Bankruptcy is a complex procedure that requires you to make a number of difficult decisions from the moment you file until the moment you are discharged.
That’s where a bankruptcy lawyer can help.
In Canada, different debt solutions can be administered by different debt professionals.
If you are in debt, you may have wondered whether the services of a bankruptcy lawyer could help you fix your finances.
But what exactly is the role of a bankruptcy lawyer in Canada?
In this article, we’ll outline what bankruptcy is, what a bankruptcy lawyer is, what a bankruptcy lawyer does, the difference between a bankruptcy lawyer and a Licensed Insolvency Trustee and how to know if you need a bankruptcy lawyer.
What is bankruptcy?
To fully understand the role of a bankruptcy lawyer, you must first understand what bankruptcy is and why thousands of Canadians file for bankruptcy every year.Bankruptcy is a legal process that can discharge you from most of your personal or business debts by helping you achieve a fresh start with your finances.
It is declared when a court has deemed the debtor unable to repay the money owed and, in most cases, is a last resort when other, less serious, methods of insolvency have been unsuccessful.
In Canada, there are three types of bankruptcy: personal, small business and corporate.
Personal bankruptcy is the most common type of bankruptcy and can help discharge debtors from their unsecured debts. Small business bankruptcy is treated the same as personal bankruptcy but is designed for businesses that are structured as a sole proprietorship or partnership.
Finally, because corporate bankruptcy involves several players, it requires a separate procedure overseen by someone that specialises in corporate filings. Corporations with debts of over $5 million can also restructure their business under the Companies Creditors Arrangement Act.
Here’s an example of how we can help.
Example debts
Capital One
$8,000
CRA
$2,500
Canadian Tire
$5,300
Money Mart
$900
Scotia Bank
$2,000
Easy Financial
$600
Total amount owed:
$19,300
Your monthly repayments
Reduced by 88%
Monthly payments are based on individual financial circumstances
What is a bankruptcy lawyer?
Put simply, a bankruptcy lawyer is a legal professional governed by the Bankruptcy and Insolvency Act that specialises in bankruptcy law and provides the highest quality legal services to people and businesses struggling with debt. Their main duties include providing legal advice and guidance, preparing official documents and, when necessary, representing clients in court.Just like real estate lawyers are experts in real estate law, bankruptcy lawyers are experts in bankruptcy law.
If you are struggling to repay your debts, bankruptcy lawyers can inform you of the various options available to you, let you know what type of bankruptcy you qualify for and outline what you can expect from the bankruptcy process.
They will also step in on the rare occasion that a conflict arises between you and your unsecured creditors and you require expert legal expertise to resolve the matter.
This could include the discovery of incorrect information that may prevent you from being discharged from your bankruptcy or a bankruptcy litigation case where complex assets are involved.
What does a bankruptcy lawyer do?
The role of a bankruptcy lawyer is wide and varied depending on whether you are filing for bankruptcy or entering into a consumer proposal.Here are some of the main duties of a bankruptcy lawyer:
Provide advice and guidance
The main role of a bankruptcy lawyer is to provide legal advice and guidance on anything related to the bankruptcy process.This can help put your mind at ease if you are filing for bankruptcy for the first time and reassure you that your finances are in the best hands.
Answer questions
Bankruptcy can be a complex process to navigate and you could find yourself running into problems if you miss an important step or submit incorrect information.Your bankruptcy lawyer will be happy to answer any questions you may have and will always be upfront and honest about what you can expect from every stage of the bankruptcy process.
Oversee bankruptcy meetings
During your bankruptcy, you will be required to attend meetings with your creditors.These meetings will be conducted by a bankruptcy trustee assigned to your case and will allow you to discuss your financial situation with everyone involved in greater detail.
The role of your bankruptcy lawyer during these meetings is to ensure no topic is overlooked and you are happy with the proposed terms.
Explain complex legal matters
It can be easy to get overwhelmed by the amount of legal and financial jargon involved in the bankruptcy process.If you are confused or unsure about anything, your bankruptcy lawyer can break it down for you and help you understand.
File paperwork
Another key duty of a bankruptcy lawyer is to file relevant documents on your behalf.It may not sound like an important step but if just one form is omitted or misplaced, your entire bankruptcy case could be dismissed.
Oversee discharge and recovery
As you near the end of your bankruptcy proceedings, it is the responsibility of your bankruptcy lawyer to ensure the relevant paperwork is filed on time so you can be properly discharged.This means you will be legally released from your debts.
Your bankruptcy lawyer will also provide expert advice to help you get back on your feet and avoid making the same mistakes that led to you filing for bankruptcy in the first place.
We have a wide range of debt management solutions that could help you write off up to 80% of your debts
What is the difference between a bankruptcy lawyer and a Licensed Insolvency Trustee (LIT)?
It is a common misconception that bankruptcy lawyers can carry out the same duties as Licensed Insolvency Trustees but whilst this may be the case in other countries, this couldn’t be further from the truth in Canada.For example, whilst bankruptcy lawyers are experts when it comes to the bankruptcy process, only Licensed Insolvency Trustees can legally administer personal bankruptcy proceedings.
Bankruptcy lawyers are also unable to become Licensed Insolvency Trustees and are only usually involved in bankruptcy proceedings when a problem arises and legal advice is required.
Do I need a bankruptcy lawyer?
In most cases, bankruptcy lawyers are only required when a legal dispute arises from your bankruptcy case over the debts you owe or the assets in your possession.Because of this, a bankruptcy lawyer is not required to file personal bankruptcy and, in most cases, is unlikely to be required at any stage of the bankruptcy process.
However, if, for whatever reason, you require expert help with your bankruptcy or further clarification on any aspect of bankruptcy law, a bankruptcy lawyer should be your first port of call as they can prevent you from making a mistake that could put your finances in further danger.