Bankruptcy Discharges

A discharge releases you from the legal obligation to repay the debts you had as of the date you filed for bankruptcy, except for specific types of debts that are excluded by the law.

The Certificate of Full Performance has the same effect as a discharge from bankruptcy. You are now released from legal obligation to repay the debts you had as of the date you filed your Proposal, except for specific types of debts that are excluded by the law.

• Alimony or child support payments.
• Student loans (if you stopped being a student less than seven years ago).
• Debts arising from fraud.

There are other debts as well, but it is best to speak with a Licensed Insolvency Trustee to discuss your exact situation.

The Licensed Insolvency Trustee will advise the Office of the Superintendent of Bankruptcy and all the proven creditors of a debtor, of the debtor completing the terms of their bankruptcy or consumer proposal, but it is the obligation of the debtor to advise the credit bureaus.

If you had any debts that did not qualify for discharge you will have to make arrangements to pay those creditors. (See FAQ 3 and discuss with your Trustee)

1. The two credit reporting agencies in Canada are Equifax Canada and TransUnion.
2. You should review the Financial Consumer Agency of Canada’s publication Understanding your credit report and credit score. By visiting their website you can learn more about:
• Credit report and score basics
• How to understand your credit report
• How to improve your credit score
• How to correct errors and check for fraud
• How to order your credit report and score
• Examples of credit reports and scores
3. It is the obligation of the debtor to advise the credit bureaus once they have completed the terms of their bankruptcy or consumer proposal.

Further to FAQ 4 and 6 above it is the duty of the debtor.

Speak to your Licensed Insolvency Trustee to determine a course of action.

No, whether you can obtain credit after your discharge from bankruptcy will depend on your ability to convince lenders of your financial maturity and ability to repay the debt. There are no guarantees, no one is required to give you credit.

• Do not rely on someone else to rebuild your credit. You must be the driving force.
• Clean up your credit report — make sure all errors are corrected.
• Obtain new credit — a secured credit card, small secured loan or RRSP loan.
• Make sure the new credit is reported to the credit bureau (not all credit products are reported).
• Start by asking your financial institution what products they have available to help you rebuild your credit. It’s good to build a relationship with the financial institution you have already been dealing with during your Bankruptcy or Proposal.
• Never miss a payment. In fact, pay before the due date. Follow the good budgeting and money-management tips you reviewed in your counseling sessions with your LIT firm.
• Save for a down payment on a car or house.

You will need to improve your credit score before you can obtain a mortgage and you will need a down payment. Start by saving and obtaining small credit balances and paying them off before the due dates to improve your credit score.

There are many factors to consider when choosing the right credit card. The Financial Consumer Agency of Canada has a credit card selector tool and can help you understand the fees, costs, rewards and benefits of each credit card.

• Refer these creditors to your Trustee.
• If the creditors are persistent provide them with a copy of your Discharge Certificate or Order and a copy of your Statement of Affairs showing that the creditor was included in your bankruptcy and that your debt to them is now discharged.
• If the creditor is harassing you or collecting in an unethical manner you can report them to the Office of Consumer Affairs in your Province.

• If your Trustee hasn’t been discharged yet, simply tell the creditor to contact your Trustee and participate in your bankruptcy.
• If your Trustee has been discharged then the creditor is entitled to be paid the same dividend (% of debt) your other creditors received from your bankruptcy. You will have to pay this amount. Contact your Trustee to discuss this.
• If you deliberately omitted the creditor from your bankruptcy (the onus is on the creditor to prove this) then the creditor can ask the court to allow their debt to survive, and you will have to pay the full amount.

• Some student loan / debts are not forgiven by your discharge from bankruptcy.
• You should have received confirmation from your trustee that either the student loans would be discharged or that they would resume collection after you were discharged.
• You should contact the National Student Loan Service Centre to find out more about your student loans account and make arrangement for payments if necessary

Your spouse may have signed an agreement or contract either co-signing or jointly signing for liability. For example, you may have a supplemental credit card for your spouse or your spouse may be a guarantor on one of your loans. If so, your spouse is responsible for paying the balance of this debt.

• The tax refund relating to the year of your bankruptcy will be sent to the Trustee for the benefit of your creditors. Subsequent tax refunds should be sent to you.
• The Trustee has a right to apply your GST credits towards the costs of administering your bankruptcy (up to a maximum of $1800). Once the Trustee’s costs are covered, the GST credits will again revert to you.

• If the Trustee has not been discharged yet, then you will have to paper-file your tax return.
• Once the Trustee is discharged you can e-file your returns again.
• You should contact the CRA and ensure they have your correct address and banking.

See FAQ 18

You may owe tax for the post-bankruptcy period, the part of the year after your date of bankruptcy up to December 31. If you owe tax for this period you are responsible for paying it.

Secured creditors (like vehicle finance companies) retain their rights under their contract, even after Bankruptcy or Proposal completion. If you fail to meet the contractual obligations, the creditor can repossess the collateral (i.e. car, ATV, Boat). In some provinces, the secured creditors can still collect from you for the deficiency, even after repossession. Ask your Trustee if this applies to you.

If you fail to pay your mortgage, your mortgage company can commence foreclosure proceedings, before, during or after Bankruptcy or a Proposal. If you are finished your Bankruptcy or Proposal and are concerned you are going to miss your mortgage payments you should contact your mortgage company immediately and try to negotiate with them.

If you are discharged from bankruptcy you are once again free to liquidate your assets. However, before cashing in your RRSP’s or other investments there are tax implications and lost future income to consider. It is recommended that you consult with a financial planner to determine the costs and benefits of doing this.

• Buying a home is a major financial decision and should not be taken lightly.
• First you need to ensure your credit report is accurate and that you have savings for a down payment.
• Canada Mortgage and Housing Corporation has many resources available to help you with your home buying decision including a test to see if you are financially ready to buy a home.
• You may want to consider rent-to-own options in your community. There are some companies willing to buy a house and rent it to you until you qualify for a mortgage.

• Much like buying a home it is recommended that you have a down payment for your vehicle purchase.
• Make sure your credit report is accurate before you apply for credit through a financial institution or car dealership.
• Create a budget! What payment is affordable to you? Don’t borrow more than you can afford to repay.
• Vehicles depreciate quickly and often need repairs before you have finished paying the loan. Ensure you budget for car maintenance and insurance.
• Do your research, there are many finance companies willing to lend to you and many even have ‘credit rebuilding’ programs. Watch for high interest rates, hidden charges and finance loans for more than five years

• Having financial goals is very important, and starting with savings is a great plan.
• We recommend starting with a savings account for emergencies. Once you’ve built up an emergency fund you can start savings for other goals like retirement, major purchases or travel!
• Use a financial goal calculator to help you get started.