David Sklar & Associates Inc.

Consumer Proposal & Bankruptcy Trustees
Serving the Greater Toronto Area

Duties of a Bankrupt

Bankruptcy is always the last choice for getting rid of debt. For some however, it is the only way they will be able to get out of debt, and get on with their lives.

Whatever the reasons a person has ended up in bankruptcy, the good news is that they are now on their way to financial recovery. Before they are released (discharged) from their unsecured debt however, they must go through a period of bankruptcy, during which time they are legally responsible for honouring the terms of their bankruptcy.

After a trustee files a bankruptcy application for a debtor with the Office of the Superintendent of Bankruptcy, the OSB issues an Estate Number and the debtor is now a bankrupt.

As a bankrupt, a person has several immediate protections from unsecured creditors under the law, including:

• all collection calls by unsecured creditors must stop,


• all garnishees by unsecured creditors must be lifted,


• all legal collection actions by unsecured creditors must be stopped, and


• all interest charges on unsecured debt must stop accruing.

Every bankruptcy is different – however, all bankrupts have a number of legal obligations as laid out in the Bankruptcy and Insolvency Act. Generally, these legally binding obligations ensure that the bankrupt has done his/her absolute best to truthfully inform and assist the trustee in all the matters relating to their assets, liabilities, financial conduct and intent. Where required, the bankrupt must turn over those assets that are not exempt from bankruptcy to their trustee for disbursal to creditors. They must also attend any meetings or hearings that may be scheduled or requested.

In addition, during the period of the bankruptcy, the bankrupt must provide their trustee with:

• monthly income and expenditure statements (including paystubs),


• notice of change in financial circumstances (ie income increases/decreases, inheritances, etc),


• assistance in dealing with their bankruptcy estate as requested by their trustee,


• income tax information as requested,


• notice of any change in address,


• notice of change in the number of family members used to determine surplus income,


• monthly surplus income payments where applicable, and


• trustee fees.

The bankrupt must also attend credit counselling sessions as provided by their trustee.

Bankrupts, who successfully complete their bankruptcy, will be discharged (released) from the unsecured debt covered by their bankruptcy.

While a person is an undischarged bankrupt they:

• Cannot borrow or obtain credit for more than $1,000 without letting the creditor know that they are bankrupt.


• Cannot be a director in a company (unless authorized by the court).

After having helped thousands of people in the Greater Toronto Area through bankruptcy, we know that the most common reaction people have when they file for bankruptcy - is relief. They have not only put a stop to their unsecured creditors, they have taken the first step towards a fresh start and a brighter financial future.