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Practice Areas

Rehabilitation and Bankruptcy

Overview

Court-supervised rehabilitation and bankruptcy procedures allow individuals burdened by excessive debt to restructure or discharge their liabilities and rebuild their financial lives. Individual rehabilitation is designed for debtors with continuing income who are unable to meet their obligations and generally provides for repayment under a court-approved plan over three to five years, followed by discharge of the remaining eligible debt. Personal bankruptcy is available to individuals who are unable to satisfy their debts from their income and assets.

Eligibility requirements, procedures and legal effects differ between rehabilitation and bankruptcy. Careful preliminary assessment is therefore essential. We review each client’s dependants, occupation, income, assets and the circumstances in which the debt arose, and develop a tailored strategy aimed at securing the most effective relief available.

Advantages of Rehabilitation and Bankruptcy Procedures

Individual Rehabilitation
  • Up to 90% of principal debt may be discharged without creditors’ consent, subject to court approval and statutory requirements.
  • Broad range of debts may be included, including private loans and guarantee obligations
  • Potential to retain public office or corporate officer status, subject to applicable law
  • Stay or prohibition of creditor enforcement
  • Restriction of creditor collection activities
Personal Bankruptcy
  • The debtor may register property in the debtor’s own name after discharge, subject to applicable law.
  • Ability to conduct business in one’s own name, subject to applicable restrictions
  • Ability to resume ordinary banking and economic activity, subject to applicable rules
  • Certain enforcement measures may cease or be affected by the bankruptcy proceedings
  • Credit records may be updated in accordance with applicable regulations following discharge

Procedure

Individual Rehabilitation

Filing of an Application for Individual Rehabilitation The debtor prepares and files an application for individual rehabilitation with the court.
Prohibition or Stay Order Once such an order is issued, debt collection, attachment and similar enforcement measures are stayed or prohibited.
Order to Amend or Supplement After reviewing the application, the rehabilitation commissioner may request additional documents or clarification.
Commencement Order The debtor begins making payments under the repayment plan after the court issues the commencement order.
Creditor Objections Creditors may file objections before the meeting of creditors.
Meeting of Creditors At this hearing, creditors may hear an explanation of the debtor’s proposed repayment plan. If the debtor fails to attend, the proceedings may be dismissed.
Approval of the Repayment Plan After the meeting of creditors is concluded, the court decides whether to approve the individual rehabilitation plan.
Performance of the Repayment Plan The debtor makes the required payments throughout the prescribed period.
Application for Discharge After completing all required payments, the debtor applies to the court for a discharge.

Personal Bankruptcy

Filing of Bankruptcy and Discharge Applications The debtor files the bankruptcy and discharge applications at the same time.
Order to Amend or Supplement and Order for Advance Payment of Costs After reviewing the application, the court may require additional documents or clarification and may order advance payment of procedural costs.
Bankruptcy Order If the debtor duly complies with the court’s orders to supplement the application and make the required advance payment, the court may issue a bankruptcy order.
Appointment of a Bankruptcy Trustee After the bankruptcy order, the court appoints a bankruptcy trustee.
The trustee investigates and administers the debtor’s property.
Creditors’ Meeting and Hearing The bankruptcy application and relevant circumstances are explained to creditors.
The debtor is required to attend the hearing.
Realisation and Distribution of the Bankruptcy Estate and Closure of Proceedings After the debtor’s assets are sold and the proceeds distributed to creditors, the court issues an order closing the bankruptcy proceedings.
Discharge Decision The court determines whether the debtor should be granted a discharge.
Once a discharge is granted, the relevant debts are extinguished, subject to statutory exceptions.