BANKRUPTCY LAW IN CANADA
Bankruptcy law (also known as insolvency law) is intended to be fair, and to provide Canadians a way to eliminate or only pay off a portion of debt through a legal and binding process. Because filing bankruptcy or making a consumer proposal are provided for in the law, there are rules and regulations. These rules and regulations are set out in the Bankruptcy and Insolvency Act, federal legislation, which defines the process you will go through and what is expected of you, as well the responsibilities of your creditors (people or companies you owe money to), the trustee and the Court.
Do I need a bankruptcy lawyer?
Unlike the United States, you do not need a bankruptcy lawyer to file for bankruptcy or make a consumer proposal. In fact, practicing lawyers cannot be licensed to file bankruptcies or consumer proposals in Canada. Only a Trustee in Bankruptcy is licensed to administer insolvency proceedings and is required to act like a referee, to guide the process and, where there is conflict, to reach a solution that is fair to all parties. A trustee can help you navigate the bankruptcy or proposal process and will answer any questions you have about bankruptcy law.
The Bankruptcy and Insolvency Act also applies to businesses, whether they are proprietorships or corporations and can also file bankruptcies or proposals to deal with debt problems. For very large and complex corporations another law, the Companies’ Creditors Arrangement Act, can be used.