet with a trustee in bankruptcy, he or she will advise you of the best approach to resolve your debt problem and will also advise you of the duties you are required to perform in a bankruptcy or consumer proposal.
In most cases, these duties will consist of:
• Attending two financial counselling sessions with the trustee;
• Prepare and submit income and expense sheets during the period of the bankruptcy;
• Provide the trustee with information to prepare your tax returns in the year of the bankruptcy;
• If required, attend a meeting of creditors; and
• If required, attend a further meeting with a representative of the superintendent of bankruptcy.
For a consumer proposal, not all of the aforementioned duties are required. Your total time commitment to fulfil these duties would be approximately 10 hours over the duration of your bankruptcy or consumer proposal.
You may be wondering why these duties are imposed on you as part of the process to obtain a release from your debt obligations.
The Bankruptcy and Insolvency Act (BIA) is, in part, a tool to facilitate the financial rehabilitation of an individual such that they will hopefully not have to resort to the BIA to seek debt relief in the future.
The mandatory attendance at financial counselling sessions and the preparation of monthly income and expense reports are meant to educate an individual on setting financial goals, budgeting, tracking and monitoring income and expenses, and obtaining and using credit.
What is the payoff to fulfilling your duties?
When you first make the decision to visit a trustee to discuss your financial affairs, your objective is to obtain relief from your debts and obtain a fresh start on your financial future.
Like most things in life, to get something you have to give something. In a bankruptcy and consumer proposal, you have to invest your time to obtain the relief you are looking for.
By fulfilling your duties, you are eligible for an automatic discharge in a bankruptcy or a certificate of full performance in a consumer proposal. These documents provide you with the relief that you strived for when you first visited the trustee. Regardless of your debt level, the payoff is significant for a small investment of your time.
If you do not fulfil your duties, you will not obtain the relief you were seeking and your creditors rights will be restored such that they can pursue collection of the amounts owed.
Accordingly, it is in your best interest to invest the time and fulfil your duties.
The above is not a complete treatment of the subject. Additional information on the process and your duties can be obtained from a trustee.