The Bankruptcy and Insolvency Act, (the ‘Act’), sets out the eligibility requirements to file an Assignment in Bankruptcy in Canada. Those requirements are as follows:
1. Applicant must not be an un-discharged bankrupt.
* This refers to the fact that a person who is (presently) bankrupt in Canada or elsewhere cannot file a subsequent bankruptcy in Canada until he or she receives a discharge from bankruptcy.
2. Applicant resided or carried on business in Canada in the preceding year or have tangible property in Canada. For example property located in Canada such as: real estate, things or goods, money which is currently located in Canada.
3. Applicant owes $1,000 to one or more creditors, is unable to pay debts as they become due, has ceased paying debts in the ordinary course of business as they become due or has debts that exceed the fair market value of the individual’s property.
If the above three eligibility requirements are met, a non-Canadian resident may file an Assignment in Bankruptcy on their Canadian debts without having to travel to Canada to execute the documents.
In order to file for bankruptcy, the selected Bankruptcy Trustee must contact the Office of the Superintendent of Bankruptcy (OSB), to obtain approval of the OSB to file the bankruptcy.
When it is unfeasible for a bankrupt to travel to Canada to meet with the Trustee, the Trustee will conduct a financial appraisal interview and assessment of the bankrupt’s personal and family situation by telephone.
Upon completion of the assessment, the Trustee will send the bankruptcy documents to the Canadian Embassy in the country where the bankrupt resides. There the Bankrupt will attend and meet with an Embassy official who will act as a witness to the bankrupt’s signature of the bankruptcy documents.
The Embassy returns the documents to the Trustee and the Trustee files the Assignment in Bankruptcy with the OSB in Canada. The OSB issues a ‘Certificate of Filing’ to the Trustee and the Trustee sends a ‘Notice of Bankruptcy’ and a ‘Stay of Proceedings’ to the bankrupt’s creditors informing them of the bankrupt’s bankruptcy.
In a situation where the individual resides in a country that would make it difficult to attend an approved office of that country to sign the bankruptcy documents, the Trustee, with the approval of the OSB, may arrange for the bankruptcy documents to be signed in the presence of the Trustee by a person who has a Power of Attorney for the individual filing the bankruptcy. This would require the bankrupt to assign a Power of Attorney in Canada to meet with the trustee.
If you file a bankruptcy in Canada you are required to comply with specified duties as a condition of your discharge from bankruptcy. These duties include attending two mandatory financial counseling sessions and reporting your monthly income and expenses to the Trustee for the period of your bankruptcy, in order for your Trustee to determine if you are required to pay Surplus Income. (the amount of income after deducting tax and your allowable living amount.) In the bankrupt’s case, the Trustee will obtain the approval of OSB to conduct the counseling sessions by telephone.
If you fail in either of these areas you will not be eligible to obtain an Automatic Discharge from your bankruptcy.