Can I have my bankruptcy annulled if I repay my debt in full?

If you’re currently in bankruptcy (or you’ve already filed for it) and your financial situation suddenly changes for the better (think inheritance, lottery win, etc.), is there anything you can do to get out of bankruptcy? You’ll be pleased to know that the answer to this is yes, but it’s not quite as simple as paying what you owe and making the bankruptcy disappear—nor will your credit record suddenly be cleared.

In fact, even though you’ll be paying your creditors in full (including interest), the only way to get out of a properly filed bankruptcy is through filing a proposal instead. To do this, you’ll need to meet with your trustee, who will then take your proposal to your creditors and ensure the correct papers are submitted to the Office of the Superintendent of Bankruptcy. Once the consumer proposal is filed and approved by your creditors, your bankruptcy will be automatically annulled and will no longer be reflected in your credit record. The proposal, however, will remain there for the usual three years following its completion.

While this may not seem ideal to you, remember that if you receive any inheritance, lottery winnings or other windfall after declaring bankruptcy, you must turn the funds over to your trustee anyway. By filing a proposal and annulling the bankruptcy, you’re giving yourself a significant head start on rebuilding your credit record (a bankruptcy remains on your file for seven years after discharge rather than the three years of a proposal).

To discuss the options best suited to your financial circumstances, call us today for a free, no-obligation consultation with one of our professional counsellors: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online.

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