Question: My husband and I declared bankruptcy on September 17, 2009. My husbnad was a first time bankrupt, and was discharged in June 2010. I am a second-time bankrupt (the first time was 15 years ago due to massive student loan debt). I received a phone call from the office of my Trustee advising that I will have to appear in court in order to recieve my discharge. I was told that the judge wants to know why I declared bankruptcy instead of filing a proposal. I was told at my initial meeting with my Trustee that my husband and I did not earn enough income to file a consumer proposal, as we were barely meeting our monthly expenses. However, most of the debt was in my husband’s name. Now I am very concered about this court case. What are the possible outcomes? Are they likely to make me re-pay the debt that was included in the bankruptcy? I am certainly not in a financial position to do that. Please advise – I am extremely anxious about this.

Answer: Prior to September 23, 2009 all second time bankrupts in Toronto were required to have a discharge hearing.

We would suggest that you discuss this with your trustee to determine if there are any outstanding issues.

If there are no issues, simply appear in court, and answer the questions that are asked.  For you, it will probably be a routine hearing.

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Question: I am a single mother, forced to declare bankruptcy, due to credit card/line of credit debt, and have monthly earnings at or below the monthly excess income limits. I was bankrupt previously, 18 years ago, for a totally different reason, than the current situation.
I will be going to court in February, and have been told that the most likely outcome is to have the bankruptcy discharge deffered 5-6 months.
What happens from the court date till the final discharge ? I have been told that I will no longer have to fill in the monthly income statements. Is this correct. Also, income tax & GST refunds that I would be elegible for in this period. Do they go to me, or to the trustee ?

Answer: Yes, what your trustee has told you appears to be correct. In the case of a second bankruptcy (filed before September 18, 2009) you are required to appear in bankruptcy court in Toronto for a discharge hearing. At that hearing the bankruptcy judge will determine when and how your bankruptcy will end. In the case of a second bankruptcy with no other issues it is common for the Toronto court to grant a “suspended order of discharge”, meaning that your official discharge will occur six months in the future. You would not be required to complete further income and expense statements, unless ordered to by the court.

GST refunds continue to be sent by Canada Revenue Agency to the trustee until you are discharged. In most cases you only lose your tax refund up to and including the year of bankruptcy. Your trustee can advise you further, based on your specific circumstances.

NOTE: Under new rules implemented on September 18, 2009, a court hearing is not automatically required if a second bankruptcy is filed after September 18, 2009.

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