Now this is an unusual question. The technical answer is: you do not have to tell him or her anything. When you sign the papers to file an Assignment in Bankruptcy, you will be asked to sign a document under the Personal Information Protection and Electronic Documents Act (PIPEDA) which specifies that your trustee will only deal with those people that they are required to do so in order to perform their duty as your trustee. This normally includes only your creditors, Canada Revenue Agency, Office of the Superintendent of Bankruptcy, the court and any collection agencies or lawyers who have been hired by your creditors. If you wish to authorize your trustee to speak to any other party such as your wife/husband, children, employer, brother, sister, etc., you will be asked to do so in writing.
The trustee will not ordinarily disclose your bankruptcy to your employer. The exception is if one of your creditors tries to garnishee your wages. Your trustee can stop the garnishee, but, if the papers have already been sent to your employer, then your trustee will have to send your employer a letter to stop the garnishee.
With respect to your husband or wife, the issue can get more complicated. If they are a creditor, they must be notified for that reason. The usual problem is that your trustee will periodically be sending you documents, notices, etc. and you will have to make sure that your wife or husband does not open your mail. You should be aware that the envelope has only a return address with no name on it. If this is an issue, please speak to your trustee at the initial meeting and we will try to resolve it by way of Email, fax or an outside mail box service.
It is, of course, better to be honest and upfront with your partner about the financial problems and the fact that you have chosen bankruptcy as the solution to your problems.
Absolutely not. Your bankruptcy is yours alone. Your family is only involved when it comes to the preparation of your budget. The budget is based on family income (your income and that of your spouse or partner plus any child tax credit being received) and the family living expenses. When listing the family expenses, there is also shown the cost of your child’s allowance, school and sports fees. As long as the expenses are reasonable, there is never an issue with the creditors.
How are student loans affected by a proposal or a bankruptcy?
It depends on the age of the student loan.
If the bankruptcy or proposal is filed more than 7 years since the end of your last semester using student loan funds, then the loan is dischargeable. When the process is done, the debt is gone.
If the bankruptcy or proposal is filed more than 7 years since the end of your last semester using student loan funds, the loan is still included in the consumer proposal or bankruptcy. No collection action can be taken against you during the process, but once the bankruptcy is discharged or the consumer proposal is complete, the loan is collectible again. Discuss this with your Trustee, as interest will still accrue, and you should have a plan to address it.
There is a provision in the Bankruptcy Act that if a person demonstrates true financial hardship, and the bankruptcy was file less than 7 years, but more than 5 years, after the last semester, the court may order that the debt does not survive.
Can creditors call on the consumer debtor for payment after bankruptcy?
Once the consumer debtor is placed into bankruptcy, any creditor with a claim provable is prohibited from proceeding with any action against the consumer debtor. In other words, the creditor cannot start or continue any lawsuit to collect on the debt. That creditor needs permission of the court, technically called “leave of the court”, to do so and in almost all cases, the court will not give the creditor that permission.
Once creditors know that the consumer debtor is bankrupt, they will stop harassing the consumer debtor and not send demand letters for payment. All institutional creditors know the bankruptcy process and they will not bother the consumer debtor anymore. These creditors will work through the trustee in bankruptcy if they foresee a problem or obtain a special order of the court if the trustee refuses or they have a special claim.
In some cases, creditors will have claims that will survive bankruptcy discharge. Those claims, as set out in Chapter 7, relate to fines and penalties, claims for alimony, maintenance and support, and claims based on fraud or misrepresentation. In these types of claims, the creditor can sue the bankrupt after the bankrupt and the trustee are discharged. If the creditor wishes to proceed earlier than that, then the creditor requires a special order or leave of the court to do so.