Bankruptcy in Canada is a legal process for eliminating your debts but in most cases you will not need to go to bankruptcy court. There are two ways for you to be discharged from bankruptcy: an automatic discharge, or a court ordered discharge.
If you are eligible for an automatic discharge there is no court hearing and you will be released from your debts. Your trustee will send you a copy of your discharge papers. If you do not qualify for an automatic discharge your trustee must apply to the Court hearing to review your discharge.
If this is your first or second bankruptcy, you are eligible for an automatic discharge if you
- complete all of your bankruptcy duties,;
- and if no-one oppose your discharge.
Complete Your Duties
During your bankruptcy you are required to complete certain bankruptcy duties including attending two credit counselling sessions. If you don’t complete these duties, your trustee will oppose your discharge from bankruptcy in Canada, and you will be required to attend a discharge hearing in bankruptcy court. At that hearing you will be required to explain to the bankruptcy judge why you didn’t complete your duties.
So, to avoid bankruptcy court, complete your duties!
If A Creditor Opposes Your Discharge
Even if you complete your duties it is possible that one of your creditors may oppose your discharge from bankruptcy, in which case there will be a bankruptcy court hearing, and you will be required to attend. However, this is a very unusual situation, occurring in less than 1 in 100 bankruptcies filed in Canada.
In most cases a creditor would only oppose your discharge if they believe that they can convince the court to require you to make extra payments, or perform extra duties. This is unusual, because your duties are spelled out in the Bankruptcy & Insolvency Act, so there is seldom any disagreement about what you are required to do. If you don’t complete your duties it will be the trustee that is opposing your discharge, not your creditors.
Third Time Bankrupt
If this is your third bankruptcy, you are not eligible for an automatic discharge, so you will need to go to bankruptcy court for a discharge hearing to determine the terms of your discharge from bankruptcy.
So, unless this is your third bankruptcy, if you complete your duties on time, and if no-one opposes your discharge, you are eligible for an automatic discharge and you do not need to go to bankruptcy court. If you are required to attend bankruptcy court in Canada for a discharge hearing, there are 4 types of bankruptcy discharge that may be granted.