The effects of a bankruptcy discharge are as follows: the bankrupt is released of most debts; however, there are some non-dischargeable debts that are not released, such as an award for damages in respect of an assault, a claim for alimony, spousal or child support, a debt arising out of fraud, any court fine, or debts or obligations for student loans when the bankruptcy occurs while the debtor is still a student or within ten years after the bankrupt has ceased to be a student.
There will be an automatic bankruptcy discharge for first-time bankrupts nine months after they became bankrupt unless the trustee recommends a bankruptcy discharge with conditions or it is opposed by either a creditor, the trustee or the Superintendent of Bankruptcy.
The trustee is required to recommend a bankruptcy discharge with conditions if either of the following circumstances exists:
If the bankrupt or a creditor does not agree with the trustee's recommendation, mediation may be requested as long as there is no other ground for opposition.
If mediation fails to resolve the issue or if an opposition is filed, the trustee will have to obtain a date for a court hearing. The party opposing the discharge will have to give his or her reasons to a court official who will make a decision. It should be noted that a first-time individual bankrupt who refuses or neglects to receive the required counseling sessions will not qualify for an automatic discharge.
For those who have already been bankrupt before or who do not qualify for the automatic bankruptcy discharge, the trustee is required within one year from the beginning of the bankruptcy to apply to the court for a hearing of the application for a discharge. The court official has several options from which to choose.
At a hearing for a bankruptcy discharge the court decides whether to postpone the hearing to a later date, refuse the discharge, or issue any of the following orders:
This official document relieves you of the debts incurred before you declared bankruptcy, taking under consideration the exceptions provided in the Act.
The court may impose certain conditions that must be met before your bankruptcy discharge becomes absolute. For example, the Court may require you to pay an amount to your trustee for distribution to your creditors.
The court orders a delay so that the discharge will not be effective until a certain date. Your bankruptcy discharge may be delayed by an opposition by a creditor, the trustee or the Superintendent of Bankruptcy on such grounds as an ongoing criminal investigation or a breach of your duties as specified in the Bankruptcy and Insolvency Act.