What Is A Stay of Proceedings?

A stay of proceedings means that creditors must cease all collection activity or legal action against the debtor, including wage garnishments. The purpose of the stay of proceedings is to allow the Licensed Insolvency Trustee to deal with the bankrupt’s assets in an orderly fashion.

Under the Bankruptcy & Insolvency Act, a stay of proceedings is automatically in place when a debtor:

1. files for bankruptcy,

2. makes a consumer proposal or

3. files a notice of intention (NOI) to make a proposal.

Here is how the stay of proceedings applies in each scenario:

Bankruptcy

Once you file personal bankruptcy, no creditor can seize your property, start or proceed with any legal action to recover a claim provable in bankruptcy.

The stay of proceedings does not prevent a secured creditor from dealing with his security. The discharge of the Licensed Insolvency Trustee terminates the Stay of Proceedings. When the Stay of Proceeds stops, creditors can continue their action against you if the bankruptcy did not extinguish the debt.

Consumer Proposal

Once you file a consumer proposal, no creditor can seize your property, start or proceed with any legal action to recover a provable claim. The stay of proceedings does not prevent a secured creditor from dealing with his security.

The Stay of Proceedings is terminated when the Proposal is withdrawn, refused, annulled, deemed annulled, or the Proposal Administrator is discharged. When the Stay of Proceeds stops, creditors can continue their action against you if the proposal did not extinguish the debt.

Filing a Notice of Intention (NOI) to Make a Proposal (typically for corporations) –

No creditor can seize your property, start or proceed with any legal action to recover a provable claim. Filing of a Notice of Intention to Make a Proposal allows you or your Company time to prepare the Proposal to creditors, without the fear of legal action or asset seizure.

There are some exceptions to the above, so we recommend meeting with a Licensed Insolvency Trustee to review the details of your particular situation if one or more of your creditors has started legal action against you or your Company.

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