What happens if I don’t fulfill my duties during a Bankruptcy?

If you’re going through a personal Bankruptcy, one of your main goals is to obtain your discharge — that is, to have your debts cleared so you can start fresh. Once you receive your certificate of discharge, the debts you had at the time of Bankruptcy will be released, except for certain obligations like child or spousal support arrears and debts arising from fraud.

But getting that discharge doesn’t just happen automatically. To get there, you have certain duties you must complete.

What tasks do I need to finish before I can be discharged?

There are a number of duties your Licensed Insolvency Trustee (LIT) will share with you when you file for Bankruptcy. These include:

• Attending two mandatory financial counselling sessions
• Submitting monthly income and expense reports to your LIT
• Staying in contact with your LIT
• Assisting your LIT in managing and dealing with your assets
• Providing all the information necessary for your LIT to file your required income tax returns
• Paying any surplus income, as calculated under the Bankruptcy and Insolvency Act.

But what happens if you don’t follow through on these duties?

What consequences would I face if I don’t do these duties?

If you don’t meet all your responsibilities during your Bankruptcy, you won’t be eligible to receive your discharge. And without the discharge, your debts aren’t cleared. In short, you’re still on the hook for what you owe.

Although the onus is on you to complete your duties, LITs are here to support you every step of the way. We want to see you get your financial fresh start.

How does this process work?

As discussed above, if your discharge is delayed for non-compliance, your LIT may need to make application to the court for your discharge once you’ve completed all your duties.

It doesn’t stop there. If you delay fulfilling your duties for too long and you don’t receive a discharge from Bankruptcy, the creditors could regain their rights to pursue you for the debts you had at the date of Bankruptcy. But only if you remain undischarged.

In other words, you could find yourself back where you started, with creditors calling, garnisheeing wages, or taking legal action to collect their debts.

What’s the long-term impact on my financial health?

Beyond the immediate consequences, failing to fulfill your duties can significantly impact your ability to repair your credit. The longer your Bankruptcy remains unresolved, the longer it stays on your credit report, impacting your chances of getting loans, credit cards, or even a mortgage in the future.

Think of your Bankruptcy as a temporary hurdle on your path to financial recovery. The quicker you meet your duties, the sooner you can get back on track, rebuild your credit, and regain your financial footing.

How can I stay on top on my duties?

There are many reasons why you may not complete your Bankruptcy duties. Maybe you were overwhelmed when you filed the Bankruptcy and didn’t remember all of the duties you needed to complete to receive a discharge. Perhaps something unexpected happened and your situation changed, which got in the way of you completing your duties. Whatever the reasons, the sooner you address them, the sooner you can move forward.

Here’s a few tips to stay on top of things:

Clear communication: Make sure you have open and clear communication with your LIT to ensure you understand your obligations.

Stay organized: Create a checklist of your tasks and deadlines to make sure nothing slips through the cracks.

Ask for help: If you’re struggling to meet your duties, don’t hesitate to reach out to your LIT or seek professional advice.

Struggling to meet your obligations? We can help.

Bankruptcy can help provide you with a fresh start, but that only happens if you fulfill the responsibilities that come with it. So, it you’re unsure about what you need to do or you’re falling behind, reach out to your LIT or one of our advisors. Our team is here to help guide you through the process and make sure you stay on the right track toward financial recovery.

Reach out to us today for a free, no-obligation consultation to discuss your debt management needs.