Bennett on Consumer Bankruptcy

preface xv 1 WHAT IS BANKRUPTCY? 1 1. Defining Bankruptcy 2 2. Read This Book First! 4 3. Learning about Bankruptcy before It Happens 5 3.1 Qualifying for bankruptcy 10 3.2 Alternatives to bankruptcy 11 4. Exempt Property 11 5. Protection Against Lawsuits 12 5.1 Wage assignments 13 5.2 Licences 13 6. Costs 14 7. Information You Will Need to Share at a Bankruptcy Interview with a Trustee or Lawyer 15 CONTENTS vi Bennett On Consumer Bankruptcy 2 Who Are the People Involved in a Bankruptcy? 19 1. The Trustee in Bankruptcy (the Administrator) 21 2. Different Types of Creditors 22 3. The Superintendent of Bankruptcy 23 4. The Official Receiver 24 5. The Bankruptcy Judge 24 6. The Registrar in Bankruptcy 25 7. The Inspectors 26 8. Others 26 3 Time Sequence in the Bankruptcy Process 29 1. Contact a Trustee 30 2. File an Assignment 34 3. Attend an Examination by the Official Receiver 34 4. Attend the First Meeting of Creditors 35 5. Apply to the Court for a Discharge 36 4 What Is the Role of the Trustee? 39 1. Trustee's Responsibilities 40 1.1 Counsels the consumer debtor and prepares the forms 40 1.2 Administers the Estate 41 1.3 Reports to the Creditors 42 1.4 Conducts Special Investigations 43 1.5 Reports to the Court on the Discharge 43 5 What Are the Types of Creditors Involved in a Bankruptcy? 45 1. What Are the Different Types of Creditors? 46 1.1 Secured creditors 46 1.2 Preferred creditors 46 1.3 Unsecured creditors 47 1.4 Special Crown claims 48 Contents vii 2. When Is the First Meeting of Creditors? 48 3. What Happens at the First Meeting of Creditors? 49 6 What Property Can the Consumer Debtor Keep? 53 1. Property the Trustee Is Entitled to Take 53 1.1 Property that the consumer debtor has at the time of filing 54 1.2 Property that the consumer bankrupt will acquire between the date of bankruptcy and the date of discharge 54 2. Property the Trustee Is Not Entitled to Take (Exemptions or Exclusions) 55 2.1 Property held by the bankrupt for another 55 2.2 Property that is exempt from execution under the laws of the province or territory within which the property is located or within which the bankrupt resides 56 3. Exempt Property 57 3.1 Federal law 57 3.2 Alberta 58 3.3 British Columbia 58 3.4 Manitoba 59 3.5 New Brunswick 60 3.6 Newfoundland and Labrador 60 3.7 Northwest Territories 61 3.8 Nova Scotia 61 3.9 Nunavut 62 3.10 Ontario 62 3.11 Prince Edward Island 63 3.12 Quebec 63 3.13 Saskatchewan 64 3.14 Yukon 64 4. Salary 65 5. Property Conveyed Away 66 viii Bennett On Consumer Bankruptcy 7 What Debts Survive Bankruptcy? 69 1. Claims That Survive Bankruptcy 70 1.1 Fines and penalties 70 1.2 Alimony, maintenance, and support 71 1.3 Claims based on fraud and misrepresentation 71 1.4 Claims based on student loans 72 1.5 Other claims that survive bankruptcy 73 8 What Are the Bankrupt's Duties? 75 1. Deliver Property 76 1.1 Make an inventory 77 1.2 Deliver books 77 1.3 Submit a Statement of Affairs 77 2. Assist and Co-operate with the Trustee 78 3. Disclose Property That Has Been Conveyed Away 78 3.1 Disclose property that has been gifted 79 4. Attend All Meetings of Creditors, Examinations, Counselling Sessions, and before the Official Receiver 79 4.1 Attend counselling sessions 80 5. Perform Other Duties 80 5.1 Aid in realization 80 5.2 Execute other documents 81 5.3 Examine proofs of claim and disclose false claims 81 5.4 Inform of any material change 81 5.5 Advise of change of address 81 9 What Are the Alternatives to Bankruptcy? 