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Bankruptcy settlement


The Bankruptcy and Insolvency Act is frequently modified to make the insolvency system fairer for all Canadians. The goal is to reduce inequities in cases of personal bankruptcy while providing a fresh start for honest people who are overwhelmed by debts.

Settlements are similar to preferences in that they are deemed to be unfair to other creditors. In bankruptcy proceedings, settlements are defined as transactions where a fair market value is not received for an asset given away.


The initial part of the bankruptcy procedure is a careful analysis of your financial situation. Your trustee must be informed about all assets and liabilities, including any assets transferred in the past few years. This includes settlements. If the trustee determines that settlements have unfairly diminished the value of your bankruptcy estate, they can start proceedings to get the asset back.

Settlements and reviewable transactions are also known as ‘Transfers at Undervalue’. Like preferences, settlements depend on the relationship of the recipient to the debtor, and when the settlement was made.


Non-arm’s length is the legal term for people who are related.

Settlements to family members may be examined by the Court as potential transfers at undervalue if the settlement took place within 12 months of the bankruptcy. However, the trustee will also investigate settlements made up to 5 years before the bankruptcy if they deem that the debtor intended to defraud other creditors, or if the debtor was insolvent at the time of the settlement.

If the trustee determines the transfer was made at undervalue for any of these instances, you may be required to pay the difference between the actual transfer and the fair market value.


Arm’s length settlements refer to settlements made to non-related creditors.

The Court can grant a judgement for the difference between the actual transfer and the fair market value of the transfer to arm’s length creditors if the settlement took place within 12 months of the bankruptcy and if the debtor was insolvent at the time of settlement.

Susan Banasco

Extremely professional service by Mr. Thatcher and his team. Mr. Thatcher and his team were always available and quick to answer any questions concerning bankruptcy. I would highly recommend this company to anyone that would require his services!

Isabel K

I have worked with Kevin and his office for many years and would recommend his services to anyone who is having financial difficulties. He is very professional and has spent many years helping people get out of tough debt situation.

Sara C

The staff at Kevin Thatcher & Associates are incredibly understanding, non-judgmental people who honestly advised me of all my options before I chose to go bankrupt. I was surprised at how easily they broke down the process for me step-by-step so I was able to meet all the requirements.

John D

I just wanted to thank everyone at Kevin Thatcher and Associates for their help. I was at wit's end and couldn't cover most of my bills. I was afraid to answer the phone ever as it might be another collector calling! I was so depressed.

Caroline C

I was looking for a bankruptcy firm and was recommended Kevin Thatcher and Associates. I initially spoke with his pleasant and knowledgable staff(Anna) over the phone. I was very impressed by her and her soft approach being in a difficult situation.

Sean C

Very kind, caring and helpful group at Kevin Thatcher and Associates.

Alan S

I was in a real bind with a lot of debt from credit cards and payday loans but I met with Kevin and his staff were very understanding of my difficulties paying. I paid for 21 months under these federal income rules, but was way cheaper than if I did nothing.

Elizabeth E

Staff is extremely kind and knowledgeable! They took a stressful situation and made it more manageable, so thankful for their expertise.

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