Perform Your Duties During Bankruptcy

During your bankruptcy, you are required to perform certain duties.  As long as you perform your duties during bankruptcy, you will be discharged and your debts will be eliminated.

If you are not discharged, your debts don’t go away, which obviously defeats the purpose of declaring bankruptcy.  Here is a simple summary of your bankruptcy duties:

1 Surrender your assets. In most cases in a bankruptcy your assets will be exempt from seizure, which means you won’t lose your clothing, or household furniture.  However, if you have a house that’s worth a lot more than what’s owing on the mortgage, or a valuable car, you are responsible for surrendering that asset.

TIP: Before declaring bankruptcy, review with your trustee all of your assets, and determine what you will be required to do to assist your trustee.  If the trustee is required to sell your car (which would be unusual in most bankruptcies), you will obviously want to make arrangements for alternate transportation before you go bankrupt.

2 Give your credit cards to your trustee.  According to Directive #3 from the Office of the Superintendent of Bankruptcy, you are required to deliver all credit cards to your trustee (except for credit cards issued to a third party, such as a credit card provided by your employer).  More information is available on the government’s website, Duties of the Bankrupt to Deliver Credit Cards to the Trustee.

3 Attend two credit counselling sessions, to help you learn ways to better manage your money in the future.  The first session must be completed within 60 days of your date of bankruptcy, and the second session must be done within 210 days.

4 Each month you are required to provide  proof of your income and certain expenses, so that your trustee can calculate your surplus income.

5 Provide all information necessary to file your tax returns.  A “pre-bankruptcy” tax return will be filed (which covers the period from January 1 to the date of bankruptcy) and the trustee will also receive your “post bankruptcy” tax refund, so the trustee will request your T-4 slips and other tax information at the end of the year.

6 Finally, during your bankruptcy you will be required to make payments to your estate.  Each situation is different, but in most cases you will be required you to make a base contribution each month to cover the costs of administering your estate, and in addition you are required to make your surplus income payments based on your income.

This is just a simple summary of the duties of a bankrupt, so you should consult with your trustee to fully understand everything you will be required to do during your bankruptcy.