Getting Back On Track: How Not To Stay An Undischarged Bankrupt

Getting Back On Track: How Not To Stay An Undischarged Bankrupt

Contrary to what you might’ve heard, when someone makes a bankruptcy filing they’re not immediately released from their debts. It’s only at the end of the process, when the individual receives their “discharge” from the bankruptcy that the remaining debt is erased and they’re able to move on and rebuild.

Getting discharged from bankruptcy requires work but can be fairly easy – most of the time individuals are discharged automatically (meaning without having to get a Court order) within 9 - 21 months after they make the filing.

However, this is not always the case.


Bankruptcy Limbo

There are many reasons why a Court application might be required to get discharged from bankruptcy, but probably the most common is that the individual’s discharge has been opposed by the Trustee because the individual didn’t complete all their required duties during the bankruptcy process. When a Court hearing is held, the Court has several options including: allowing the discharge to occur immediately or after a specified period of time, making the discharge conditional on the individual doing certain things, and refusing altogether to grant the discharge, instead keeping the individual in bankruptcy indefinitely.

When the Court doesn’t immediately grant the discharge, sometimes the individual’s bankruptcy process ends up stalled for long periods of time. This tends to occur when the individual fails to comply with conditions, doesn’t complete their duties, or becomes unresponsive to the Trustee. In these cases the Trustee may proceed to obtain its own discharge, leaving the individual to remain in the bankruptcy without a Trustee to administer the case, a state of legal limbo. When this happens, creditors' rights to collect the debt are revived so the bankrupt individual is no longer protected from asset seizures, wage garnishees or any other collection action by a pre-bankruptcy creditor. It is then up to the bankrupt individual to take steps to get released from the process. If you are in this situation, here is some advice on the steps to take.

Getting Back On Track

Find out what you need to do to finish your requirements.

If your discharge was opposed by the Trustee, the reasons will be detailed in a report (called a Section 170 report) that was filed with the court by the Trustee, and could be something like:

  • Not attending the required two financial counselling sessions;
  • Not providing monthly statements regarding your income and expenses, or information to prepare tax returns;
  • Not paying the required payments; or
  • Not being cooperative with the Trustee, or committing a bankruptcy offence.

Contact your Trustee, the Office of the Superintendent of Bankruptcy, or the Court in the jurisdiction where you filed bankruptcy to get a complete copy of your filed paperwork. Take a look at the most recent Section 170 report and any Court orders that were made at your discharge hearing. If the Court has issued a Conditional Order of Discharge, you may be able to get your discharge simply by complying with the conditions and then advising your Trustee and/or the Superintendent of Bankruptcy of this.

If your discharge was refused or adjourned, keep in mind that as long as you’ve remained undischarged your duties continue, so you may have additional reporting or payments to submit, and new assets you’ve acquired (or those that have appreciated in value since your initial bankruptcy date) may need to be turned over. In particular, you would be well-advised to obtain a copy of your land title if you own real estate, as your Trustee may have registered an interest in it, which may still be valid even if the Trustee has been discharged, which will be an issue if you ever try to sell the property.

Figure out the extent to which you can comply with the outstanding requirements, and if you can’t comply with all requirements, gather evidence to support why you cannot, as you’ll need this for the next steps.

Consult your Trustee

Whether you’re now able to comply with your duties or not, you may still be able to work with your Trustee to get released; although it should be noted that for the outcome of the new application to have a different result, there needs to be a compelling reason to grant the discharge if you can’t complete the duties. If your Trustee itself has not yet been discharged, they can still make another application for your discharge, although they will likely only be willing to do so if you pay an additional fee to cover their costs of making the application. To find out if your Trustee has been discharged, your best bet is to simply call them. Even if they have already been discharged, they may be willing to be re-appointed but there will almost always be a deposit to be paid to the trustee before they do any work on your case, as they won't take a risk of doing a bunch of work without getting paid, especially given the way things played out with your bankruptcy previously.

An option your Trustee may discuss with you is filing a proposal to your creditors instead of pursuing a discharge from the bankruptcy. If your creditors (and the Court) are willing to accept a proposal instead, your bankruptcy is annulled (treated as though it didn’t happen) and you will be required only to comply with the proposal terms.

If your Trustee is unwilling to work with you on any of the above, another Licensed Insolvency Trustee may be willing (with the consent of your former Trustee) to assist in either filing a proposal or being appointed by the Court to act as Trustee in your bankruptcy to complete your discharge. If you are in this situation, feel free to reach out to us to see if we can help.

