9. Bankruptcy Discharge

The final and most important step in the bankruptcy process is your discharge from bankruptcy.

On the day you file for bankruptcy, there is an automatic “stay” which prevents your creditors from collecting money directly from you.  However, your creditors still exist; your debts don’t go away until you receive your discharge.

That’s why your discharge is so important, because it’s necessary to eliminate your debts.

If this is your first or second bankruptcy, you are eligible to receive an automatic discharge.  (For a third bankruptcy you are required to go to court).  There are two common reasons why you would not receive an automatic discharge.

The most common reason would be that you have not completed your duties.   If you did not provide the trustee with proof of your income each month, or if you did not attend your counselling sessions, or provide your tax information, or make the required payments, you are not eligible for an automatic discharge.  You will be required to go to court and explain to the Registrar (bankruptcy judge) why you did not complete your duties.

TIP: Complete your duties!  If you are having problems, speak to your trustee immediately.

The other reason for not receiving an automatic discharge would occur when one of your creditors (the people you owe money to) opposes your discharge.  This is a rare occurrence, but it could happen if the creditor believes you have not completed your duties, or if they believe that instead of filing a bankruptcy you should have filed a consumer proposal.  If they object, a court hearing is held, and the court will decide whether or not you will be discharged.

Again, be sure to complete all of your duties so that you receive your discharge from bankruptcy, and officially eliminate your debts.