As one might expect there are difference between business bankruptcy Canada proceedings and bankruptcy proceedings in the United States. In 2005, when the United States enact significant changes in bankruptcy laws the two countries grew much closer in similarity. Prior to the changes of bankruptcy law in the United States in 2005, the two major differences involved mandatory credit counseling and means testing. As a result, both countries now require debtors to undergo counseling prior to submitting a bankruptcy petition. In addition, means testing is conducting to determine whether debtors must make payments to creditors or whether debts can be erased. In the United States, one counseling session is required, whereas in Canada two counseling sessions are required during the bankruptcy term.

One of the differences between business bankruptcy Canada filings and filings for bankruptcy in the United States if that debtors in Canada will usually receive an automatic discharge within a period of nine months if it is their first time to file for bankruptcy. In order to receive the automatic discharge they must have met all related obligations and additionally, there must not be any objections to the discharge.

Generally, both countries have similarities regarding which types of debt can be erased, although there are some differences. For example, in the United States, student debt usually cannot be erased except under very rare circumstances. In Canada, student debts may be erased through bankruptcy if the bankruptcy petition is filed either prior to or within ten years following the completion of one’s studies.

One of the biggest differences between business bankruptcy Canada filings and filings in the United States relates to the interim in which businesses and individuals are allowed to file bankruptcy for a second time. In the United States, it is not possible to file for bankruptcy again until more than 8 years have passed if the original bankruptcy was under Chapter 7 and more than four years ago if the bankruptcy was discharged under Chapter 7, 11 or 12. If the petition was filed under Chapter 13 then it may be possible to file for bankruptcy again in two years. In Canada, it may be possible to file for bankruptcy again within 24 months provided that there is no excess income. In the event that there is excess income then a second bankruptcy may be filed within 36 months.

As in the United States, businesses that are considering filing for bankruptcy in Canada would be well advised to seek the consultation of an experienced bankruptcy attorney who has handled bankruptcy cases in Canada. Ideally, it is best to seek the consultation of a Canadian business bankruptcy attorney who has courtroom experience handling business bankruptcy cases. Business owners should not be alarmed that their case will go to court, but it is always best to make sure you have the most experienced attorney on your side possible. Doing so can ensure that the business owners knows exactly which bankruptcy options are open to them in Canada and how those options will best benefit their current situation.

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2. Business Bankruptcy Law

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