The Bankruptcy and Insolvency Act provides for an insolvent individual to file a personal assignment in bankruptcy or consumer proposal. Upon filing, unsecured creditors are stayed from taking any further collection proceedings. Garnishments (except for spousal or child support), court proceedings and collection calls cease and the debtor is protected from their creditors. The filing provides relief from creditors but the “fresh start” doesn’t occur until the debtor is discharged or completes the terms of their proposal.

Monthly Statements

During a bankruptcy, the debtor must submit Monthly Income and Expense statements. The purpose of the statements is twofold – to allow the trustee to determine if the bankrupt must make surplus income payments and for the debtor to track their monthly income and expenditures. The debtor will no longer have the benefit of credit to support any shortfall in their budget so they must determine where they are spending their money and what changes can be made to balance their budget. It is sometimes an eye-opening experience when every dollar spent is tracked and added up at the end of the month to see how much is spent on food, gas, entertainment, etc.

Counselling Sessions

Two counselling sessions are mandatory in a bankruptcy and consumer proposal. The counselling sessions will discuss money management, causes of financial difficulties and rebuilding credit and will require a debtor to prepare a budget and set financial goals. All important steps in obtaining a financial “fresh start”.

Discharge/Completion

A bankrupt who has completed all their duties and not received an opposition to their discharge will obtain a discharge from their bankruptcy. A debtor who completes the terms of their proposal will obtain a Certificate of Full Performance of Proposal. It is advisable to obtain a credit report from www.transunion.ca and www.equifax.ca to ensure your discharge/completion is properly reported and all debts have been noted as included in your insolvency filing.

With the education provided at the counselling sessions and completion of your insolvency process, you now have a financial “fresh start”.

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)