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What you need to know?

Are you considering claiming bankruptcy, or have you already filed bankruptcy? Then you need to learn exactly what a bankruptcy discharge is and how it will affect you.

Easy to understand details on the bankruptcy process >>

The entire goal of claiming bankruptcy is to obtain your bankruptcy discharge. However, many people are confused by what a bankruptcy discharge actually is and what receiving one will mean.

1. What is a bankruptcy discharge?

Technically speaking, a bankruptcy discharge is legal document that officially and permanently eliminates your debts. However, and more importantly, a bankruptcy discharge is the beginning of your fresh financial start.

By receiving your discharge, you are legally released from all debts covered under your bankruptcy. This means you are no longer liable for payments and you are legally protected from your creditors!

However, you should know that there are some debts which you cannot include in a bankruptcy.

2. What are Non dischargeable debts?

A non dischargeable debt is any debt that cannot be included or resolved through bankruptcy.

Some examples of non dischargeable debts are:

Spousal or child support
Alimony
A debt arising out of fraud
Any court imposed fines
Student loans less then seven years old
Restitution orders

If you have non dischargeable debts don't get discouraged! You still have options. To learn how you can deal with your non dischargeable debts, contact a licensed bankruptcy trustee. A trustee will be able to review the specifics of your individual situation and then discuss all the available options with you.

3. When does a bankruptcy discharge happen?

First time bankrupt:

If you are a first-time bankrupt, with no surplus income and have completed all your bankruptcy duties, you eligible for an automatic discharge after nine months. However, if you have surplus income then your bankruptcy will be extended for an additional 12 months.

Second time bankrupt:

If you were previously bankrupt, and have no surplus income, you are eligible to be automatically discharged in 24 months. If you have surplus income you are eligible to be automatically discharged in 36 months.

Third time bankrupt:

If this is your third bankruptcy, you are not eligible for an automatic discharge. Your trustee will need to apply to the courts for a hearing of your application for discharge. Your file will be reviewed by the courts and the judge or registrar will choose from several different options to grant you a discharge. We can explain these options to you in more detail in your free initial consultation with us.

4. What happens if My Discharge is opposed?

It is possible for a creditor, the Superintendent of Bankruptcy, or your trustee to oppose your bankruptcy discharge. This usually happens if one of the following has happened during your bankruptcy period.

You did not pay the agreed amount of surplus income.
You could have filed a viable consumer proposal, but instead chose to file a bankruptcy.
You refused, or neglected, to receive the required counselling sessions.
A creditor objects to your discharge due to unusual or excessive transactions prior to bankruptcy
Your bankruptcy was caused by gambling.

If your discharge is opposed, a court hearing, in Bankruptcy Court, will be held, and bankruptcy judge or registrar will determine the conditions of your discharge. Those conditions may include a longer bankruptcy period, or you may be required to make additional payments.

5. Types of bankruptcy discharge & what they mean

There are four bankruptcy discharge types:

Automatic Discharge

You completed all of your duties, and there were no objections to your discharge. In this case no court hearing is required.

Order of Absolute Discharge

An Order of Absolute Discharge officially relieves you of the debts incurred before you declared bankruptcy, taking under consideration any exceptions provided in the Bankruptcy and Insolvency Act.

Order of Conditional Discharge

An Order of Conditional Discharge means the court has imposed certain conditions that must be met before your bankruptcy discharge becomes absolute. For example, the Court may require you to pay an additional amount for distribution to your creditors.

Order of Suspended Bankruptcy Discharge

An Order of Suspended Bankruptcy Discharge means the court has ordered a delay so that your discharge will not be effective until a certain date. Your bankruptcy discharge may be delayed by an opposition on such grounds as an ongoing criminal investigation, or a breach of your duties as specified in the Bankruptcy and Insolvency Act, or due to a prior bankruptcy.

Bankruptcy discharge - your fresh start!

Receiving your bankruptcy discharge is the beginning of your fresh financial start. To learn more about bankruptcy, or for specific answers about bankruptcy discharge, call or email us at Hoyes Michalos & Associates today. Or, simply take advantage of our free, no obligation online evaluation and get a quick and confidential review today. For over a decade people have trusted our team when they needed help to resolve their debts. We have successfully helped them and we can help you too.

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