The easiest way to think of bankruptcy is that it is a legal way to eliminate your debts.

You are asking the Court to force your creditors to lose their money because you are unable to repay them.  
Don't worry, a first time bankrupt that completes all their required duties, rarely has to go to court.

The basic idea is that you get rid of your debt by giving up all of your property to an Insolvency Trustee.
Now of course there are always exceptions to the rules and we will look at them later but that is the basic concept.

Getting this far makes it easier to understand the roles of each individual party.

YOU - are the one using the available laws for help with your debt.

Bankruptcy is a legal process and so you must be truthful in all respects.

You must disclose, or tell the Trustee about:

. all of your assets and property;

. all of your debts;

. you must answer some standard questions concerning your past financial affairs, and

. report your monthly family unit income and expenses for the period of the bankruptcy.

You must give the trustee all the information and documents required to:

. file your tax return for the bankruptcy period, and one year prior, if necessary;

. realize on any non exempt property you may have, and

. turn over all credit cards for return or destruction.

A complete listing - Duties of a Bankrupt - is available .

Bankruptcy laws were developed to help the honest but unfortunate debtor to get relief from their debt.
So, if you have helped your own problem by gambling, overspending or taking on more debt than your income could possibly support you might be required to explain your actions to the court and may be ordered to repay a portion or even all of your debt.

Do not let this scare you! It is always worth talking to a Trustee. The most important thing to remember is that professional advice is only as good as the information you provide.

Even if this is the case a proposal, where you pay a fair amount back to your creditors may work.

THE CREDITORS - because they are being forced by the court to lose some of their money they have their rights.

They can request a creditors meeting if they wish to talk to you concerning your financial affairs.

They can request an examination under oath if they believe that you have acted improperly.

They can direct the Trustee to further investigate your financial affairs or they can get their day in court if they believe you have not acted responsibly and at your discharge hearing they can ask the court that you pay all or some of your debt.

THE TRUSTEE - Because the Trustee will be a guardian of your property for the creditors, they do not actually work for you. How is that possible? Under the law if you file a bankruptcy or proposal you are required to pay into your bankruptcy estate. The Trustee is just the court officer that administers your estate; they may be paid by the estate but the reality is they are not working for you.

A Trustee is an officer of the court trying to ensure the bankruptcy laws and rights of all parties are respected.

It is also important to note that because of all these facts you do not have what is commonly known as "solicitor/client privilege" .

It is important to note that your Trustee will be required to object to your discharge if you do not meet and complete your duties under the Act.

THE OFFICE of the SUPERINTENDENT of BANKRUPTCY (OSB)  - is the government agency that administers the Bankruptcy and Insolvency Act and the licensing of Trustees.

THE COURT -  is available if there is a dispute between any of the parties. Most people going through the process will never need to attend court but if there are any disputes between you and the creditors or you and the Trustee the court will determine the matter.

Now the exceptions to the rules - The most common exception to the rule is that you do not lose everything. Each province has exemptions. Your Trustee will give you the details applicable to you but commonly you keep enough to maintain your basic requirements.

The next exception is that not all your debts are eliminated. Certain debts survive any insolvency process. Common ones being; child and spousal support; fines and penalties of a Court and student loans if it has been less than seven years since you finished school.

We have tried here to simplify things but you can see that this process maybe anything but simple.
That is why you need to talk to a Trustee.