December « 2008 « Bankruptcy Ontario: Free Information about Bankruptcy in Ontario

Our house is about to sell, I am going bankcrupt, and now we have found there is a lien on our home

Monday, December 22nd, 2008

Question: We are in financial disaster. We renegotiated our mortgage in the spring, and because of bad credit, renegotiated a 13% first and second mortgage. Our house has just sold, the closing date is Dec 28th, and we just found out there is a lien registered on our home. With the sale, we are having to borrow 15K to close the sale, now we find out we will need to borrow 35K to get out of this house. We are paying insane closing fees of 9K in penalties, I have already had my bank accounts seized. At this point, both my husband and I feel we might as well both go bankrupt and let the banks fight it out. I already went bankrupt in 1997…now we are facing it again. Should we let the deal fall through and file for bankruptcy?

Answer: Your situation is very serious and urgent, so it’s critical that you get professional help immediately; you should contact an Ontario bankruptcy trustee as soon as possible. It is beyond the scope of this bankruptcy Ontario website to advise on an issue as critical as your home.

The decision on whether or not to go bankrupt will depend on many factors. The level of your debt is one issue, and obviously with the shortfall on your house there will be a $35,000 shortfall. If you can repay the $35,000, bankruptcy probably is not necessary. However, if you have other debts, bankruptcy may be an option.

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in jail and bankruptcy in Ontario

Sunday, December 21st, 2008

Question: Can i apply for bankruptcy for my son while he is incarcerated?

Answer: The only way that you can file bankruptcy on behalf of another person is if you are that person’s power of attorney, or if you have a court order.

The most common reason for declaring bankruptcy in Ontario is to prevent a wage garnishment. If your son is in jail he will not have any wages that can be garnisheed, so it may not be necessary for him to declare bankruptcy while in jail.

Also, a bankrupt person must attend two credit counselling sessions, and must be available for creditors’ meetings or if necessary a discharge hearing in court, which is of course impossible if the person is incarcerated, so it may be best to simply wait until he is released. A trustee or lawyer can provide you with more information.

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trustees

Wednesday, December 17th, 2008

Question: What recourse is there if you think there is interference by the trustee ??? During our two meetings , there were many conflicting statements made and I am concerned. Can you change trustees midway through a bankruptcy due to lack of trust ????

Answer: Although it is the person who wants to go bankrupt that approaches a trustee, legally the trustee is appointed by the court, so the bankrupt person cannot change trustees. A creditor could request a creditors’ meeting and request that a trustee be substituted, but a bankrupt person cannot do that.

If you do not believe your trustee is following the rules, you should start by talking to your trustee, or perhaps the owner of the firm that your trustee works for.

Your next option would be to talk to the Office of the Superintendent of Bankruptcy and raise your concerns with them, since they regulate all trustees.

Finally, if your trustee opposes your discharge from bankruptcy, there will be a discharge hearing in bankruptcy court, and at that time you will have your chance to have your say in front of the Bankruptcy Registrar to explain your side of the dispute, and the court will then make a ruling.

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trustee and consumer proposal

Wednesday, December 17th, 2008

Question: Can the trustee influence the creditors acceptance or rejection of a consumer proposal ??? or must they stay out of the process?

Answer: Legally, the trustee is not permitted to “solicit” votes in a consumer proposal. The trustee, technically the Administrator of the consumer proposal, is required to act in a manner that is fair to all parties. It would not be fair for an Administrator to call up a creditor that they think might vote in favour to solicit their vote, while not contacting a creditor that may be more likely to reject the proposal.

That being said, the Administrator of the consumer proposal is permitted to answer questions, so if a creditor calls asking for information, the Administrator can discuss the proposal. In addition, the Administrator does submit a report to the creditors, Form 48, indicating that they believe the proposal is “fair and reasonable” to the creditors and the debtor, so in that sense it could be argued that the Administrator is influencing the acceptance of the proposal.

Your trustee can provide you with more information if you require a more detailed explanation.

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Claiming bankrutpcy on osap student loans

Wednesday, December 17th, 2008

Question: my last year of full time study was april 2004. since then, i have been on interest relief on my loans (OSAP), i also hold pre-1999 osap student loans with the bank. i am considering declaring bankruptcy. i had done some research some months back and understood that students loans were exempt for 7 years after last graduation. if i declare bankruptcy now, it is only to cover not paying back the student loans, since after 4.5 years, it is proving difficult. what is the newest legistlation on this issue and how can i declare bankruptcy and have my loans be included in the amount?
thanks.

