Applying for Bankruptcy

• A creditor who is owed a minimum of $1,000 can file an application for a bankruptcy order against a debtor. The creditor may also file an application if the debtor has assigned his property to a trustee within the last six months. The applicant files an affidavit setting out the facts of the case. A judge reviews the bankruptcy application and may refuse it if he or she finds that the debtor has the means to pay his debt.
  
  

Proposals to Creditors

• A consumer who is having trouble meeting her financial obligations can make a proposal to creditors. If the creditor accepts the consumer proposal, the amount owing must be repaid within five years. The consumer is responsible for paying any fees or expenses in connection with the consumer proposal.
  
  

Property of Bankrupt

• A person in bankruptcy has the right to earn sufficient income to give him a reasonable standard of living. A portion of any surplus income is used to pay creditors. The type of property that may be excluded from bankruptcy proceedings is determined under provincial law.
  
  

Offenses

• A person who does not comply with a court order may be liable to pay a fine or imprisonment of up to three years. A person who is in bankruptcy who is operating a business needs to keep accurate records. Disposing of property fraudulently is also an offense under the Bankruptcy Insolvency Act of Canada.
  
  When a trustee knows or suspects that a bankrupt person has committed an offense under the Act, she has a duty to report it to the court. A prosecution under the Act must be started within five years.
  
  

Secured Creditors

• A secured creditor may appoint a receiver to seize inventory, accounts receivable or other property of a bankrupt person. The secured creditor must make the application in the jurisdiction where the bankrupt resides.