In order to evaluate a debtor’s situation a trustee will need information about your unique set of circumstances. It is important that you provide information that is accurate and complete. If you do not provide accurate information or fail to disclose certain information it could be very costly to you.
It’s About Good Advice
There are times when keeping information from your bankruptcy trustee, can result in recommendations that don’t always work. Here is an example of a person who recently filed a consumer proposal in one of our Toronto offices.
- Filed a consumer proposal 6 months ago that was accepted by the majority of the creditors.
- Original terms of the proposal was $250 x 60 months = $15,000.
- The debtor failed to disclose to the trustee a personal income tax debt of $15,000. This was considered a material change in his proposal, and as a result, an amendment needed to be filed. An amendment is almost like filing a new consumer proposal, because it requires all creditors to vote again.
As a result, the debtor filed an amendment to the proposal, with new terms of $350 x 60 months being offered for a total of $21,000. Luckily, the majority of creditors accepted the amendment as filed. However, the consequences could have been much worse, had the amendment not been accepted, it would have resulted in the annulment of the consumer proposal.
It Could Be An Offence Under The Bankruptcy Act
The most serious implication of keeping information from your trustee would be an action that could be classified as a bankruptcy offence, under the Bankruptcy and Insolvency Act (BIA). Some of the more common offences under the BIA are summarized below:
- Fraudulently disposes of property before or after the bankruptcy
- Makes false entries in a statement of account or hides, destroys or falsifies a document related to his/her property or affairs;
- Obtains credit or any other goods through false representations;
- Conceals or fraudulently removes property, or conceals claims or debts;
- Obtains credit or engages in trade without informing the people involved that he/she is bankrupt;
- Refuses to respond fully and truthfully to questions posed during an examination held in accordance with the Bankruptcy and Insolvency Act.
Upon conviction of one of these offense, you could at worse be fined and/or imprisoned and at best these will affect your bankruptcy discharge. These are the most severe cases and often involve deliberate actions by a bankrupt for the purpose of defeating or defrauding their creditors.
While these cases are rare they do happen, and this clearly demonstrates why it is important that you provide your trustee, all the information requested.