Generally speaking, a bankruptcy takes root, grows and is snipped at the stem come discharge time without incident. However, there can be complications that need to be dealt with before this natural progression can unfold. While a creditor cannot stop you from filing for bankruptcy, they can certainly do their part to create challenges that delay its ending. A creditor opposition to your bankruptcy discharge – even with your good behaviour and mindful attendance of your bankruptcy-related responsibilities – will throw a big wrench into your automatic discharge.
When Can a Discharge be Challenged?
A discharge can be challenged — by creditors, the trustee or the Office of the Superintendent of Bankruptcy — for a broad number of reasons; some, more obscure than others. The most typical cases are those where the proposed payment terms do not satisfy creditors because they are looking for more money and have reason to believe that they can get it. Creditors may also object to a discharge because they want clarification on a past account or they simply don’t understand the process and think that they might land some extra cash if they oppose the discharge and meet the individual in front of a judge.
What is Required When a Discharge is Challenged?
When a discharge is challenged, the court reviews the challenger’s details and invites the bankrupt individual, along with the creditor, to attend a discharge hearing in bankruptcy court where you have the option to retain a bankruptcy lawyer or simply appear on your own.
The bankruptcy registrar will provide a written decision regarding the terms of your discharge at court. This decision may be handed down the day of the court hearing, but more likely, it will come a few weeks or even months later. This is a temporary frustrating reality that further delays the launch of your much-anticipated fresh start. The details of your discharge may range from a free-and-clear discharge with no conditions (i.e. extra money owing or a suspended timeframe to which the discharge will “kick-in”), to a requirement that you make additional payments or fulfill other duties before receiving a discharge.
While we write this, we sit back and think about how many creditor oppositions we’ve dealt with during the last 15 years and we can tell you, it hasn’t been many. An opposition to a well-deserved, highly anticipated discharge can be unpleasant for someone who has filed for bankruptcy and is looking forward to a fresh start. Don’t let it discourage you from dealing with your debts, as your trustee will be there to guide you until the end of your proceeding.
Consumer Proposal as an Alternative to Bankruptcy
If you wish to avoid the possibility of a creditor opposition at the time of discharge, you may want to consider a consumer proposal. Your creditors vote either for or against your proposal at the beginning of the process and any concerns that they have are addressed from the start. Your discharge is granted once you have completed your proposal payments. For more about the voting process, read our article on how a consumer proposal works.