Generally the minimum term of the bankruptcy is 9, 21, 24 or 36 months. You cannot shorten the term of the bankruptcy, but it can get extended if your actual income increases and you are unable to pay the required amount during the minimum term, or if your duties have not been completed on time.
If you file for bankruptcy you must complete, at a minimum, the following:
- File a report with your Trustee detailing your income and your expenses each month;
- Pay any surplus income owing, depending on the income actually earned during the term of the bankruptcy;
- Provide your Trustee with your income tax information for the year of your bankruptcy; and,
- Attend two counselling sessions.
As your minimum term is coming to an end, your Trustee will review your file. If you have completed everything required of you, the Trustee can grant you an automatic discharge from your bankruptcy, and you will be released from your obligation to pay your debts.
If you have not completed all your duties on time, the Trustee will oppose your automatic discharge and make an application to court to have your discharge reviewed by the registrar.
Wait times for court dates, multiple court dates and possible additional duties can add several months to your term.So what started out as a 9, 21, 24, or 36-month process has now become significantly longer.
In summary, you are required to stay in bankruptcy for the entire minimum term of 9, 21, 24, or 36 months in length. If you are diligently making payments and doing your duties, your minimum will also be your maximum. If you are not diligent, the term will be extended and can be postponed indefinitely until your trustee is satisfied you have completed all the duties.
A proposal is a new payment arrangement you propose to your creditors. Sometimes the new arrangement acts as a consolidation of all your debts into one payment, or it can be a compromise or reduction of the total amount owing.
The term of the proposal is impacted by two things:
- The amount your creditors are offered in a proposal must be more than in what they would receive in a bankruptcy
A proposal must always offer more money to the creditors than a bankruptcy and is usually three to five years in length.
A proposal is set and fixed from the beginning – there are no interest charges or unexpected fees to impact the monthly payment or, ultimately, the term of the proposal. A proposal must be completed within the initial time period set but can be completed early with no penalties.
- The monthly payment you can afford, taking into consideration your budget and its restrictions
Once we have determined the proposal amount we can work with you to create your own unique budget that sets up an achievable schedule for payments.
One big benefit of a proposal is that, once your creditors have accepted the proposal, the monthly payment will not change regardless of changes in income. So if your actual income turns out to be higher than projected, it doesn’t impact the amount you need to pay into the proposal or the term of the proposal.
On the flip side, if your income decreases, your proposal payment also stays the same. So it’s important to be realistic about your anticipated income and impacts on that income, so we can ensure the proposal payments are maintainable over the term.