83 1. Pay Something and Not Go Bankrupt 83 2. Seek Credit Counselling Assistance 84 3. Deal with Creditors: An Informal Proposal 85 4. Apply for the Orderly Payment of Debts 86 5. Make a Formal Proposal 86 Contents ix 10 How Does the Debtor Make a Consu mer Proposal? 89 1. Decide to Make a Consumer Proposal 90 2. Cause an Investigation 91 3. File the Documents 92 11 Small-Business Proposal 95 1. Decide to Make a Small-Business Proposal 95 1.1 Types of proposals 97 2. Cause an Investigation 97 3. Vote 99 12 Bankruptcy and Initial Documents: An Overview 101 1. Does the Consumer Debtor Need a Lawyer? 101 2. Trustees: Costs and Paperwork 103 3. What Documents Does the Consumer Debtor Have to Sign? 104 13 How Does the Bankrupt Live as an Undischarged Bank rupt? 113 1. Holding down a Job 114 2. Telling People about the Bankruptcy 114 3. Living between Bankruptcy and Discharge 115 14 Dis charge: How Does the Bankrupt Get Out o f Bankruptcy? 117 1. Automatic Discharge for First-Time Bankrupts 117 2. Automatic Discharge for Second-Time Bankrupts 118 3. Making the Application 118 4. Prepare for the Hearing when There Are Oppositions 127 5. Attend at the Bankruptcy Court 131 x Bennett On Consumer Bankruptcy 15 Co mmon Questions 135 1. Who Prepares the Consumer Debtor's Income Tax Returns? What Happens to a Refund? 135 2. Is Notice of the Consumer Debtor's Bankruptcy Published in the Newspaper? 136 3. Can Creditors Continue to Call on the Consumer Debtor for Payment after Bankruptcy? 137 4. Will the Consumer Debtor's Employer Find Out about the Bankruptcy? 137 5. Is the Consumer Debtor's Credit Rating Affected? 138 6. What Happens to the Consumer Debtor's Bank Accounts? 139 7. Where Can the Consumer Debtor Learn Better Budgeting Skills? 139 8. Can the Consumer Debtor Get a Loan after the Bankruptcy? 140 9. Are the Assets of the Consumer Debtor's Spouse Affected? 140 10. Where Does the Consumer Debtor Find a Bankruptcy Lawyer and/or Trustee? 141 11. Does the Consumer Debtor Have Any Director's Liabilities? 142 12. Can the Consumer Debtor Keep the Vehicle after Bankruptcy? 143 13. When Can the Consumer Debtor Get back His or Her Credit Cards? 144 14. How Are Student Debts Treated? 144 G lossary 145 APPENDIX 1: Excerpts from the Bankruptcy and Insolvency Act 153 1. Definitions from Section 2 153 2. Acts of Bankruptcy from Section 42 155 3. Application for a Bankruptcy Order from Section 43 156 4. Assignment from Section 49 156 Contents xi 5. Property of the Bankrupt from Section 67 156 6. Consumer Proposal: Division II, Sections 66.11 - 66.40 158 7. Attachment of Wages from Section 68 174 8. Duties of the Bankrupt from Sections 158 - 159 179 9. Examination of the Bankrupt from Section 163 181 10. Debts Not Released by Discharge from Section 178 181 11. Bankruptcy Offences from Sections 198 - 201 182 12. Support Creditors from Sections 136 and 178 185 APPENDIX 2: Additional Reading and Contact Information 187 1. Additional Reading 187 2. Contact Information 188 2.1 The Superintendent of Bankruptcy 188 2.2 The Offices of Official Receivers 188 Appendix 3: Superintendent's Standards 191 THE DOWNLOAD KIT 193 INDEX 195 FIGURES 1 Structure 20 2 Time Sequence 31 3 Bankruptcy Process 38 SAMPLES 1 Assignment for General Benefit of Creditors 105 2 Statement of Affairs 107 3 Affidavit of Income and Expenses 120 4 Section 170 Report 122 5 Notice of Opposition to Discharge 130