The purpose of the Bankruptcy and Insolvency Act is to ensure that creditors are able to obtain as much dividend as possible, and to ensure that honest people, are able to be relieved from hardships that they have unfortunately come across. Sometimes this happens more than once, and sometimes it happens more than that. It’s important to evaluate why someone is pursuing bankruptcy, if there are other alternatives, and what the court will see.
In Re Dennison 2013 SKQB 108, the bankrupt had gone bankrupt a total of four times and was seeking a discharge from her fourth bankruptcy. Her first bankruptcy was in 1977. She had $39,000 in liabilities, $14,000 of which were unsecured, and $25,000 in assets. She also had a torrid common-law marriage, and four children which she was fighting over. She was granted a suspended discharge in 1978.
The next time she went bankrupt, in 2000, she and her husband were on disability income and she stated that they did not have enough to survive. She had $29, 425 in liabilities, and $9,905 in assets. She was granted an automatic discharge.
Her next bankruptcy was in 2005, only five years later. Her husband was unemployed, ill, and the costs of moving to Saskatoon was too much for her single income. Her liabilities were $6,880 and her assets were $1,000. She was discharged in May 2008 after a suspended discharge.
Her most recent bankruptcy was in 2010; only 2.5 years after being discharged from her last. She claimed that she had liabilities of $13,567 and assets of $2,000: half being exempt, and the other half encumbered. She had $1,479 in monthly income, and only $2.00 left after her monthly expenses.
The registrar understood her hardships, and did not believe that there was any fraud. The trustee had recommended a 36 month suspension. However, the registrar noted that even with more money coming in each month, she still couldn’t afford her expenses. The margin between her income and expenses had increased since October 2011, even though she had more disposable income.
The registrar determined that she could not grant the discharge, as she did not believe that the bankrupt wouldn’t be back for another bankruptcy in a couple of years. The application was refused, and the registrar allowed the bankrupt to reapply in two years’ time.