One becomes bankrupt when so declared by a "receiving order" or an "assignment." A debtor is "received" in bankruptcy when he or she voluntarily declares his or her insolvency by a "petition" made with the assistance of a receiver and a trustee in bankruptcy, who is usually an accountant. A debtor may be "assigned into bankruptcy, " without his or her consent or will, by his creditors.

Trustees are officers of the Court, by law, although they operate for profit, as members of the private business community. They "wind-up" the bankrupt person's affairs, by determining his or her valid debts (for bankruptcy) and his or her assets (for bankruptcy purposes). Some debts, and some assets, are protected, for example, tools for work, personal effects, support for children and spouses, pensions, and so on…according to their nature.

With an ultimate duty to the Bankruptcy Court, the trustee is, at all times, an intermediary, between the debtor and his creditors, owing a duty to all. He is however retained by the debtor, and must be paid by him or her.

The debtor is bound, under the Act to deal honestly and candidly with the receiver. Any failure to do so may be a fraud, may vitiate the bankruptcy, and most significantly, may lead to criminal punishment, as certain provisions of the Act, which is after all a federal Act, are of the same penal nature as the Criminal Code.

All creditors may "prove their debts" upon notice by the trustee, and may challenge the bankruptcy, their priority in the bankruptcy payment scheme, the amount claimed as their debt, and so on.

A lawyer's role commences where there is a dispute by creditors, by the trustee, or to defend the debtor, where such disputes arise, or in cases of subsequent bankruptcies by a previously bankrupt debtor. The bankruptcy lawyer is also able to provide some advice to those who are uncertain about their financial affairs.

The debtor who is bankrupt for the first time, and whose bankruptcy is relatively small, and not disputed, can benefit by "summary" provisions from the Act. He or she will not need a lawyer, and can be "discharged" from the bankruptcy in nine months, more-or-less, relying only on the administration of the receiver. His or her affairs will be managed with the assistance of the receiver, for the period he is an "undischarged bankrupt." He or she will have to take a program to assist in managing his or her affairs, but may resume his or her normal financial existence on discharge.

The discharged bankrupt is not automatically barred from receiving credit, loans or credit accounts, but will meet some difficulty convincing creditors to advance credit…given past history! The undischarged bankrupt may not deal in business, nor may he or she dispose of assets, deal in property, pay taxes, or engage in credit transactions. He or she is not competent to appear in Court, nor to engage in litigation, except through the Trustee. Generally, no action may be commenced in Court against an undischarged bankrupt, except by leave of the Bankruptcy Court.

"Bankruptcy" is not the only solution for insolvency. The Act contains provisions for the orderly payment of debts, and for immediate, temporary relief, by means of "debtor proposals," also administered after a "petition" is received by a trustee. These debtor proposals allow a debtor to stretch out payment of creditors, on their consent, and to provide stay of interest, for periods of up to several years.

Finally, if a bankrupt is before Bankruptcy Court for a second or subsequent bankruptcy, or in the case of a dispute or objection by the trustee, the Judge may choose one of several alternatives, at the hearing. The Justice at Bankruptcy Court, a General Division Judge appointed to that court, may refuse to discharge the bankrupt, forcing him to continue in the administration of a bankruptcy trustee, may grant a "conditional discharge" requiring certain terms for discharge, such as the payment into a pool of money, to be paid out by the trustee on a pro rata basis to approved creditors. The Justice may also overturn the petition of bankruptcy, in cases of fraud or other crime.