Once an individual files an assignment in bankruptcy, they must receive their discharge in order to be relieved of the obligation to pay their creditors.  In usual circumstances, between the bankruptcy filing and the discharge, a bankrupt may want to annul (cancel) the bankruptcy.  The desire to annul a bankruptcy may arise if the bankrupt becomes entitled to an inheritance or a settlement in a lawsuit that would pay their debt in full; they don’t want to complete their duties imposed by the Bankruptcy and Insolvency Act and have regret about filing bankruptcy for maybe a small amount, or their personal situation has changed impacting their decision to have filed a bankruptcy.  As per below, these reasons will not likely convince a court to annul a bankruptcy.

There are basically two ways to annul a personal bankruptcy filing. The first one is to file a proposal to the creditors which, if accepted, would annul the bankruptcy. The second method is to make an application to the court.  If the court believes that an assignment ought not to have been filed as the debtor was not insolvent, abused the process of the court or committed a fraud to their creditors, an order can be made to annul the bankruptcy.  The fact that the debtor has paid all of their debts in full is not sufficient reason to annul a bankruptcy.  The court considers the circumstances as they existed when the assignment in bankruptcy was filed and the interests of many stakeholders, including the bankrupt, the creditors and the public interest in the insolvency process.  It is at the discretion of the court to annul a bankruptcy.

Filing an assignment in bankruptcy provides relief from debt and allows a debtor to move forward with a financial fresh start.  All debt relief solutions should be explored with a Licensed Insolvency Trustee to ensure you can make an informed decision that you will not later regret.

Have questions about filing a bankruptcy? Talk to a Taylor Leibow Fresh Start Now Licensed Insolvency Trustee at 1-888-287-2525.

By Kathy Lenart Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)