Case Study: Understanding the Bankruptcy Discharge

Case Study: Vincent

Vincent has decided to file for bankruptcy. His Licensed Insolvency Trustee outlines what debts will be discharged in a bankruptcy and how long the process takes.

Meet Vincent, a father of two young children. A recent separation has left him unable to meet his financial obligations.

After having his options explained by a Licensed Insolvency Trustee, a professional whose duties are regulated by the Office of the Superintendent of Bankruptcy Canada, Vincent has decided that bankruptcy is the most appropriate solution to his financial troubles.

The trustee explains that after fulfilling his bankruptcy obligations, his debts will be discharged and he will be free to start over financially. The trustee further explains that in the case of most first bankruptcies, the discharge will happen automatically after nine months—or 21 months if surplus-income payments have to be made.

The trustee also tells Vincent the automatic discharge happens only if it is not opposed by the Licensed Insolvency Trustee, a creditor or the Office of the Superintendent of Bankruptcy Canada; and he attends two counselling sessions to help him understand why he went bankrupt and to assist him in managing his financial affairs in the future.

If the discharge is not automatic, Vincent is told a court hearing will be scheduled. At the hearing, the court will determine if and when the discharge will occur.

Once the discharge is granted, Vincent will be relieved of his debt as of the day he filed for bankruptcy and he will be free to start rebuilding his credit rating and his financial future.

But, the trustee explains, there are certain debts that will not be discharged.

These include alimony and child support payments; in some cases, student loans, court-ordered fines or penalties; and debts arising from fraud.