Answer: Effective July 2008, the rule is as follows: Student loans are automatically discharged in a bankruptcy if you have “ceased to be a student” for more than 7 years. Since you were last a student in April 2004, it has not been seven years, so your student loans, even the ones from 1999, would not be automatically discharged in a bankruptcy.

There is another rule that says that, in the case of extreme hardship, you can apply to the bankruptcy court to have your student loans discharged after 5 years (instead of 7), so one option for you would be to wait until your student loans are 5 years old and then go bankrupt. However, there is no guarantee that the court will discharge your student loans.

Further information can be found on the student loan bankruptcy canada web site.

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Divorce and Bankruptcy

Tuesday, December 16th, 2008

Questions: I am recently divorced with children. I have given my wife the house and healthy support payments so that my children can live comfortably and without too much disruption to their lives. My wife was stay at home before so I transferred debts to my name in the form of unsecured lines of credit. I have a good income and a good company pension but my employer has recently refused to pay me a substantial amount of money which I earned through a contract with them. This missing money has left me in a serious shortfall. I am considering personal bankruptcy to shed the dept load. My questions are: Will the courts demand a big chunk of my good income and will this impact my support payments or are the support payments protected? What happens to my company pension?

Answers: There are a number of complexities in your situation, so you should consult a bankruptcy trustee to review your unique situation.

In general, a company pension is not impacted by a bankruptcy.

As for your income, while you are bankrupt you are required to make a contribution to your bankruptcy estate based on your income. It’s called a surplus income payment, and the more you earn, the more you pay while bankrupt. However, the child support you pay is considered a reduction in your net income, so your child support payments reduce your surplus income in a bankruptcy.

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rejected discharge from bankruptcy

Sunday, December 14th, 2008

Question: Can I appeal the Registrar in Bankruptcy decision to reject my discharge?

Answer: Yes, although given the complexities of that process it would be best to discuss it with your trustee first, and then if you choose to proceed you should get legal advice.

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mortgages and bankruptcy and foreclosure

Saturday, December 13th, 2008

Question: Hi, If I surrender a property to the bank at the time of my bankruptcy, will it also show up on my credit report as a foreclosure? If so how long does it stay on the credit report? I know that the bankruptcy will stay 6-7 years, but will there be a foreclosure there? Is surrendering the property at the time of bankruptcy the same as a foreclosure?

Answer: The answer depends on how the bank reports the foreclosure to the credit bureau. In most cases the word “foreclosure” does not appear on your credit report. What will appear is the amount of the debt that was included in your bankruptcy, which generally is the amount of the mortgage company’s shortfall after your house is sold.

Technically surrendering the house at the time of the bankruptcy has the same effect as a foreclosure, except that you are doing it voluntarily. Your trustee can provide you with more information on the impact of surrendering your house prior to bankruptcy.

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Surplus income payments in Bankruptcy

Saturday, December 13th, 2008

Question: If I can not make the full surplus income payments in my bankruptcy each month, what happens? Will my discharge be delayed? How long will I be given to catch up? Will a trustee garnish my wages for the missed payments?

Answer: Yes, if you are not able to pay the full amount of your surplus income payments each month, it is possible that your discharge will be delayed, and the trustee does have the power to garnishee your wages.

If you are behind in your payments, or believe you may fall behind, it is essential that you arrange a meeting with your trustee and discuss your situation. It is usually possible to work out a repayment plan. The trustee may be able to extend the bankruptcy to give you time to make the required payments, but the sooner you make those arrangements the sooner your bankruptcy will be able to be completed.

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bankruptcy and running for office

Friday, December 12th, 2008

Question: is there any restriction for a bankrupt from running for office?

What is the average discharge time?

Answer: There is nothing in the Bankruptcy & Insolvency Act that prevents a bankrupt from running for office. However, the fact that the person was or is bankrupt will probably become known during the campaign, which may hamper their chances of being elected.

The average discharge time in a first bankruptcy with no surplus income or other issues is nine months, but if there are issues the discharge can take longer.

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Archive for December, 2008