Why You Should Complete Your Bankruptcy

I can’t stress the importance of this statement enough:

It is critical that you complete the bankruptcy process once you begin it and get your discharge.

There are few options for changing your mind once you have begun and they all involve paying more money back to your creditors. I have seen many people who did not complete the duties associated with their bankruptcy come back years later, surprised to hear that they were never discharged. Inevitably they have tried to get new credit or have needed to file another insolvency procedure, only to find the original bankruptcy still needs to be dealt with.

Required Duties To Complete Your Bankruptcy

There are four main duties that must be completed for a bankruptcy to be discharged:

1. Income Tax information must be provided to your trustee the year that you file (January 1^st until your file date and then the day after you file until December 31st of that year).
2. You must submit monthly income and expense statements with proof of your income.  The number of months you need to submit depends on your individual situation.
3. Attend two required credit counselling sessions.
4. Complete your scheduled payments based on your income and assets (as determined by your trustee when you filed).

What if I don’t complete these duties?

If you do not complete all of these duties you will not get discharged and your bankruptcy will not be completed. Very simply, this means your debts are not discharged either. After that, the process to deal with an incomplete bankruptcy can be quite complicated.

So what happens if you don’t finish the process? Since you are not entitled to an automatic discharge, the trustee will have to go to court and recommend you not be discharged because you didn’t complete your duties. The court will likely agree and your trustee may ask that they be discharged (even though you are not).

Once your trustee is discharged, you lose the protection from your creditors that your bankruptcy offered. This means that they will charge you interest for the entire time that you were supposed to be in a bankruptcy, and restart their collection activity. They also have the right to pursue legal action against you, such as putting a lien on your assets or garnisheeing your pay cheque. If the reason that you went bankrupt in the first place was due to a garnishment,  the original judgement is valid and they can go right back after your pay cheque (and there will be nothing you can do to stop them other than pay the debt in full).

If you later need to deal with the incomplete bankruptcy (and deal with the debts that remain) you will need to ask the trustee to re-open your file.  This will require you to complete all of your outstanding duties and meet any other additional requirement imposed by the court which can often mean additional costs as well.

Completing your bankruptcy should be a priority.  It’s important to think of the process as a plan to get the fresh start that you need, and just like any other plan, it needs to be followed through.  You’ve made a promise to your creditors and to yourself that you will eliminate your debt; so make good on that promise!  Prolonging the process doesn’t make it go away and you’ve already taken the first step to getting debt free by deciding to file bankruptcy – the hard part’s over, so finish what you started.