Do I Need A Toronto Bankruptcy And Insolvency Lawyer To File Bankruptcy?

In Toronto, a bankruptcy and insolvencylawyer is, in a vast majority of cases, not part of the personal bankruptcy filing process. This means that if a person has debts that he cannot repay and is considering either bankruptcy or a consumer proposal, then he will need to speak to a licensed Insolvency Trustee, and not a lawyer.

Canadian lawyers are not allowed to file or administer bankruptcies. This is in accordance to the Bankruptcy law in Canada which is administered under the Bankruptcy & Insolvency Act, also referred to as the Act or BIA.

In the Canadian bankruptcy system, individuals have two debt relief solutions. These are a personal bankruptcy or a consumer proposal. These two legal processes are filed under the Act and is administered by a Bankruptcy Trustee, who is now referred to as a Licensed Insolvency Trustee. The Trustee also files and administers a consumer proposal, and in this case is referred to as a Consumer Proposal Administrator.

Trustees, and not lawyers, handle bankruptcy cases because there is no court involvement in the legal process. Rules and regulations governed by the Act allow individuals to go through the bankruptcy process without the need to appear in court. In about 99.9% of all personal bankruptcies, the process would be that an individual files for bankruptcy, signs over his assets to the Trustee, goes through the rules and procedures to have his unsecured debts eliminated, and then he receives an automatic discharge at the end of the process. So from the start of the legal process and up through the discharge, the bankrupt person only deals with the Trustee, without ever having to talk with a lawyer or appear in court.

There are some very rare cases, however, when lawyers who practice in the area of insolvency law may be required to get involved in the bankruptcy process. In cases that have contentious issues, such as when there is a dispute as to a creditor’s claim or an asset of the bankruptcy, an insolvency lawyer may be called in to provide legal advice to the Trustee and the bankrupt person. There are also very rare cases when a bankrupt person may need legal advice during a discharge hearing, and may hire the services of an insolvency lawyer to argue his case.

Bankruptcy lawyers, also interchangeably referred to as insolvency lawyers or as bankruptcy and insolvency lawyers, primarily work on corporate insolvency files. They typically represent a creditor or a business in negotiations or in court to argue the position of their clients towards a legal outcome. They are highly specialized in their field, and are normally very expensive. The Canadian bankruptcy system is set up the way it is today for the primary purpose of minimizing the costs associated with filing a bankruptcy. This is so for the benefit of all parties involved so that as much money as possible may be returned to the creditors. Without the need for lawyers, except in the most contentious cases, then all costs related to the bankruptcy process is kept as minimal as possible.

If a bankrupt person feels that there is a need to seek legal advice on an ongoing basis during the course of the bankruptcy hearing, then he is free to employ the services of a lawyer. A bankruptcy and insolvency lawyer in Toronto can help discuss the process and give opinion on matters that may potentially become legal issues.