Bankruptcy Discharge – Top 10 Way to Avoid Opposition

Bankruptcy Discharge, for the average 1st time bankrupt, discharge happens automatically after the term of 9 months or 21 months.  This is dependant upon the bankrupts income and their fulfillment of required duties.   All in all, the discharge requirements are simple to achieve and an absolute discharge is available in a timely manner.

Opposition to bankruptcy discharge, can result in:

1. Conditional discharge, with terms and conditions attached to absolute discharge
2. Rejected discharge

Opposition can be initiated by

1. OSB, Office of the Superintendent of Bankruptcy
2. CRA or Tax agencies
3. Creditors
4. Trustee on file for the estate

Rulings on discharge, conditional discharge and subsequent opposition are determined by the court presiding over the case in the province of the bankrupt.

The court may

•  grant or refuse an absolute order of discharge;
•  suspend the operation of an absolute order of discharge for a specified time; or
•  grant an order of discharge subject to any terms or conditions with respect to any earnings or income that may afterwards become due to the bankrupt or with respect to the bankrupt’s after-acquired property.

Cases of discharge opposition rulings are published by the Canadian OSB

The decision to oppose discharge is always based on actions of the bankrupt.  Avoiding  these Top 10 common errors will assist in a timely discharge.

1. Bankrupt failed to perform his duties as a bankrupt imposed under the Act.
2. Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living.
3. Bankrupt has $200,000 or more of personal income tax debt, which represents 75 percent or more of the bankrupt’s total unsecured proven claims.
4. Bankrupt failed to account for any loss of  assets; he cannot explain why there are not enough assets to meet his  liabilities.
5. Bankrupt is responsible for having less than half the value of her debts covered by the value of her assets.
6. Bankrupt  continued to borrow after knowing she was insolvent.
7. Bankrupt  has on a previous occasion been bankrupt.
8. Bankrupt failed to pay the required surplus income to his trustee.
9. Bankrupt refused or neglected to receive counselling.
10. Bankrupt has allegedly committed an offence.

Court decision’s in recent discharge oppositions.

• The Court ordered the bankrupt to pay $150,000 at an  annual rate of $15,000 over 10 years. The bankrupt can be discharged only after 10 years, even if he completes payment before that time.
• The Court ordered the bankrupt to pay $23,481 to the trustee  for her bankruptcy estate, in minimum monthly payments of $1,000, before she  can receive an absolute discharge. She must also file  a notice with credit agencies that she cannot apply for credit for 60  months and she must attend at least five gambling counselling sessions.
• The Court ordered the bankrupt to pay $35,000 at a rate of  $100 per month. In addition, the Court ordered the Canada Revenue Agency to  forward all of the bankrupt’s income tax refunds directly to her trustee to go  toward her payments. The bankrupt must also file a  notice with credit agencies that she cannot apply for credit while she is an  un-discharged bankrupt.
• The Court refused to discharge the bankrupt and ordered him to pay $100,000 to the estate before he  can reapply for discharge.
• The Court ordered a conditional discharge upon payment of  $20,000 to the estate, including any income tax refunds. This amount is  intended to cover the $10,000 preferential payment to his mother and $10,000 in  restitution for the bankrupt’s abuse of credit cards. The Court established an  eight-year payment plan, but the bankrupt has the right to prepay at any time.