Bankruptcy Law

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  1. How can I deal with collection agencies?
    Under the Fair Trading Act, collection agencies have certain rights and obligations. If you think the action of a collection agency may be illegal under the Fair Trading Act, contact Alberta Government Services, Consumer Services Branch.

    If any collection agency threatens to physically harm you, your family or your property, charges may be laid under the Criminal Code of Canada.

    If you feel that a business's own collection staff has treated you unfairly, contact the business to discuss your concerns.

  2. How can I stop a garnishment on my wages?
    When a creditor receives a judgment from a court for your debt, the creditor can garnishee (take money from) your wages, bank accounts or accounts receivable to get the money that you owe.

    You can file an objection at the Court of Queen's Bench if you think that the garnishment was calculated incorrectly. You will probably need a lawyer to object to a garnishment and you should act quickly, before the court pays money out to your creditors.

    You can also stop a garnishment on your wages by paying your debt in full.

  3. I am considering bankruptcy. Do I need a lawyer?
    In general, lawyers only become involved in bankruptcy matters if there is a dispute between the bankrupt, their trustee, or a creditor of the bankrupt. If you expect such disputes to arise, it is worth consulting a lawyer before you declare bankruptcy. Otherwise, your first step is to find and consult a bankruptcy trustee, and he or she will tell you if you’re likely to need a lawyer, and when. Finally, as lawyers often deal with various trustees, a lawyer might be helpful in recommending a trustee if you have no other way of deciding.
  4. How do I become bankrupt?
    Bankruptcy can occur in three situations:
    • voluntary assignment – you assign all your assets to a trustee for the general benefit of all creditors;
    • involuntary assignment - a creditor files an assignment in a provincial court for bankruptcy order against you; and
    • deemed bankruptcy - when a proposal to your creditors pursuant to the Bankruptcy and Insolvency Act has failed.

    When you become bankrupt, a trustee in bankruptcy becomes the legal owner of your property and may be entitled to some of your income too. Some of the property may be returned to you because it is exempt property and some of the property may be released to secured creditors. The trustee will generally sell the rest of the property and the proceeds will then be distributed amongst your unsecured creditors.

  5. What are my alternatives to bankruptcy?
    If you have debts owing to creditors, you have an obligation to pay them as they come due. Bankruptcy should be your last resort. If you are beginning to experience problems in managing your debt, you should consider the following:

    Credit counselling services.

    • You may apply for a Consolidation Order which sets out the amount and the times when payments are due to the court. The court will distribute your payments to your creditors.
    • You can make a proposal to your creditors under the Bankruptcy and Insolvency Act. A proposal is a payment arrangement with your creditors to prevent bankruptcy. A licensed trustee must assist you in preparing a proposal.
  6. What are my rights and obligations during bankruptcy?
    • You have the right to earn a living.
    • You must truthfully disclose all of your assets and income to your trustee, including any property you dispose of (e.g. sale or gift of property).
    • You must not fraudulently dispose of or conceal your property before or after going into bankruptcy.
    • You must not obtain any credit or any property by false representations (e.g. failing to disclose that you are a bankrupt).
    • You must attend the first meeting of your creditors and other required meetings.
    • You must answer truthfully to any questions if you are examined under oath with respect to your property and affairs.
    • You must assist in the realization of your property (converting your property into cash assets) and the distribution of the proceeds among creditors.
    • You must generally assist your trustee and keep him or her informed of your place of residence or address.
  7. How do I obtain my discharge?
    If you are a first-time bankrupt, you will be automatically discharged nine months after you became bankrupt unless your discharge is opposed by a creditor, your trustee or the Superintendent of Bankruptcy.

    If you have been previously bankrupt or cannot be automatically discharged, your trustee must apply to the court for a hearing of your application for discharge within one year from the beginning of your bankruptcy. The court will then decide whether to postpone the hearing to a later date, refuse the discharge, or issue an order for either your absolute, conditional, or suspended discharge.

    When you are discharged, you are released of most debts other than:

    • an award for damages in respect of certain assaults,
    • a claim for alimony, spousal or child support,
    • A debt arising out of fraud while acting in a fiduciary capacity or a debt for property obtained by fraud,
    • any court fine, or
    • debts or obligations for student loans if the bankruptcy occurred while you were still a student or within ten years after you had ceased to be a student.