Glossary of Terms

The following is a list of common bankruptcy terms. These definitions are intended to provide the reader with an understanding of the terms used on this website. They are general interpretations only and are not to be considered legal definitions. For specific information on your situation, please talk to a Paddon + Yorke professional.

ASSETS: Assets are any items of property you own such as a home, car, furniture, RRSPs, life insurance policies, etc. All assets, owned on the date of the assignment, come under the jurisdiction of the Trustee except those exempted by Provincial legislation or belonging to secured parties.

ASSIGNMENT IN BANKRUPTCY: A formal term for going bankrupt is “filing an assignment” in bankruptcy.

BANKRUPT: A natural person or corporation who has made a voluntary assignment in bankruptcy or against whom a receiving order has been made.

CERTIFICATE OF FULL PERFORMANCE: A document issued by the trustee or administrator once a debtor has fully performed his or her obligations under the proposal.

CO-SIGNER: A third party who has signed a contract, accepting responsibility for payment of the contracted debt. The third party responsibility is not removed by bankruptcy of the first party.

COUNSELLING: A process under which services of a qualified counsellor are made available to assist and educate bankrupts and/or relatives of bankrupts, or consumer debtors, on good financial management, including prudent use of consumer credit and budgeting principles; in developing successful strategies for achieving financial goals and overcoming financial setbacks; and at any time, where appropriate, making referrals to deal with non-budgetary causes of insolvency (e.g.: gambling, addiction, marital and family problems, etc.).

CONSUMER PROPOSAL: A simplified process to make a proposal for repayment of debt to creditors, available under the Bankruptcy and Insolvency Act to a consumer debtor whose aggregate debts, excluding any debts secured by the person’s principal residence, do not exceed the amount prescribed in the Bankruptcy and Insolvency Act.

CREDIT RATING: Upon making an assignment in bankruptcy, a person’s credit rating is destroyed. Subsequent to discharge, credit may be obtained only when the credit granting agency is persuaded of the applicant’s ability to repay as required. Records of the bankruptcy and discharge are on file for seven years at the Credit Bureau.

CREDITOR: One to whom a debt is owed; in insolvency matters, a person having a claim provable under the Bankruptcy and Insolvency Act.

DEBT: A specific sum of money due by agreement or otherwise.

DEBTOR: Is someone who owes money to another.

DEFAULT: Failure to pay or perform a legal or contractual obligation.

DISCHARGE: The release of a debtor from the obligation to repay his or her debts. A bankrupt’s discharge may be automatic, suspended, conditional or absolute. A bankrupt may also be refused discharge.

DUTIES OF A BANKRUPT: Obligations that must be performed by a bankrupt. For example, provide the trustee with a statement of the bankrupt’s affairs showing the particulars of his or her assets and liabilities, the name of all his creditors etc.

EQUITY: The difference between the market value of an asset and the secured debt against it.

GARNISHMENT: A legal process whereby a creditor requires a third party to turn over to the creditor, a debtor’s property such as wages or bank accounts.

GUARANTOR: A person who takes on financial responsibility for another’s debt.

LIABILITIES: Financial obligations or debt of an individual or a business, including unpaid taxes, salaries, accounts payable etc.

MEDIATION: Process whereby differences between the bankrupt, the trustee and the creditors concerning the carrying out of the bankrupt’s obligations under the Act can be resolved. Two main areas where this process will be utilized is where there is a disagreement over the amount of surplus income and secondly where there is an opposition to the bankrupt’s discharge.

MORTGAGE: A lien against property, which is registered on title that is granted to secure an obligation such as a debt.
PRINCIPAL RESIDENCE: Your principal residence is the home in which you live most of the time.

PROOF OF CLAIM: A creditor’s written statement that is submitted to prove the creditor’s claim; used as the basis for paying dividends, if accepted by the trustee.

SECURED CREDITOR: A person holding an instrument such as a mortgage or a lien on or against the whole or part of the property of a debtor as security for a debt due him from the debtor.

STATEMENT OF AFFAIRS: The bankrupt’s financial statement or a balance sheet of assets and liabilities showing the estimated value of assets and the names and addresses of creditors and the amounts owed.

STAY OF PROCEEDINGS: A bar against any creditor for the recovery of a claim provable in bankruptcy against the insolvent person or the insolvent person’s property. No creditor shall start or continue any action, execution or other proceeding for the recovery of such claims.

SUPERINTENDENT OF BANKRUPTCY: A federally appointed official who oversees the administration of the Bankruptcy and Insolvency Act in Canada.

SURPLUS INCOME: The portion of an individual bankrupt’s income that is required to be paid into the bankruptcy estate during the bankruptcy as per standards established by the Office of the Superintendent of Bankruptcy.

UNSECURED CREDITOR: A creditor who advances credit without taking any rights against the property of the debtor.

  • Often times I think of your extraordinary kindness and effort. I shudder to think where I might be without your guidance. Thank you for being one of the angels to pass through my life. — Don