Mandatory counselling and your duties in a Canadian bankruptcy or consumer proposal
The two insolvency counselling sessions required in Canada, what they cover and cost, plus the duties of a bankrupt and of a consumer debtor, month by month.
Both a consumer proposal and a personal bankruptcy in Canada require two counselling sessions under the OSB's Insolvency Counselling Program. In a bankruptcy, attending them is a condition of automatic discharge (BIA s. 157.1); in a proposal, they are required before the administrator can issue the certificate of full performance. The fee is set by the BIA General Rules at $85 per individual session (or $25 per person in a group) and is paid from the estate or proposal funds. Bankrupts also have a list of statutory duties in BIA s. 158, including disclosing all property, reporting monthly income and expenses and paying any surplus income.
Part of the debt relief worked examples. General information, not legal advice.
The two counselling sessions
The sessions are given by the trustee or by a qualified insolvency counsellor and follow standards in OSB Directive No. 1R8, Counselling in Insolvency Matters (issued 18 March 2024, replacing 1R7).
| First session | Second session | |
|---|---|---|
| When | Between 10 and 90 days after the bankruptcy or the filing of the consumer proposal | At least 30 days after the first session, and before discharge or the certificate of full performance |
| Focus | Money management, spending and shopping habits, warning signs of financial difficulty, obtaining and using credit | Your budget in practice, the causes of your insolvency and the obstacles to staying solvent; may include a referral for further help |
| Format | In person, normally at the trustee's office; by video on an individual basis if you choose; by phone only in extraordinary circumstances (distance, no transport, medical reasons) | Same |
| Cost (General Rules, Rule 131) | $85 individual, $25 per person in a group | Same |
Counselling can be given by the trustee personally or by a BIA insolvency counsellor registered with the OSB, who must meet the directive's training and professional-development requirements. Check the current directive on the OSB website for the full rules.
How to get real value from counselling
- Bring your actual bank statements and track a month of spending before the first session.
- Ask the counsellor to help you plan for irregular expenses: car repairs, gifts, annual insurance.
- Ask what to do if your income changes during the bankruptcy or proposal.
- Discuss rebuilding credit after discharge or completion.
Duties of a bankrupt (BIA s. 158)
The main duties are:
- Disclose and deliver property. Give the trustee all non-exempt property and the documents relating to it, including credit cards, which are cancelled.
- Disclose creditors and transactions. List every creditor and disclose property sold or transferred in recent years.
- Attend meetings of creditors and any examination by the Official Receiver, if required.
- Report income and expenses monthly, with pay stubs, so the trustee can calculate surplus income; see the surplus income calculation.
- Pay surplus income as required under s. 68.
- Attend counselling: both sessions.
- Cooperate with the trustee and tell them about any change of address, job or family situation.
- Do not dispose of property belonging to the estate.
Breaching these duties can lead the trustee or a creditor to oppose your discharge; see bankruptcy discharge.
Restrictions while bankrupt
- If you borrow $1,000 or more while undischarged, you must tell the lender you are an undischarged bankrupt; failing to do so is an offence under the BIA.
- Some positions, such as being a director of a corporation, are not open to undischarged bankrupts under corporate statutes.
- Some professions and licensing bodies require you to report a bankruptcy; check with yours.
Duties in a consumer proposal
A consumer proposal is lighter, but you still must:
- make the payments on schedule; three missed monthly payments mean deemed annulment (s. 66.31); see default and annulment;
- attend both counselling sessions;
- meet any other terms of the proposal, such as filing tax returns or paying a lump sum from a tax refund, if the proposal includes it;
- tell the administrator about changes that may affect your ability to pay.
There is no monthly income reporting in most proposals and you keep your assets, although credit cards included in the proposal are cancelled by the issuers.
A month-by-month view of a first bankruptcy
| When | What you do |
|---|---|
| Before filing | Gather documents; see the first meeting checklist |
| Month 1 | Sign the assignment; hand in credit cards; first income report |
| Months 1–3 | First counselling session |
| Every month | Income and expense report; surplus income payment if required |
| Spring | Tax return for the year of bankruptcy (filed by the trustee) |
| Before month 9 | Second counselling session |
| Month 9 or 21 | Automatic discharge if no opposition |
| After discharge | Keep the certificate; check credit reports |
Illustrative example. Leah files for a first bankruptcy in March 2026. She attends the first counselling session in April and the second in July, files her monthly reports and has no surplus income. Her trustee files the discharge report and, with no opposition, she is discharged in December 2026, nine months after filing.
Mistakes that delay discharge
- Missing the second counselling session.
- Forgetting a monthly report or understating income.
- Not handing over a tax refund that belongs to the estate.
- Taking on new credit without disclosing the bankruptcy.
- Moving without telling the trustee.
Frequently asked questions
Can I skip counselling if I already understand budgeting?
No. Both sessions are mandatory, and in a bankruptcy they are required for automatic discharge.
Who pays for counselling?
It is paid through the estate or the proposal payments at the rates in the General Rules. You do not usually get a separate bill.
Can my partner attend?
Often yes, and it can help if household finances are shared. Ask the trustee.
Is counselling the same as a credit counselling agency?
No. Insolvency counselling is part of the BIA process. Non-profit credit counselling agencies offer separate budgeting help and debt management plans.
Sources
- Office of the Superintendent of Bankruptcy — Insolvency Counselling Program; Directive No. 1R8
- Justice Laws Website — BIA ss. 157.1, 158, 168.1 and 199; General Rules, Rule 131
- Credit Counselling Canada — budgeting help after insolvency