Prepare to make your own Court application

If you’re unable to comply with the requirements of a Conditional Order of Discharge or are unable to work with a Licensed Insolvency Trustee to complete your bankruptcy and make a new discharge application, you can make your own application to the Court to ask for your discharge. This would involve:

  • Gathering information about what has happened since your discharge hearing to help the Court decide whether to grant the discharge and what conditions, if any, will be placed on your discharge;
  • Preparing Court application materials, booking a Court date, and serving the materials on the appropriate parties;
  • Attending the Court hearing and speaking to the Court to explain your application and why a discharge should be granted; and
  • Filing the Order that is made, delivering it to the relevant parties, and complying with the terms of any Conditional Order for Discharge.

For details of the specific requirements and rules, as well as tips to complete the above steps, the Law Information Centre has provided this document which includes information and forms you can use to prepare documents. As you will see upon reading it, the process involves a lot of steps and specific requirements must be followed. You may determine you can’t do this on your own. In that case, many people seek the assistance of an insolvency lawyer, although in some cases a Licensed Insolvency Trustee may be able to assist you. Feel free to reach out to us if this applies to you, as we can provide information, assistance and/or a referral to an appropriate lawyer.

Moving Forward

Getting your bankruptcy back on track is not impossible. The consequences of staying in bankruptcy include requirements to disclose your bankrupt status, impact on your credit rating which may continue to seriously impair your ability to obtain credit, and inability to file a new bankruptcy if you experience debt problems again. Don’t wait until you urgently need your discharge. Get started on these steps today, and get help if you need it. 

Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee, serving the southern Alberta region. We regularly help individuals looking to move on from their debt. If you would like a free, no-commitment consultation to review your options, contact us.

Disclaimer: This publication provides general information and should be seen as broad guidance only. The information contained herein cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon this information without obtaining specific professional advice relating to your particular circumstances. Charla Smith & Company Ltd. does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

Frequently Asked Questions

An individual who has made an assignment in bankruptcy, or otherwise has been adjudged or deemed bankrupt, and who has not yet received their official discharge from bankruptcy is considered an "undischarged bankrupt". An undischarged bankrupt cannot act as a director of a corporation or obtain credit, and will have bankruptcy obligations that remain ongoing.

If you have been bankrupt and are unsure whether you have been discharged from the bankruptcy, you can find out by conducting an insolvency records search on the Office of the Superintendent of Bankruptcy's website. To do so, you must create an account and pay a fee, which is currently set at $8. Another option is to call your Trustee to find out.

If you are an undischarged bankrupt and aren’t sure who your Trustee is, either conduct a records search on the Office of the Superintendent of Bankruptcy's website (you will have to create an account and pay a small fee to do the sarch) or take a look at any documents you've kept from your bankruptcy - the Trustee's name will be provided in the search results and on most documents. However, in the event you can't reach your Trustee (for example where the corporate Trustee no longer exists) you should contact the Office of the Superintendent of Bankruptcy to see if your file has been transferred to another Trustee.

Once you know the name of the Trustee, a quick internet search will usually find them, or you can search for them on the Office of the Superintendent of Bankruptcy's website here.

If it has been quite a while since you've had contact with your Trustee, there's a good chance that even though you haven't been discharged from the process, they have. That would mean they are no longer obligated to assist you with getting your discharge. Regardless, you will want to contact them to see if they can tell you what you need to do to complete your bankruptcy and whether they are willing to be re-appointed. If not, you have other options as outlined in Getting Back On Track: How Not To Stay An Undischarged Bankrupt

Any debt that has been incurred after the date you first made your bankruptcy filing will not be released even if you get a discharge from your existing bankruptcy. There may be other options for dealing with the new debt, but if you need to make another formal insolvency filing like a proposal or bankruptcy, you will have to get discharged from your existing bankruptcy first, as discussed in Getting Back On Track: How Not To Stay An Undischarged Bankrupt. Reach out to us if you want to understand your options.

If you don't get discharged from your bankruptcy, your Trustee will eventually apply for its own discharge. Once your Trustee gets its discharge, your creditors' rights to collect the pre-bankruptcy debt are revived, so you are no longer protected from asset seizures, wage garnishees or any other collection action.

You also remain responsible to disclose the fact of your bankruptcy in situations where you are requesting credit, and your bankruptcy will continue to show up on your credit report. Because of this, you may find you cannot get credit when you need it, or you may find that the interest rate you are offered is very high, making it difficult to buy assets.

Review our blog Getting Back On Track: How Not To Stay An Undischarged Bankrupt for information on how to get discharged frm your bankruptcy so that you can move on with your life.


With our experience and our caring approach, we will help you find the best option for debt relief based on your unique situation - from advice on talking to your creditors to a consumer proposal or bankruptcy, and everything in between. We are here to lift the burden caused by overwhelming debt. 

Contact us today at 1-403-899-3890‌ for a FREE, no-commitment meeting, and let us guide you to regaining your financial footing.

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