When it comes to the Canada bankruptcy process, bankruptcy mediation is a way to resolve a disagreement where the person affected by the bankruptcy is directly involved in deciding how the disagreement will be settled. The parties work with an impartial person called a 'mediator' who helps settle the dispute rather than going to court. The mediator is normally an employee from one of the Superintendent of Bankruptcy's Division Offices. When bankruptcy mediation takes place, the bankrupt and the trustee are both present. If a creditor asks for bankruptcy mediation then the creditor must be present. Mediation is much faster, less expensive, and more flexible than going to court.
There are two types of disputes in bankruptcy that will require bankruptcy mediation. The first type of dispute is disagreements regarding the amount of money the bankrupt will pay to the trustee for the benefit of the creditors during the bankruptcy which is called surplus income mediation. With surplus income mediation, if the bankrupt does not agree with the amount of surplus income he or she must pay, the trustee must request mediation. If any creditor does not agree with the amount of surplus income that is going to be paid, they can submit a written request to the trustee asking for mediation.
The second type of dispute in bankruptcy is disagreements about the conditions that the trustee has recommended for bankruptcy discharge. The bankrupt can request mediation if he or she disagrees with the conditions that the trustee has recommended for discharge. Also, the trustee must request mediation if he or she opposes the bankrupt's discharge because the bankrupt did not pay the agreed amount of surplus income or the bankrupt filed for bankruptcy instead of proposing an alternative repayment plan. Creditors can request mediation if they oppose the bankrupt's discharge because the bankrupt did not pay the agreed amount of surplus income or the bankrupt filed for bankruptcy.
The role of the mediator is to assist the parties with communication to reach an agreement. The mediator explains the mediation process and meeting procedures. When going through the mediation process, both parties must know the exact issues that are being disputed and they must understand what each party wants. The mediator gives each party the opportunity to explain their reasoning and discuss various ways to come to an agreement. The parties must reach an agreement. The mediator does not decide if there will be an agreement. When the disagreeing parties reach an agreement, each party will sign a 'mediation settlement agreement.' Once signed, the bankrupt must comply with all conditions in the agreement.
When involved in surplus income mediation, and the parties fail to reach an agreement, the trustee in bankruptcy can apply to the court to request an order stating the amount the bankrupt must pay the bankruptcy estate. When involved in discharge mediation and the parties fail to reach an agreement or the bankrupt does not comply with the conditions of the mediation settlement agreement, the trustee asks the court for a hearing to resolve matter. Bankruptcy Mediation is much faster, less expensive, and more flexible than going to court.
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