Obligations after you have filed your bankruptcy or consumer proposal

Once you have filed your bankruptcy or consumer proposal with a Licensed Insolvency Trustee (“LIT”), you will have certain obligations to comply with in order to receive a discharge from your bankruptcy or a certificate of completion for your consumer proposal.

The some of the more common deficiencies we see in bankruptcies are as follow:

  1. Failing to make the required payments in your bankruptcy.  When you file for bankruptcy, the Trustee will calculate the amount of money that you will be required to pay into the Estate for the benefit of your creditors.  The calculation is based on a number of factors, including the number of people in your household, the monthly income for your household, and any equity in assets that may not be subject to an exemption.

  2. Failing to report monthly for the term of your bankruptcy on your monthly income.  Filing for bankruptcy will require you to report and provide supporting documentation on your income and certain deductible expenses, such as medical expenses and spousal or child support.

  3. Failing to attend your two (2) mandatory counseling sessions. As part of the process, you will be required to attend two mandatory counseling sessions.  The sessions deal with creating a budget, pitfalls of credit, spending habits and rebuilding credit once you receive your discharge.

  4. Failing to provide the Trustee with the documentation needed to process your year of bankruptcy income tax returns.   For the year of bankruptcy, two returns will be prepared.  The first return is for the period of January 1st to the date of your bankruptcy (called a pre-bankruptcy return) and the second for the period from the date of your bankruptcy to December 31st (called a post-bankruptcy return).

Failing to complete any of the above duties will affect your ability to be discharged from your bankruptcy.

The obligations for a consumer proposal are less onerous.  Failure to perform the following may result in your consumer proposal being voided.

  1. Just like in a bankruptcy, you will be required to attend the two mandatory counseling sessions as described above.

  2. You have to make all the payments you agreed to make under your consumer proposal.  Falling behind and not making up a total of three (3) payments will result in your proposal being voided.

The above is not intended to be an exhaustive list of deficiencies that may arise during the bankruptcy or consumer proposal process.  For more information on your obligations under a bankruptcy or consumer proposal, contact us at 403-836-6690 or visit our website at correctthedebts.com and book your free consultation to review your specific situation.  We are a locally owned Alberta company that proudly services all Albertans.