Bankruptcy is a legal process by which you may be discharged from most of your debts. Its purpose is to permit an honest, but unfortunate debtor to obtain a discharge from most debts, subject to reasonable conditions.
There are three different ways to go into bankruptcy:
- voluntary assignment - where insolvent persons make an assignment of all their assets for the general benefit of all creditors
- involuntary assignment - when a creditor files a petition in a provincial court for a receiving order against the debtor's assets, known as being petitioned into bankruptcy
- deemed bankruptcy - when a debtor, who has started the insolvency process, has failed to meet the requirements for filing a Division I proposal in bankruptcy under theBankruptcy and Insolvency Act or has failed to adhere to the provisions provided within the proposal after it has been filed and accepted by the creditors/court
You or your representative (trustee/administrator) may have to send a copy of the court-issued Assignment in Bankruptcy, a Bankruptcy Notice, or a document titled First Meeting of Creditors to your Insolvency Intake Centres.
Usually, the business number (BN) of a bankrupt client will be closed after discharge.
Rights of a bankrupt
The bankrupt has the right to earn a living. For this purpose, the bankrupt is allowed to engage in or continue a taxable business activity outside of the estate, after a bankruptcy.
For more information on how bankruptcy will affect your business, go to Bankruptcy - Business structures.
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