case studies,  consumer proposal,  personal bankruptcy

Can you cancel a bankruptcy?

I thought filing for Bankruptcy was going to help with my stress by getting rid of my $100k unsecured debt but my stress level has now tripled no thanks to my LIT. Situation: I left a Toxic work place in Jan 2021 and decided I wanted to transition to a different industry which is more aligned to my degree.

I took a bunch of courses, applied for a bunch of roles, got a couple of interviews but never got the job because they found someone with more experience. I already had a horrible spending habit before I quit my job, support my family(from a developing country) and owed about $75k already.

I had about $30k in savings which I thought will be enough for me to survive until I find employment. But with making monthly payments on that amount of debt, car payments for 9 months before I finally sold it. Also I went to visit my husband and bam! I got pregnant in September due in May which didn’t help my stress. I had to halt job search because I was sick the entire pregnancy.

At our initial meeting she made it seem like she was going to be helpful through this process and make it less painful. After filling out the forms she informed me that based on my situation it should be a seamless process and wouldn’t need a second interview unless any creditor opposes discharge which she didn’t think will happen.

Fast forward to 4 months after filing, I get an email that the Superintendent office ask for a meeting, I start to panic and called her for assistance and ask what to prepare. Her words are “I don’t know. Just meet with them and answer whatever questions they have”. It was literally a 40 second call. This is already after sending 2 different emails with questions about the process and getting no response.

I only get a response from her when I follow up over 2 weeks later. I have an email she hasn’t answered in 2 months.

I have the meeting unaware of what I needed. The interview really made me think of how I got in this situation and I remembered a family member got diagnose with a bad illness and I was solely responsible for their treatment on my savings I was supposed to be using to survive while unemployed. They had to be flown to a different country for treatment. The flights, accommodation and initial treatment alone was $7000. (If you are not from a poor country, you might not understand the need to support your family especially in a life and death situation).

At the end I ask the guy why the meeting was set up, he stated that because the unsecured debts were so high with no assets it triggered a meeting and they want to make sure I didn’t plan this all along. That statement of I didn’t plan this all along made me very worried and I felt so bad that they will think I purposefully planned to file for bankruptcy. I quit a good job all in the name of filing for bankruptcy?

A week later the LIT send me an email making me feel pretty much like a criminal asking me why I have about $30k savings withdrawal within the last 5 years and I need to show them proof of all the family support I have given within the last 5 years. How did she think I was making my mortgage, minimum payments & eating for 2 years??

I have had more than 5 now closed accounts over this period. I have given money here and there to family (she was aware of this at our initial meeting) This is the same lady that has been of no help after the initial meeting even my “Financial Wellness Partner” has never responded to the 2 emails I sent to her. The only support I have received is from the credit counsellor who has gone outside her job description to answer my inquires.

My question now is can I just cancel this whole bankruptcy process because it is causing me more stress than when I had the debt. At least before I don’t answer any of the collection agencies call. Battling postpartum and this is not making things any easier for me and I just want to runaway but there is nowhere to run to.

P.S.: All meetings have been virtual because I am with my husband and the baby in the UK. Came here so I can have his help instead of being all alone in Canada.

Victor Fong, Licensed Insolvency Trustee responds:

My question now us can I just cancel this whole bankruptcy process because it is causing me more stress than when I had the debt

Given your situation, the practical answer is “no”.

You can annul a bankruptcy by filing a proposal, but it would have to be accepted by your creditors which seems unlikely given your situation.

You can hire a lawyer to apply to bankruptcy court to have your bankruptcy annulled, but again, obtaining an Order to annul your bankruptcy seems unlikely given your situation.

It sounds like you’re being examined by the Office of the Superintendent of Bankruptcy to determine whether you’ve abused the bankruptcy process process, in particular:

  1. You had $30,000 in savings that you’ve remitted to family outside of Canada to assist them. This is common among immigrants with family in their country of origin so I get why you did this. But it looks suspect because it gives the appearance that you’ve attempted to hide money from your creditors prior to filing your bankruptcy.

  2. You paid $7,000 to fly back to your country of origin to be with a sick relative (presumably on credit?). Again, I understand why you did this but it gives the appearance that you decided to go on vacation on your creditor’s dime just before you filed bankruptcy.

Just tell the OSB examiner the truth when you meet with him/her and provide any documentation you have to verify your statements. They’ll then issue an examination report to both you and your LIT with an opinion as to whether any aspects of your conduct constituted an offence under the Bankruptcy and Insolvency Act.

If you did commit an offence, the OSB will oppose your discharge from bankruptcy and you will have to attend bankruptcy court where a judge (called an Associate Justice) will review your LIT’s bankruptcy file, the OSB’s examination report, and will ask you questions about your conduct. A representative from the LIT’s office and the OSB will also be present. The judge may ask them questions as well. This is called a Discharge Hearing.

If that happens, you should consider hiring a lawyer who specializes in bankruptcy to represent you in Court; an LIT is not your legal representative in Court.

There are 3 possible outcomes from the Discharge Hearing:

  1. You obtain an Absolute Discharge if the Court finds that you did nothing wrong.

  2. Your discharge is conditional upon you performing some task such as paying additional monies to the bankruptcy estate for the benefit of your creditors.

  3. Your discharge is refused. If that happens, your creditors will be able to come after you again after your LIT closes your bankruptcy file.

Good luck 🤞

 

Victor is the President of Fong and Partners Inc. He is a Licensed Insolvency Trustee and Chartered Professional Accountant. With many years of experience in the insolvency field, Victor has been involved in both corporate and consumer insolvency engagements. Previously with a large national firm, Victor founded Fong and Partners Inc. so that he could dedicate his professional life to help people from all walks of life to deal with their debt.