Do I need a lawyer to file for bankruptcy?

Posted By: J. Doug Hoyes

If you are struggling with more debt than you can repay, you may be considering either bankruptcy or a consumer proposal to help you deal with those debts. If you are, then you need to speak with someone who is a licensed Bankruptcy Trustee; in Canada, that person is not a lawyer. A Bankruptcy Trustee often has an accounting background and is licensed through the Canadian federal government.

Bankruptcy law in Canada is administered under the Bankruptcy & Insolvency Act (the Act or BIA). The Act provides for two possible debt relief solutions for individuals: personal bankruptcy or a consumer proposal. Both options are legal processes filed under the Act and administered by a Bankruptcy Trustee, or in the case of a consumer proposal, the Trustee may also be called a Consumer Proposal Administrator. The reason for this is that, while bankruptcy is a legal process, the courts rarely get involved. Instead, there are a series of regulations and rules, that when followed, allow a person to go through the bankruptcy process without the need to appear in court. In most cases, an individual files for bankruptcy, performs their required duties and receives an automatic discharge at the end of the process all without ever having to talk with a lawyer or appear in court.

The role of the Bankruptcy Trustee is to be an impartial administrator. The Trustee makes sure that all rules and regulations are followed and that the bankruptcy process is fair to both the debtor and the creditor. This concept of fairness begins even at the initial consultation stage. By law, a Bankruptcy Trustee is required to review the debtor's financial situation and explain all possible solutions, not just bankruptcy. This ensures that the person choosing to file for bankruptcy is well-informed and makes the best decision for their individual situation. This is another reason why the Act requires that a Bankruptcy Trustee be trained specifically in the provisions of the Act and in issues related to debt management.

While most Bankruptcy Trustees are also accountants, it is not a prerequisite. To become a Trustee an individual must complete an extensive training program over several years, have practical experience in the area of insolvency and must pass both written exams and a final oral examination before a threeperson board that includes a representative from the Office of the Superintendent of Bankruptcy, a licensed Bankruptcy Trustee and a...