The Bankruptcy Assistance Program

2015-09-23

The Bankruptcy Assistance Program (the “BAP”) under the Bankruptcy and Insolvency Act is a very significant program for consumers. Administered by the Office of the Superintendent of Bankruptcy (a federal government agency), the BAP must be adhered to by all Trustees in Bankruptcy in Canada who are participating in the program.

The BAP was designed for low income consumer debtors. The intent is to make bankruptcy affordable for those who cannot afford to pay the typical fees and disbursements of a licensed Trustee in Bankruptcy. 

Person looking at their laptop with their face in their hand

For some debtors, bankruptcy is often the only realistic option in dealing with collection calls and legal threats and their only viable means of legally discharging most, if not all, of their debts.

Who Qualifies for the Bankruptcy Assistance Program?

The BAP is available to the following individuals:

  • Individuals who are not (currently) incarcerated;
  • Individuals who were not previously or are not currently involved in commercial activities where the administration of the bankruptcy could give rise to an appreciable amount of administrative or investigative work for the Trustee; and
  • Individuals who are not required to make surplus income payments to the bankruptcy estate.

How Can the Bankruptcy Assistance Program Help Me?

Many individuals who live below the Statistics Canada low income cut-off face a multitude of socio-economic and personal issues. As a result of having no income or insufficient income to pay general living expenses, they cannot afford to pay the typical fees and disbursements of a Trustee in Bankruptcy.

The BAP can assist an individual, who considers bankruptcy as a potential solution to resolving unmanageable debts, to obtain the services of a licensed Trustee in Bankruptcy at a reduced rate based on their available disposable income.

What Does the Bankruptcy Assistance Program Cost?

Although the BAP is not a fee free program and there is no province-wide standard fee that has been established, a licensed Trustee in Bankruptcy who participates in the program will charge a reduced fee payable on a monthly basis over a period of time. This monthly fee will be in accordance with the individual’s disposable income after taking into consideration the individual’s reasonable living expenses.

How Do I Apply for the Bankruptcy Assistance Program?

The first step in applying for the BAP is to contact the Office of the Superintendent of Bankruptcy and request an information package and registration form. The Office of the Superintendent of Bankruptcy has a comprehensive website and can also be contacted toll-free at 1.877.376.9902. Once you have requested the BAP information, the Office of the Superintendent of Bankruptcy will send you the necessary information and registration forms together with a list of Trustee’s in your area who are participating in the BAP. You then must meet with two Trustees who will assess your financial situation and outline your available options. If you are eligible for the BAP, the Trustee will sign the registration form. Once you’ve secured the signature of two Trustee, you will be required to submit the registration form to the Office of the Superintendent of Bankruptcy who will designate one of the two Trustees which you consulted with or alternatively, another Trustee on the list of Trustee’s participating in the BAP to assist you with filing a bankruptcy and notifying your creditors of your bankruptcy.

What Happens if my Income Increases After Being Accepted into the Bankruptcy Assistance Program?

If your income increases after being accepted into the BAP and the Trustee determines that you have surplus income in accordance with the Superintendent of Bankruptcy Standards for Surplus Income Payments, the BAP will no longer be available to you. You will be required by the Bankruptcy and Insolvency Act to make surplus income payments to the bankruptcy estate based on your (new) income as a condition of your discharge from bankruptcy.

The length of time for payment of surplus income and the period of your bankruptcy are determined by the Bankruptcy and Insolvency Act. They are not determined by the Trustee. Several factors affect the amount of surplus income payments required to be made to the bankruptcy estate as a condition of your discharge from bankruptcy. These factors are determined by the Standards set out by the Superintendent of Bankruptcy for Surplus Income Payments, your household income, the number of persons residing with you in your household and whether or not you have been bankrupt before. Depending on your income, you may be required to make surplus income payments to the bankruptcy estate based on standards set by the federal government.

If you are required to make surplus income payments to the bankruptcy estate, provided your discharge is unopposed and provided you have complied with all required surplus income payments, you will be eligible for an automatic discharge in 21 months if this is your first bankruptcy or 36 month if this is your second. Whether or not you are required to make surplus income payments to the bankruptcy estate, you will be required to attend court for your discharge if you have been bankrupt on three or more occasions. It’s also important to note that these stipulations apply to the number of bankruptcies you have filed in both in Canada and elsewhere.

Can I Apply to the Bankruptcy Assistance Program if I Want to Make a Consumer Proposal to My Creditors?

The BAP is only available to eligible individuals who file an Assignment in Bankruptcy. It is not available to individuals who make a Consumer Proposal to their creditors.

How do I locate a Trustee?

You can find a list of licensed Trustees in your area by searching the Trustee Registry of the Office of the Superintendent of Bankruptcy website.

You may also contact the MNP office in your region to schedule a free, confidential, no-obligation consultation that will help you assess all of your options and choose the debt solution that best suits your needs.