Bennett on Consumer Bankruptcy. Frank Bennett

a government officer, in the area which the consumer debtor resides for filing. Alternatively, the trustee may fax or deliver the documents to the office for filing. (The government offices are listed in Appendix II.) Once these documents are accepted by the Official Receiver, the consumer debtor is then officially bankrupt.

      3. Attend an Examination by the Official Receiver

      Once the consumer debtor is bankrupt, the debtor is required to perform a number of duties. These are set out in more detail in Chapter 8. One of the duties is to attend, if requested by the creditors or by the Superintendent of Bankruptcy, or by the office of the Official Receiver, an examination as to the consumer’s debtor’s assets and liabilities before the first meeting of creditors.

      In consumer bankruptcies, there is seldom an examination. However, where the trustee suspects credit card abuse, extravagant living, or gambling, the trustee may call the Official Receiver and request that the Official Receiver conduct an examination. The trustee and the Official Receiver usually set the date and time of the examination, but it is usually held shortly before the first meeting of creditors, if one is requested. The consumer debtor, now bankrupt, must attend and answer questions under oath concerning the debtor’s conduct before bankruptcy, the causes of bankruptcy, and the disposition of the debtor’s property over the last five years. Many of the questions are of a general nature.

      On occasion, the Official Receiver obtains information from the trustee and the creditors, and then makes up some new questions relating to the debtor’s property. The Official Receiver’s questionnaire is designed to bring out answers relating to the debtor’s assets that the debtor may have had prior to bankruptcy so that the trustee and the creditors may recover these assets that have been conveyed improperly to friends, family, and business associates. The consumer debtor usually attends the meeting without a lawyer, but may bring a lawyer or friend to assist; it is not usual for the consumer debtor to bring a lawyer to this type of examination. In fact, if the debtor brings a lawyer, the Official Receiver may suspect that there may be problems in the administration. Unlike at the Official Receiver’s examination, the bankrupt is not under oath when attending the first meeting of creditors.

      The Official Receiver usually writes the answers on the form, and on additional pages if necessary. At the end of the examination, the Official Receiver asks the consumer debtor to review the answers and sign the form under oath. The consumer debtor should read the material carefully and make any corrections at that time, or as soon as the debtor realizes an error.

      At the meeting of creditors, the Official Receiver reads the answers aloud. Creditors may ask additional questions at that time.

      4. Attend the First Meeting of Creditors

      In consumer bankruptcies, there is not likely to be a meeting of creditors unless requested. Within 30 days of the bankruptcy, the Official Receiver or creditors having at least 25 percent in value of the proven claims can request a meeting of creditors. If a creditors’ meeting is requested, the trustee must send a notice of bankruptcy and notice of impending automatic discharge for first-time bankrupts to creditors. The notice must indicate the amount of surplus income that the bankrupt is required to pay the estate.

      If a meeting is requested, it must be held within 21 days after being called. If a meeting is called, it is usually because the consumer debtor owes substantial money to creditors, or credit card issuers suspect something improper or illegal.

      If the Official Receiver or creditors wish to call a meeting, the trustee in bankruptcy must notify all the creditors of the date, time, and location for the first meeting of creditors in the bankruptcy estate. The Official Receiver sets the date and time and usually confers with the trustee in doing this.

      The trustee sends a notice of the first meeting with the statement of affairs and a summary list of creditors to all the creditors, advising them of the date, time, and location of the first meeting of creditors, and advising them that if they wish to come and vote, they must first file a proof of claim before the meeting begins. If the trustee does not accept the proof of claim, the creditor will not be permitted to vote.

      While not usual for consumer bankruptcies, the Official Receiver’s examination of the bankrupt is usually held the day before or during the morning before the first meeting of creditors. At the first meeting of creditors (and usually there is only one as second or subsequent meetings can become expensive), the Official Receiver and trustee review a number of matters including the results of the examination and then the trustee obtains directions from the creditors. This is covered in more detail in Chapter 5.

      5. Apply to the Court for a Discharge

      The bankruptcy of an individual person operates as an application for discharge. If the bankrupt is a first-time bankrupt, then there is an automatic discharge nine months after filing unless the bankrupt has refused or neglected to receive counselling or where a creditor, the trustee, or the Superintendent objects to the discharge, or where the bankrupt has no surplus income. If there is opposition, there is a special hearing before the bankruptcy registrar or judge. For individuals who have been bankrupt before, or in circumstances where their conduct is questionable, the discharge could take much longer.

      While the consumer debtor is undischarged, that is while the consumer debtor is still in bankruptcy, the consumer debtor’s surplus wages, salary, or commission, or a draw as a self-employed individual, are subject to seizure or attachment by the trustee for the benefit of creditors. The amount that the trustee is entitled to attach depends on the debtor’s family income, family responsibilities, and personal situation. On filing the bankruptcy papers, the trustee must review the consumer debtor’s surplus income requirement and determine according to the Superintendent’s Standards what portion the debtor is going to pay to the estate while the debtor is undischarged. Annually, the Superintendent’s office publishes these standards in chart form setting out suggested payments depending upon the size of income and the number of dependents. The standards are the same across Canada and do not take into account regional disparities of income and expenses; see Appendix III.

      At the discharge hearing, creditors may oppose the consumer debtor’s discharge if they have reason to believe that the debtor’s conduct prior to and during the bankruptcy was improper under certain prescribed provisions of the Bankruptcy and Insolvency Act. When the consumer debtor gets out of bankruptcy all the proceedings stop and the consumer debtor is free to enter into business and obtain credit once again.

      In Chapter 14, there is a review of the discharge hearing and what a consumer debtor can expect at the hearing.

      Figure 3 shows the bankruptcy process.

      Figure 3: Bankruptcy Process