If you are struggling with more debt than you can repay, you may be considering either bankruptcy or a consumer proposal to help you deal with those debts. If you are, then you need to speak with someone who is a licensed Bankruptcy Trustee; in Canada, that person is not a lawyer. A Bankruptcy Trustee often has an accounting background and is licensed through the Canadian federal government.
Bankruptcy law in Canada is administered under the Bankruptcy & Insolvency Act (the Act or BIA). The Act provides for two possible debt relief solutions for individuals: personal bankruptcy or a consumer proposal. Both options are legal processes filed under the Act and administered by a Bankruptcy Trustee, or in the case of a consumer proposal, the Trustee may also be called a Consumer Proposal Administrator. The reason for this is that, while bankruptcy is a legal process, the courts rarely get involved. Instead, there are a series of regulations and rules, that when followed, allow a person to go through the bankruptcy process without the need to appear in court. In most cases, an individual files for bankruptcy, performs their required duties and receives an automatic discharge at the end of the process all without ever having to talk with a lawyer or appear in court.
The role of the Bankruptcy Trustee is to be an impartial administrator. The Trustee makes sure that all rules and regulations are followed and that the bankruptcy process is fair to both the debtor and the creditor. This concept of fairness begins even at the In most cases, an individual files for bankruptcy, performs their required duties and receives an automatic discharge at the end of the process all without ever having to talk with a lawyer or appear in court.initial consultation stage. By law, a Bankruptcy Trustee is required to review the debtor’s financial situation and explain all possible solutions, not just bankruptcy. This ensures that the person choosing to file for bankruptcy is well-informed and makes the best decision for their individual situation. This is another reason why the Act requires that a Bankruptcy Trustee be trained specifically in the provisions of the Act and in issues related to debt management.
While most Bankruptcy Trustees are also accountants, it is not a prerequisite. To become a Trustee an individual must complete an extensive training program over several years, have practical experience in the area of insolvency and must pass both written exams and a final oral examination before a three-person board that includes a representative from the Office of the Superintendent of Bankruptcy, a licensed Bankruptcy Trustee and a bankruptcy lawyer.
If you choose to file for bankruptcy your Trustee will file the necessary paperwork with the Superintendent of Bankruptcy, notify your creditors of the bankruptcy or proposal, review and approve claims from creditors, realize on any assets that must be surrendered to the Bankruptcy Trustee, ensure that you have completed your duties and apply for your discharge once the bankruptcy process is complete.
It is rare for a bankrupt to need to appear in court, however, it does happen. If the bankrupt does not complete their required duties, or a creditor wishes to object to a person’s discharge from bankruptcy, the Bankruptcy Trustee will apply to court for a discharge hearing. Again, it is important to understand that even during this process, the Trustees are impartial administrators. They represent neither the debtor nor the creditor, but instead advise the court as to the facts of the situation and may provide a recommendation as to the outcome.
Then what do bankruptcy lawyers do? Lawyers who practice in the area of insolvency law primarily work either on corporate insolvency files or occasionally provide legal advice to Bankruptcy Trustees and undischarged bankrupts about court actions. A lawyer’s role is that of an advocate. When lawyers work on a corporate file they are typically representing a creditor, a business or another interested party to a legal outcome. They would argue, either in negotiations or in court, the position of their client. If a Bankruptcy Trustee needs legal advice, perhaps about a dispute as to a creditor’s claim or an asset of the bankruptcy, he or she may request a legal opinion from an insolvency lawyer. In the rare instance that a debtor may need legal advice during a discharge hearing, then the debtor would engage the services of an insolvency lawyer. Again, it is important to understand that this very seldom occurs. Most bankruptcies are completed within nine months with no court involvement.
A final word of caution. As mentioned, bankruptcies and consumer proposals can only be administered in Canada through a licensed Bankruptcy Trustee. There are, however, many other debt consultants who provide information about bankruptcies or consumer proposals on their websites and will offer to walk you through the process, for a fee. Others provide non-legislated debt management services and if you need to file for bankruptcy, will end up referring you to a Bankruptcy Trustee anyway. Neither of these approaches are necessary. Most Bankruptcy Trustees will provide a free initial consultation. If you are uncomfortable with the advice provided by one trustee, you should contact another trustee in your area for a second opinion prior to filing. To be sure that the individual you are dealing with is a licensed trustee you can search their name or firm name with the Office of the Superintendent of Bankruptcy.
About J. Doug Hoyes
