Types of Bankruptcy Discharge

Category: Personal Bankruptcy

Bankruptcy discharge is the last step in your bankruptcy and what eliminates you from any further obligation for the debts covered by your bankruptcy.  In most cases, a bankruptcy in Canada will end in an automatic discharge with no court hearing. In these circumstances your trustee will send you a copy of your bankruptcy discharge papers and that will be it – you are ready to begin your fresh start.

In some circumstances your may not qualify for an automatic discharge. If a creditor opposes your discharge, if you do not complete your required bankruptcy duties or this is your third bankruptcy, then your trustee will be required to apply to the court for an application for discharge.  At that hearing your trustee will tell the court any relevant information about your bankruptcy such as duties you did not complete or information about a creditor’s opposition. The court will then grant you one of four types of discharge:

Order of Absolute Discharge

If you receive an absolute discharge you are officially released from your debts incurred before you declared bankruptcy, taking under consideration debts not included in a bankruptcy under the Bankruptcy and Insolvency Act.

Order of Conditional Discharge

Under a conditional discharge the court will imposed certain conditions that must be met before your bankruptcy discharge becomes absolute. For example, the Court may require you to make additional payments for distribution to your creditors.

Order of Suspended Bankruptcy Discharge

A suspended discharge is an absolute discharge that will not be effective until a certain date. The court may order a delay pending the outcome of a criminal investigation, or a breach of your duties as specified in the Bankruptcy and Insolvency Act, or due to a prior bankruptcy.

Discharge Refused

Under rare circumstances the courts may refuse to grant a discharge.

Once you receive your discharge, you are released from the debts covered by your bankruptcy. In almost all cases bankruptcy in Canada ends in an automatic discharge. It is important to talk to your bankruptcy trustee about what is required before you file for bankruptcy to ensure that you will receive your bankruptcy discharge at the end of your bankruptcy.