B. Procedure for Discharge

Author:Roderick J. Wood
Profession:Faculty of Law. University of Alberta
Pages:276-278
 
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The procedure that governs the granting of bankruptcy discharges is divided into three streams. The first stream is available to first-time bankrupts and will result in an automatic discharge unless an interested party actively takes steps to object to it. The second stream applies to debtors who have been bankrupt once before. It shares a similar structure to the first, except that longer time periods are imposed before the debtor obtains an automatic discharge. The third stream applies to debtors who have previously been bankrupt more than twice as well as to first-time and second-time bankrupts who do not obtain an automatic discharge because a valid notice of opposition to the discharge has been given. No automatic discharge is available. Instead, a bankruptcy court hears the matter and determines the terms of discharge of the bankrupt.

1) The Trustee’s Report

In order to make an assessment on whether to object to a discharge, interested parties must have sufficient information about the circumstances of the bankruptcy. The report of the trustee partly fulfils this function. The report sets out the causes of the bankruptcy and the conduct of the debtor, and describes any circumstances that would justify the court in refusing an unconditional order of discharge.13It is accompanied by a resolution of the inspectors declaring whether or not they approve or disapprove of the report. The trustee must send a copy of the report to the Superintendent of Bankruptcy, to the bankrupt, and to creditors who request it.14

2) Automatic Discharge

The automatic discharge provisions were designed to cut down on the number of discharge applications that came before bankruptcy courts.15

If the debtor is a first-time bankrupt and no surplus income payments have been required,16the debtor is given the benefit of a procedure

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that will, in most cases, result in an automatic discharge without the need for a court order.17The automatic discharge comes into effect nine months after the date of bankruptcy if it is not opposed.18If surplus income payments have been required in respect of a first-time bankrupt, there is an automatic discharge after twenty-one months unless an opposition to the discharge has been filed.

If the debtor was bankrupt one time before under the laws of Canada or any prescribed jurisdiction, a longer time period comes into effect.19In the absence of any opposition, the automatic discharge comes into effect twenty-four months after the date of bankruptcy. If the debtor has been required to make surplus income payments, the automatic discharge comes into effect after thirty-six months.

The trustee must give the superintendent, the bankrupt, and the creditors a...

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