June 2008 « Bankruptcy Ontario Blog Bankruptcy Ontario: Free Information about Bankruptcy in Ontario

Selling my house before declaring bankruptcy in Ontario

Sunday, June 29th, 2008

Question: Hi. If I sell my house and move my money to an offshore account and then file for bankruptcy (all my debts are unsecured) will there be any repercussions?

also

Would I be able to sell my house to my brother and rent it from him. Then file for bankruptcy?

Answer: When you file for bankruptcy in Ontario, the trustee will ask you a number of questions, including “in the last five years did you sell any property?” If you sold your house and moved the money to an offshore account, you would be required to repay the money to the trustee before you would be discharged. Since all real estate transactions are easily traceable, lying about this is a criminal offense, and the maximum penalty is a jail sentence. So the answer to your question is yes, there would be serious repercussions.

You are able to sell your house to your brother and rent from him, but again, you must sell the house at fair market value, and the proceeds of the sale must be turned over to your trustee for the benefit of your creditors.

Posted in bankruptcy Ontario, what do I get to keep if I go bankrupt | Comments Off

Student Loans and Bankruptcy in Ontario

Saturday, June 21st, 2008

Question: I have now been paying back my student loans (through a B.C. debtors assistance program) for almost ten years. (I live in Ontario now and have a canada loan and a BC loan.) Despite paying almost $30,000 I owe more now than I did when I started. I of course am considering bankruptcy at the ten year mark but am devastated that I will then have to wait another 7 years before I am clean (I am in my mid forties now) I wonder if there are other options. Am I able to offer my creditors a certain amount on the dollar to clean this up. A family member has offered to help me financially. Any advice that you may have would be greatly appreciated.

Answer: You have three options.

First, keep paying until the loans are paid off; this will have the best impact on your credit, but with the interest is obviously very costly.

Your second option is to declare bankruptcy. If you have been out of school for more than 10 years your student loans will be automatically discharged in the bankruptcy. The rules are somewhat complex; more information is available on the student loan bankruptcy canada web site. Once the bankruptcy is finished you can begin to re-build your credit. You are correct that the bankruptcy remains on your credit report for seven years, but if you have a good job and can save money you can generally re-build your credit in a much shorter period of time.

Your final option would be to file a consumer proposal, where you offer a settlement to your creditors. If you have family that can help, it may be possible to offer a lump sum to the creditors of an amount less than the full amount owing, and they may be willing to write off the remaining balance. Whether or not they will accept the consumer proposal depends on your level of debt, your family income, and your other assets.

You have options, so we suggest you contact a licensed trustee in Ontario for a no-charge initial consultation to review your options.

Posted in bankruptcy Ontario, student loans | Comments Off

Kicked in the head again, what about the house?

Saturday, June 21st, 2008

Question: Hi. Just bought a house with 100% mortgage 6 months ago, so essentially there is no equity in the house. I may be looking at bankruptcy as the only option at this point. Never missed a payment; all associated bills up to date. Will I have to sell/lose the house?

Answer: If you go bankrupt in Ontario, if you want to keep your house, you are required to pay to the trustee the equity in your house. In your case, if there is no equity, you would be able to keep your house.

Of course the other question to ask is whether or not it makes sense to keep the house. If there is no equity, and if the housing market in Ontario is declining, it may be better to surrender the house, find a place to rent, and then file bankruptcy.

Each person’s situation is unique, so to fully explore your options contact an Ontario bankruptcy trustee for a free initial consultation.

Posted in bankruptcy Ontario, what do I get to keep if I go bankrupt | Comments Off

Can creditors/Trustee oppose my discharge after the fact

Sunday, June 8th, 2008

Question: Hi, i got discharged 2 weeks ago from my first time bankruptcy. I’m planning to buy a house immediately from a private financeire and borrow the down payment from a relative.

1. Can any of my creditors/trustee void my bankruptcy based on the fact that i will own a house not long after my discharge.

2. Does the loan have to be registered anywhere or is an agreement on paper good enough

3. If yes, how long can i wait before i can own something and guarantee that no one will come after me.

Thanks alot

Answer: Once you are discharged, your bankruptcy cannot be re-opened, so you are free to buy a house or do whatever you wish. The only exception to that rule would be where the trustee or a creditor can prove that you lied or did not fully disclose your assets while bankrupt.

In your case, you have a relative that is willing to loan you the down payment on a home, so you are free to do as you wish.

Our only caution would be to be very careful getting back into debt at this time. The real estate market in Ontario is declining, so borrowing from a relative and borrowing for a mortgage puts you back in debt, which may prove difficult to service if the value of your new house declines over the next two years. In most cases it is better to save for a significant down payment, and then buy a house in the future with a minimum amount of mortgage debt.

Posted in bankruptcy discharge, bankruptcy Ontario | Comments Off

Bankruptcy in Ontario

Saturday, June 7th, 2008

Question: I am separated from my spouse and he is not paying his share of debt which is forcing me into personal bankruptcy. I have tried to sell my home to cover these debts but have not until now and find myself sinking deeper and deeper. My husband has been gone since Nov 07 and has contributed nothing to any debt. Is there some recourse I can take as I would not be declaring bankruptcy if he would pay the debt he owes me. We were married for 30 years and it is before the courts now but I may not be able to last until the court date.
I have tried to save my credit and at this point it is ok but I can no longer keep up. Please advise what I can do.

Answer: Unfortunately there is no way to speed up the court process. Your options are as follows:

First, you can talk to your lawyer about strategies to speed up the court process.

Second, if you are able, you could sell your house and use the funds to deal with your debt. If you are faced with a multi-year legal fight, it may be best to sell the house now and get out of debt now, rather than waiting until your credit gets worse.

Please note that this is a very generic answer, since we don’t know the value of your house, or what you owe. It may therefore be wise for you to discuss your situation with an Ontario bankruptcy trustee to determine your possible options.

Posted in bankruptcy Ontario, bankruptcy trustee | Comments Off

407 ETR and Bankruptcy in Ontario

Wednesday, June 4th, 2008

Question: The 407 has been charging an insane amount of money as “interest” to me…Will that bill be erased on a claim of bankruptcy in Ontario?

Answer: The rules are subject to change, but as it stands now debts owed to 407 ETR are discharged in a bankruptcy in Ontario. However, it is possible that at some point in the future debts to 407 ETR will be added to your license plate or driver’s license renewal cost, in which case you will need to pay them in order to renew your license.

Posted in bankruptcy Ontario | Comments Off

Monthly Payments and Income Tax Question

Tuesday, June 3rd, 2008

Questions: I have two questions. The first is:

I have a certain amount that I pay monthly to my trustee and would like to know if my mortgage payment increases (or have other increases), will this affect the amount that I pay to them (decrease it)?

If I get money back from filing my income tax, I understand that my trustee takes that amount and distributes it to whomever, does this money get included into the amount that I am required to pay back and does it decrease my monthly payments?

I hope these questions make sense.

Thanks

Answers: When you go bankrupt in Ontario, you are required to report your income each month to your trustee. If you have what is called surplus income, you are required to make extra payments while bankrupt. These payments are based entirely on your income, not your expenses, so if your mortgage payments increase, your surplus income payments remain the same.

Also, you are correct, your tax refund is an asset of your bankruptcy estate; it is distributed to your creditors, but it does not reduce your monthly payments, because again your monthly payments are based on your monthly family income.

Your trustee can provide you with more detailed answers based on your specific situation.