What to keep in mind
- A debt category and its discharge treatment are separate.
- The debtor and the estate are different concepts.
- Ask which document establishes a claimed status.
People and legal status
Debtor: a person who owes money. Creditor: a person or organization with a claim. Insolvent person: a defined legal term concerning financial circumstances, not merely a description of feeling stretched. Bankrupt: a person with the formal status described in the Act. Read the statutory definitions in section 2.
When someone uses a status word, ask what event or document supports it. For example, “considering bankruptcy” does not tell you that a bankruptcy has been filed. In your notes, label information as proposed, filed, disputed or confirmed so that later conversations do not confuse these stages.
Assets and claims
Secured creditor: broadly, a creditor holding security against property, subject to the statutory definition. Unsecured debt: a debt without that form of property security. Estate: in this context, the property and administration handled in the bankruptcy process, rather than a synonym for everything a family owns. The OSB bankruptcy guide introduces asset administration.
Useful follow-up questions are: What agreement creates the security? Who owns the asset? Which valuation is being used? Avoid deciding the category from the creditor's name. The same institution may hold several accounts with different documentation.
Procedure and payments
Stay of proceedings: a legal restriction on specified creditor remedies. The bankruptcy provision is section 69.3, which contains exceptions. Surplus income: a statutory income concept relevant to contributions during bankruptcy; it is not simply what remains in your bank account after your chosen spending. See section 68.
Consumer proposal: a formal insolvency repayment procedure. Debt management plan: an informal repayment arrangement. When comparing either with bankruptcy, ask about obligations, creditor participation and completion evidence. Similar marketing words do not make the underlying processes equivalent.
End points and documents
Discharge: release from provable claims subject to exceptions, rather than a promise that all debts vanish. Conditional discharge: an outcome requiring conditions before an absolute discharge. The OSB discharge reference describes the main outcomes.
Use the glossary as a reading aid. Copy the unfamiliar phrase, the document date and the sentence around it into your question list. Ask a trustee or lawyer to explain its meaning in that document. The guides on discharge and debt categories provide worked ways to organize the next discussion. A short definition cannot settle a disputed legal classification.
Follow the evidence
Sources & further reading
Continue with the reference that answers your next question.
Guides/Insolvency Vs Bankruptcy