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I received a terrific question recently from an undischarged bankrupt, who had been dealing with another Licensed Insolvency Trustee firm and didn’t know how to finalize his process. He informed me that he had filed for bankruptcy protection in 2004, but failed to fulfill all of his duties under the Bankruptcy and Insolvency Act (otherwise known as the BIA). Specifically, and sadly, he had failed to attend his two credit counselling sessions, because they had conflicted with his work schedule.

What is undischarged bankrupt?Not fulfilling your duties in a bankruptcy scenario means that your Insolvency Trustee loses the power to discharge you from your debts, and you effectively are in a state of financial limbo.

This debtor told me he had attempted to open a bank account at one of his former creditor’s branch locations, and all kinds of bells and whistles started going off. Even though the bank’s computer screen indicated the original debt had been “written off.” That information led this debtor to believe, incorrectly, that there was some form of closure to his former debts. When a creditor “writes off” a debt, it has nothing at all to do with a bankruptcy filing. Writing off a debt means the bank has essentially “eaten” the debt and realizes it will not be able to recoup it. And if this debtor didn’t fulfill all of his duties under his bankruptcy, and did not attend any subsequent court proceedings, he would need to speak with his Insolvency Trustee to determine what items remained outstanding and get them completed (i.e. finish paying his fees, attend counseling sessions, provide tax info, provide monthly income reports and any outstanding asset information) before his Insolvency Trustee – or the Bankruptcy Court will issue a discharge to him. It is probably not prudent to try to conduct business with a former creditor anyhow, whether discharged or not. Despite what may appear on a person’s credit report, creditors themselves keep detailed records of bad debts and would rarely accept a discharged debtor as a client again. The simple answer is this: there has been no closure to this debtor’s former debts, and he is still on the hook to complete his duties to the Bankruptcy Court and his Insolvency Trustee. I strongly recommended that he contacts his Licensed Insolvency Trustee as soon as possible, to make arrangements to clean up this situation This way he can put his debts behind him and get a fresh financial start.

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