Bankruptcy FAQ #5

Can a creditor continue to contact me after I’ve filed for bankruptcy?
No, once you have filed for bankruptcy you have entered into the protection of the Court. Creditors are no longer allowed to contact you in any way including telephone, mail or personal visit. The creditors must contact the Trustee that is in charge of your case and deal with matters with them directly. They may contact the Trustee throughout the bankruptcy when necessary.

Who lets my creditors know I’ve filed for bankruptcy?
The Official Receiver or Trustee of the Court will contact all of your creditors to inform them of your status. They will contact all those with whom you have any credit or business relation with. The Trustee will handle all of your debts and payments if any will be made through the Court. The Trustee will also contact anyone with whom you have any interest in assets that could be used to help pay debts owed.

What does a trustee do?
The trustee handles most of the proceedings of the bankruptcy starting with an official interview with the individual wanting to file bankruptcy. They gather all of the information needed for the Judge to make a decision in each case, they also handle the processing of payments to be dispersed to creditors when applicable, and help with the bankruptcy in many ways throughout the process. Their duties do not end until after you have been discharged and the Court is satisfied with your case being complete.

Can creditors object to a bankruptcy filing or plan?
Yes, sometimes a meeting of the creditors is called and they must agree to the terms of the bankruptcy. They can appeal, and give instructions to the Trustee, but eventually have to settle with an agreement. Normally the creditors understand the circumstances and will not appeal because they will be paid a portion of the money owed in situations where that is possible.

What happens at a creditors meeting?
The Trustee or Official Receiver is to call the meeting if one is necessary for the case involved. Creditors don’t often even come to the meeting. Most often if they do it is to ensure that the debtor has not committed fraud or they have security interest in the debtor’s assets. The creditors are able to appeal and sometimes have a new Trustee appointed. This meeting is usually more informative to “set the plan” or what the payment plan will be if there is to be one for the bankruptcy. The debtor must attend this meeting and may have to answer questions pertaining to the case. Failure to respond truthfully can result in the petition being dismissed or in some extreme cases be charged with perjury. Creditors may ask questions about assets and any matter relevant to the bankruptcy. This meeting is to set forth the “plan” of your bankruptcy, whether or not there will be payments made among other details.

What if I’ve forgotten to include a debt on my schedule?
As long as you were thorough when completing the interview with the Official Receiver, then you are not responsible for omitting the debt. Anyone you have had any business relationship with was most likely contacted by the Official Receiver and therefore it is their responsibility to get in touch with the Official Receiver to include that debt. They have a certain number of days to contact the Court and let them know that they have interest in the matter. You may make an appeal yourself to admit any omission but you are subject to perjury if you are found to have been misleading.

When do I have to stop using my credit cards if I’m planning to file bankruptcy?
All open lines of credit will be included in your bankruptcy. It is suggested that you should stop using any credit as soon as you anticipate on filing. Bankruptcy allows the review of any questionable purchases that are potential fraud. Debts that are incurred within a certain time prior to the petition could be excluded from bankruptcy and sometimes the bankruptcy can be dismissed in extreme situations. Cash advances are included in credit use and should not be used prior to filing for bankruptcy. Penalties can be severe if you do not fully co-operate with the Trustee and all the requirements of the Court. On the other hand if you do everything you are instructed to do you will have a smooth and rather quick bankruptcy and be on your way to a fresh start. You may re-establish new credit prior to discharge with permission and under strict guidelines but it is not suggested that you open any new lines of credit until after you have been discharged. It can take a couple years to really establish your credit rating.

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