from the date the papers are filed with the Official Receiver), the trustee may oppose the application in which case the discharge will be delayed. While courts frown on this practice, the consumer debtor should be aware that his or her discharge may be delayed if he or she does not pay the trustee in full, on time.
Once the consumer debtor has made the initial contact with the trustee, the trustee or his or her assistant requires the debtor to meet and review all the assets and liabilities. That means the consumer debtor will be asked many questions about —
• what the consumer debtor had (i.e., assets the debtor did own over the last five years, but has since sold or transferred or gave away to other persons);
• what the consumer debtor has (i.e., assets the debtor presently owns, uses, or has an interest in); and
• what the consumer debtor might have in the future (i.e., monies the debtor may receive by way of salary, wages, or other remuneration, on an insurance claim, other lawsuits, or through an inheritance).
These questions are designed to disclose assets that may be available for realization from which the proceeds would be distributed to the creditors. From this information, the trustee prepares a Statement of Affairs. The completion of the forms is discussed later in this book.
Some questions point out possible problems that the consumer debtor may have with the creditors or in dealing with some of the assets. For example, the consumer debtor may want to know if he or she can keep a vehicle or whether the debtor will lose his or her investments in an RRSP. These are difficult questions which the trustee may not be able to answer readily. It is at this point in time (i.e., when some questions remain unanswered) that it is best to hire or retain a lawyer to assist, hopefully before the consumer debtor takes bankruptcy protection. If the trustee points out some difficulties, the consumer debtor should seek legal advice first from a lawyer. For example, if the consumer debtor has high earnings, the trustee will require the debtor to pay a portion of his or her earnings monthly to the trustee for all the creditors or if the consumer debtor has transferred the car to his daughter within the last three weeks, the daughter may have to transfer it back or pay the trustee the value.
Whether or not the consumer debtor will be aware of these problems is a different matter. If the trustee does not tell the consumer debtor that there are problems, then these problems may arise while the debtor is in bankruptcy or when the debtor wants to get out of bankruptcy or get discharged. This is the reason a consumer debtor may want to see a lawyer first before going bankrupt as the consumer debtor may decide not to go bankrupt at that time, or at any time.
If the trustee recognizes complications in an interview, then the trustee may suggest a consultation with a lawyer. At that time, the lawyer may point out the problems in dealing with certain assets that the consumer debtor owns as well as with the types of creditors that may be hostile and adverse throughout the bankruptcy process. Unlike the trustee, the consumer debtor can tell the lawyer everything about his or her personal affairs on a confidential and private basis. Communications between the consumer debtor (the client) and the lawyer are protected by law, and the lawyer must not breach that confidence. In fact, what the consumer debtor says to the lawyer is privileged and confidential and generally, with the exception of fraud and locating assets, no one can make the lawyer divulge that information and the legal advice given without the consumer debtor’s consent. However, such privilege does not extend to third parties, such as spouses, friends, and accountants, who attend the lawyer’s office with the consumer debtor.
2. File an Assignment
If the consumer debtor wishes to proceed with the bankruptcy process, the debtor eventually signs a form called an “Assignment.” The Assignment form is a one-page document that transfers all the debtor’s assets to the trustee under the Bankruptcy and Insolvency Act. It is the document that puts the consumer debtor into bankruptcy by his or her own hand (voluntarily). An example of this form is shown in Chapter 12.
In addition to the Assignment, the consumer debtor also signs a Statement of Affairs, a “pertinent information sheet,” and a Personal Income and Expense Statement. The Statement of Affairs, also shown in Chapter 12, is the document that sets out all the consumer debtor’s assets and all the liabilities with full particulars. In the liabilities section, the consumer debtor names all the creditors to whom the debtor owes money. The pertinent information sheet contains many questions about the consumer debtor’s present status and about previous dealings with property.
When these documents are signed, they are then e-filed by the trustee to the Official Receiver, 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
