What Debts are Not Cleared through a Bankruptcy or Proposal?

Debts can arise from many different sources – credit cards, loans, taxes, lawsuits, government over-payments, support payments, etc. When people reach a point when these debts are no longer manageable, they have the option of a personal bankruptcy or a consumer proposal. But what debts are included and not included?

In general, the Bankruptcy and Insolvency Act states that all debts are discharged or cleared through a personal bankruptcy or a consumer proposal except for the following:

  • Federal or Provincial student loans that are under 7¬†years old, from the time ceased to be a full or part-time student;
  • some debts with respect to support or maintenance under Family Law;
  • a debt or liability arising from fraud, embezzlement, misappropriation, defalcation, false pretenses, or fraudulent misrepresentation;
  • any fines, penalties, or restitution orders that are imposed by the courts;
  • any award of damages by a court for bodily injury, sexual assault, and wrongful death;
  • a dividend (amount paid to the creditor from a bankruptcy or proposal) a missed creditor would have received in the process if they had received notice.

This list is based on the Act and there is several court precedents and interpretation into various situations. If you are from the Kitchener-Waterloo area and are experiencing financial difficulties with your debts, please call our Kitchener office at 519-747-0660 or 310-PLAN or e-mail us a question .