Filing for Bankruptcy in Ontario

Summary of Steps

When a decision is made to file an assignment in bankruptcy, the Trustee will inform the individual of the implications of bankruptcy, prepare the necessary documents, and file the assignment in bankruptcy with the Office of the Superintendent of Bankruptcy. The mere act of filing bankruptcy in Ontario does not release an individual from debts. This can only be done at the time of the bankrupt’s discharge.

Contact a Trustee at Paddon + Yorke Inc.

A Trustee is an individual or corporation who is licensed by the Government to conduct the bankruptcy process. A Trustee is not a lawyer. The bankrupt is not a client of the trustee. The bankrupt may look to the Trustee for advice about certain bankruptcy matters, but the bankrupt is not a “client” of the Trustee. As an Officer of the Court, the Trustee represents the interests of all the creditors in the bankruptcy process and will investigate the affairs of the bankrupt as warranted. The Trustee will ensure, however, the rights of the individual, as defined by the Bankruptcy and Insolvency Act, are not abused.

Meeting of Creditors

The trustee will notify all your creditors that you are filing for bankruptcy in Ontario within five business days after filing. A meeting of creditors will be arranged if it is requested by a required number of creditors, within thirty days after the date of bankruptcy. The trustee or its representative chairs this meeting. The purpose of this meeting is to allow creditors to gain information about the bankruptcy.

Counselling

Two counseling sessions are required to assist you in determining how the current financial problems arose and how to conduct future financial affairs to avoid another bankruptcy. If you do not attend the required counseling sessions within the prescribed 210 days of the date of the assignment, your discharge could be denied.

Discharges

For a first time bankrupt with no surplus income, an application for discharge can be made in as little as nine months from the date of the assignment in bankruptcy. If a person filing bankruptcy in Ontario has surplus income, they must pay the surplus amount for 21 months and the Trustee can apply for the bankrupt’s discharge after 21 months. If there is no objection to the discharge by the Superintendent of Bankruptcy, the creditors or the Trustee, the discharge is automatic.

For a second time bankrupt with no surplus income, an application for discharge can be made in 24 months from the date of the assignment in bankruptcy. If the bankrupt has surplus income, they must pay the surplus amount for 36 months and Trustee can apply for the bankrupt’s discharge after 36 months. If there is no objection to the discharge by the Superintendent of Bankruptcy, the creditors or the Trustee, the discharge is automatic.

If the debtor has been bankrupt on two or more occasions the Court will not hear an application for discharge until 36 months from the date of filing the assignment in bankruptcy has passed. Depending on the circumstances, it may be necessary for the bankrupt to attend the hearing. At the discharge hearing, the Court will be informed by the Trustee’s report of the circumstances surrounding the individual’s bankruptcy and the Court may determine any one of the following:

  • Absolute – The debtor is no longer responsible for debts incurred prior to bankruptcy except for those in Section 178 of the Bankruptcy and Insolvency Act. Certain debts survive (are not forgiven) in a bankruptcy. These debts are discussed in full detail under Section 178 of the Bankruptcy and Insolvency Act.
  • Suspended – This is an absolute discharge with a delay before it comes into effect.
  • Conditional – The bankrupt may be required to pay a certain amount of money during a specified period (e.g., $100.00 per month for 36 months). The specified conditions must be fulfilled in order to obtain an absolute discharge.
  • Adjourned – An objection by a creditor may cause the discharge hearing to be adjourned and the bankrupt will then have to appear before a Judge for the discharge hearing. The bankrupt will be advised by the Trustee, in writing, of the adjourned Court hearing date.
  • Refused – The Court has the right to refuse a discharge, but will seldom exercise this power except in unusual circumstances.

Trustee’s Recommendations

The trustee prepares a report for the Superintendent of Bankruptcy describing your actions throughout the period of bankruptcy, outlining your current financial situation and recommending whether or not you should be discharged.

The trustee will recommend a Conditional discharge if either of the following situations exist:

  • The bankrupt did not pay the surplus income as required; or
  • The bankrupt was filing for bankruptcy in Ontario when he or she could have filed a consumer proposal.

Please visit our FAQs About Bankruptcy page or for more information on bankruptcies contact a Paddon + Yorke professional today – and get on with your life!

  • When I came to you with my financial problems, my self esteem was at an all time low. Your understanding, guidance and professionalism have restored much of that self esteem. I am sincerely grateful. — Ross