After a notice was sent by my trustee in bankruptcy announcing a personal bankruptcy and asking for a meeting with the creditors, how long do they have to respond to the notice? Is a person left hanging in limbo indefinitely?
How will I know if they responded or not?
When you file bankruptcy in Canada, all creditors are advised of the bankruptcy, and they are given the option to request a meeting of creditors. Most personal bankruptcies in Canada pass by without the need for a meeting of creditors. The creditors are given a chance to request a meeting, but rarely exercise that right. There are two situations however, where a trustee must call a meeting;
- If the Official Receiver requests the trustee to call one, or
- If creditors that are owed more than 25% of your total debt request one.
The request is made to the trustee any time before the date you’re eligible to receive your discharge from the bankruptcy. This helps to ensure you’re not left wondering indefinitely if one is going to be called. If a meeting is to be called, it’s most likely that the creditors like it to be at an early stage of the bankruptcy.
The main benefits to calling the meeting at an early stage is that it allows the creditors a chance to give directions to the trustee with respect to how they’d like the bankruptcy to be administered or matters of concern they’d like to be addressed by the trustee.
If a meeting is called, the trustee will notify you of the time and place. The meeting is usually held at the trustee’s office and you should prepare to attend the meeting so that you can answer any questions or provide information to address the creditors concerns.
One reason meetings are rare in most personal bankruptcies is because creditors with questions will often just ask the trustee via phone or email rather than calling an official meeting as they can often get a quicker response that way. Meetings of creditors are a little more common place in corporate bankruptcies where the number of creditors could be much higher and issues revolving around the bankruptcy are more complex.
There are no specific rules that way when a creditors’ meeting must be called, but presumably it would occur before the bankrupt’s discharge. In practice, if it was going to happen, it generally would happen during the first few months, since there’s not much point in waiting until the end to call a meeting.