How does bankruptcy affect a person's ability to enter into contracts?

In Canada, when a person files for bankruptcy, their ability to enter into contracts is indeed impacted, but not entirely eliminated. While bankruptcy may impose certain restrictions on a person’s financial dealings, they can still engage in contracts under specific conditions.

When a person is in bankruptcy, they may face limitations on their financial activities until they are discharged from bankruptcy. This means that although they retain some ability to contract, any contracts they enter into could be scrutinized, particularly concerning financial obligations and responsibilities. Essentially, the bankruptcy process is designed to give the individual a fresh start while also ensuring that creditors are treated fairly. Until the bankruptcy is resolved and the individual is discharged, certain responsibilities and limitations apply to their contracting ability. This can include restrictions on obtaining credit or managing financial transactions effectively, which can limit their capacity to engage in some types of contracts, particularly those that require significant financial commitment.

Thus, the assertion that bankruptcy limits contracting ability until discharged accurately reflects the legal standpoint regarding contractual obligations during bankruptcy proceedings.