Can Creditors Collect Debts After Bankruptcy?

When you receive a discharge after completing your bankruptcy, it releases you from the debts you owed before your date of bankruptcy. Once you file personal bankruptcy, your creditors cannot legally collect on those debts.  

There are types of debts that will survive your bankruptcy; referred to as non-dischargeable debts:

• Fines, penalties and restitution orders imposed by Court.

• Court awarded damages for intentionally inflicted bodily harm, sexual assault or wrongful death resulting therefrom.

• Debts or liabilities arising out of fraud, embezzlement, misappropriation or defalcation.

• Debts or liabilities resulting from obtaining property or services by false pretences or fraudulent misrepresentation. Note that this may include Employment Insurance overpayments.

• Debts or liabilities for alimony, maintenance, spousal support or child support.

• Student loans are only discharged if you have not been a full or part-time student at any time in the seven years prior to filing for bankruptcy.

If you have any of these debts, the creditor can continue collection activity after you are discharged. The creditor can also seek Court approval to continue collection while you are still in bankruptcy. It is important to discuss any debts that you think might fall in these exceptions with your Trustee before filing.

In addition to the non-dischargeable debts, secured debts for assets you chose to keep, will survive your bankruptcy. If you chose to keep your home and vehicle, you will be required to keep making the payments on these debts, which are secured by those assets.

When you receive your bankruptcy discharge papers, we strongly recommend that you keep these documents. In case a creditor or collection agency attempts to collect a debt that has been discharged in your bankruptcy. These documents can also be helpful if you need to have errors on your credit report corrected.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress; 

• You won’t be stuck in an assembly line process. 

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.  

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy. 

• We help Canadians with overwhelming debt get fresh financial starts.  

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.  

We offer free consultations to review your financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.