{"id":5303,"date":"2014-05-01T00:00:00","date_gmt":"2014-05-01T04:00:00","guid":{"rendered":"https:\/\/dev-ginsberg-gingras.flywheelsites.com\/non-dischargeable-debts\/"},"modified":"2021-04-13T18:16:55","modified_gmt":"2021-04-13T22:16:55","slug":"non-dischargeable-debts","status":"publish","type":"post","link":"https:\/\/ginsberg-gingras.com\/en\/non-dischargeable-debts\/","title":{"rendered":"Non-Dischargeable Debts"},"content":{"rendered":"

Did you know that the Bankruptcy and Insolvency Act (BIA) designates some debts as non-dischargeable and that even in bankruptcy, you are still obliged to pay back these debts!<\/p>\n

Section 178 (1) of the Act lists several categories of debt that bankrupts cannot eliminate by means of an order of discharge. However, aside from a few exceptions, an order of discharge as part of the bankruptcy process can release bankrupt individuals from all provable claims against them.<\/p>\n

Non-dischargeable debts are as follows<\/h2>\n
    \n
  1. \n

    Sec.178 (1), a) \u2014 Fines and compensation in cases of wrongful death or intentional bodily harm<\/h3>\n

    All fines, penalties, Highway Code violations or other offences are considered non-dischargeable debts under the BIA. With respect to compensation in cases of wrongful death or intentional bodily harm, the Court is required to rule on the intentional nature of the harm for the debts to become non-dischargeable.<\/li>\n

  2. \n

    Sec. 178 (1), b) and c) \u2014 Any debt or liability for alimony or support<\/h3>\n

    Bankruptcy does not affect the provisions of existing family support agreements. However, the context needs to be considered when determining whether a given situation involves such a liability. Amounts due under a divorce decree are not necessarily paid as family support. However, if they are, the liability remains. In fact, family support agreements do not have to be ratified by the Court for the liabilities concerned to be excluded from the discharge of the debtor concerned.<\/li>\n

  3. \n

    Sec. 178 (1), d) \u2014 Various types of fraud (fraud, embezzlement, collusion or breach of trust while acting in a fiduciary capacity)<\/h3>\n

    Debts arising out of fraud are non-dischargeable. One consequence of a debtor\u2019s conviction for fraud is that their capital, interest and expenses are not affected by their bankruptcy. On the other hand, a judgment that does not clearly indicate fraud, embezzlement, collusion or breach of trust can be interpreted as such by the Court on the grounds of the evidence on which the judgment is based.
    \nEmbezzlement-related debts are similarly non-dischargeable. For example, the term embezzlement covers such situations as a notary using monies held in trust for his or her own purposes.
    \nDebts caused by a breach of trust can also remain valid after a bankrupt\u2019s discharge \u2013 for example, a bank debt when the bankrupt concerned takes out a car loan and then resells the car before paying off the entire amount of the loan. Under instalment sales contracts, financial institutions remain the owners of the property concerned until the final payment is made. Prior to that date, any sale of the property can constitute a breach of trust. However, breach of trust is not necessarily considered to be dishonest.
    \nThis section of the BIA also covers debts incurred by individuals acting in a fiduciary capacity. An individual enters into a relationship of trust with another individual from the time when the other acts in full knowledge of the fiduciary relationship. The resulting debts are then non-dischargeable.<\/li>\n

  4. \n

    Sec.\u00a0178. (1), e) \u2014 Debts resulting from false pretences or fraudulent misrepresentation<\/h3>\n

    Such debts or liabilities are the result of obtaining property or services by false pretences or fraudulent misrepresentation.
    \nFor example, if a bankrupt fails to disclose the existence of one or more debts when applying for a loan, he\/she is assumed to have committed an act of fraudulent misrepresentation. The creditor then needs to prove this fraudulent misrepresentation, and it is up to the bankrupt to disprove this assumption by providing appropriate explanations. Fraudulent misrepresentation cannot be assumed if the failure to disclose a debt involves a guarantee against which no claim has yet been made.<\/li>\n

  5. \n

    Sec.\u00a0178. (1), f) \u2014 Liability for a dividend to which a creditor was entitled<\/h3>\n

    Creditors who are entitled to a dividend on any provable claim not disclosed to the trustee by the bankrupt can be paid this dividend if these creditors did not have notice or knowledge of the bankruptcy.<\/li>\n

  6. \n

    Sec. 178 (1), g) and Sec. 178 (1.1) \u2013 Student loan debts<\/h3>\n

    Student loan debts are non-dischargeable where the date of bankruptcy of the bankrupt occurred within seven years after the date on which he\/she ceased to be a student. Although exceptions are possible under section 178 (1.1), it is up to the bankrupt to demonstrate his\/her good faith to the Court.<\/li>\n<\/ol>\n

    With respect to the debts described in sub-paragraphs d) to f), only a Court decision can designate them as non-dischargeable. In such cases, it is up to the creditors to prove that their claims qualify under paragraph\u00a0178 (1) of the BIA. Such debts continue to be subject to interest during bankruptcy (Sec. 178 (1), h)).<\/p>\n

    It is important to remember that the discharge of a bankrupt does not release the guarantor of a loan contracted by the debtor.<\/p>\n

    A final word: Contrary to what many people think, back taxes are included in the bankruptcy process and are actually dischargeable debts.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Did you know that the Bankruptcy and Insolvency Act (BIA) designates some debts as non-dischargeable and that even in bankruptcy, you are still obliged to pay back these debts!<\/p>\n","protected":false},"author":48,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[667],"tags":[767],"class_list":["post-5303","post","type-post","status-publish","format-standard","hentry","category-blog","tag-debt"],"acf":[],"yoast_head":"\nNon-Dischargeable Debts | Ginsberg Gingras<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ginsberg-gingras.com\/en\/non-dischargeable-debts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" 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