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Glossary

The following definitions are solely for the convenience of our website visitors. They are in no way to be used as or considered legal definitions.


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Absolute Discharge

Issued by the court – a ruling that officially removes the bankrupt’s legal responsibility to pay the debts covered in their bankruptcy.

Automatic Discharge

A type of absolute discharge that is given automatically to a bankrupt who has completed their required counselling, fulfilled all their legal requirements, and whose discharge has not been disputed by the Trustee, Office of the Superintendent of Bankruptcy, or by a creditor. Available to first and second time bankrupts after 9 months and 24 months respectively, unless the bankrupt is required to make surplus income payments, in which case it is 21 and 36 months respectively.

Bankrupt

An individual or business who has filed bankruptcy voluntarily or has been placed into bankruptcy.

Bankruptcy

The condition that an individual or business is in after being declared a bankrupt. Also – the process of being declared a bankrupt.

Bankruptcy and Insolvency Act

A federal statute that governs bankruptcy and insolvency in Canada.

Bankruptcy Trustee

See Trustee in Bankruptcy

Business

A commercial or industrial enterprise – which is in the form of a sole-proprietorship, a partnership, or a corporation.

CAIRP

Canadian Association of Insolvency and Restructuring Professionals – represents as well as provides training and certification for insolvency professionals such as Trustees in bankruptcy, counsellors and administrators.

CCAA

Companies’ Creditors Arrangement Act

Certificate of Full Performance of Proposal

Issued by a Trustee in Bankruptcy or a Proposal Administrator when all the terms and conditions of a proposal have been completed.

CIRP

Chartered Insolvency and Restructuring Professional – a CAIRP professional designation that is given to individuals who have completed the required training and met admission standards.

Conditional Discharge

Issued by the Court – this ruling is a type of discharge from bankruptcy that sets specific conditions that the bankrupt must perform before they are released from their legal requirement to pay their debts.

Consumer Proposal

Under the Bankruptcy and Insolvency Act – this is a legal process to assist qualified individuals in making legally binding proposals to creditors for the repayment of debt – without having to go into bankruptcy, specifically for those individuals with less than $250,000.00 in debt (excluding their primary residence mortgage).

Creditor

An individual or business who gave credit to a debtor, which has not been repaid, and which can be proved to exist under the Bankruptcy and Insolvency Act. See Secured Creditor and Unsecured Creditor.

Debt

The amount of money owed by a debtor to a creditor.

Debtor

An individual or business who owes money to another individual or business.

Discharge From Bankruptcy

Release of the bankrupt from their legal requirement to pay the debts covered in their bankruptcy. There are five types of discharge; automatic, absolute, conditional, suspended or refused.

Division 1 Proposal

For use by individuals who have debt in excess of $250,000 (excluding their primary residence mortgage) and for use by businesses. A legally binding offer under the Bankruptcy and Insolvency Act from a debtor to their creditors to pay unsecured debts in a manner different from the existing terms.

Garnishment

A legal process, authorized by the Courts, that instructs a third party to turn a debtor ’s property (most often bank accounts and wages) over to the creditor. Also called a garnishee.

Insolvency

The inability of an individual or business to pay debts as they become due. In the case of businesses – insolvency can also exist if the total value of debts is greater than the total value of assets.

Insolvent Debtor

An individual or business who is unable to pay their debts as they become due.

Notice of Intention to File a Proposal

Filed by a Trustee in Bankruptcy, this is a legal document that notifies the Superintendent of Bankruptcy that a debtor intends to file a proposal under the Bankruptcy and Insolvency Act.

Ontario Execution Act

The Act that is in effect in the province of Ontario – it stipulates which assets are exempt from a bankruptcy settlement. Stipulates certain assets you are entitled to keep. Amendment >

Order of Absolute Discharge

Document issued by the Court that officially removes the bankrupt’s legal responsibility to pay the debts covered in their bankruptcy.

Order of Conditional Discharge

Document issued by the Court that that sets conditions that the bankrupt must perform before they are released from their legal requirement to pay their debts.

Order of Suspended Discharge

Document issued by the Court that officially removes the bankrupt’s legal responsibility to pay the debts covered in their bankruptcy – but it does not come into effect until a future date.

Proposal

A legally binding offer under the Bankruptcy and Insolvency Act from a debtor to their creditors to pay unsecured debts in a manner different from the existing terms.

Secured Creditor

A creditor who has a legally binding security interest over some or all of the debtor’s assets.

Secured Debt

A specific sum of money owed to a creditor for which security rights against the debtor’s assets were given. Further explanation

Solvency

The ability of an individual or a business to pay debts as they become due.

Superintendent of Bankruptcy

The Office of the Superintendent of Bankruptcy is the branch of the federal government responsible for overseeing the Bankruptcy and Insolvency Act.

Superintendent’s Standards

The levels of income set by the Office of the Superintendent of Bankruptcy that are used to determine if a bankrupt has surplus income.

Surplus Income

Based on the Superintendent’s Standards and a fixed formula, the amount of income that a bankrupt individual must pay into their bankruptcy estate.

Suspended Discharge

Issued by the court – this ruling is a type of discharge from bankruptcy that releases the bankrupt from their legal requirement to pay their debts – but is not effective until a future date.

Trustee in Bankruptcy

A person who is licensed, by the Superintendent of Bankruptcy, to file and administer both bankruptcy and proposal estates under the Bankruptcy and Insolvency Act.

Unsecured Creditor

A creditor who grants credit without taking any security interest in the debtor’s property.

Unsecured Debt

A specific sum of money owed to a creditor for which no security rights against the debtor’s assets were given. Further explanation


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