March « 2009 « Bankruptcy Ontario: Free Information about Bankruptcy in Ontario

407 ETR and Bankruptcy in Ontario

Tuesday, March 31st, 2009

Question: I filed bankruptcy and owed 407ETR. My understanding was that the debt to them was discharged.

However, when plate renewal time came it was rejected until I was able to pay the 407ETR bill that supposedly was discharged in my bankruptcy.

I fully understand that I am responsible to pay for the actual use of the highway, but what I DON’T UNDERSTAND is, how can they charge me interest on a debt that was included in the bankruptcy? How can you calculate interest on a debt that, technically (and legally), no longer existed.

Please clarify if this is correct and legal?

Thank you.

Answer: Technically, yes, the debt to 407 ETR is discharged in the bankruptcy. However, 407 ETR has an agreement with the Ministry of Transportation that your license will not be renewed if there are amounts outstanding to 407 ETR. Their reasoning is that driving is a privilege, not a right, and they can withhold your license or your plates for whatever reasons they deem expedient.

At some point someone may challenge this interpretation in court, which may prevent 407 from doing this in the future. Unfortunately most people who go bankrupt in Ontario do not have the resources to fight this in court, so for now 407 ETR is in the driver’s seat, so to speak.

Tags: 407 ETR
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Help….House Shortfall and Bankruptcy

Monday, March 30th, 2009

Question: We have had our house for sale with no luck, for almost a year now. When and if we do sell we will be at least $30K in the hole after commissions, mortgage paid etc. I cannot do a proposal or a bankruptcy as I work in the Financial Industry and will lose my job if this occurs. Therefore we wondered if we walked away from the house, is it the same on my bureau as a bankruptcy? If they come back to us asking for us to pay a shortfall, it will likely be less then the $30K we will owe if we sell. Or can we do a bankruptcy just in my husbands name….but all our debt is joint…we are in a bad position and need some guidance, any thoughts?

Answer: If you walk away from the house, the mortgage holder will eventually foreclose, sell it, and then pursue you for the shortfall. If the shortfall would be $30,000 if you sold it yourself, the shortfall would probably be $50,000 or higher if the bank sells it, since they will get less under foreclosure, and they will want to recoup all of their legal fees.

Your first option would be to attempt to make a deal with the bank where they agree to let you sell the house, and then you work out repayment terms for the shortfall. That maximizes the amount of money going to the bank, so they may agree to it.

If you can’t make a deal and simply walk away, your credit report will reflect a bad debt, which, given the amount, is almost as damaging as a bankruptcy.

Just your husband could go bankrupt, but since you have co-signed the mortgage, the bank will eventually pursue you as well.

It is possible to file a consumer proposal or go bankrupt and keep your job; each employer is different; they may reassign you to other duties. You should discuss this in detail with your employer, and then consult a trustee for a detailed evaluation of the implications of all of your options.

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House Sale Pricing and Bankruptcy in Ontario

Monday, March 30th, 2009

Question: With the drop in the housing market, what happens if my house is evaluated today, and is worth less in a month?

As well, does the trustee settle on the gross sale price of the house ie:(300,000 – 100,000mtg = 200,000 to be paid), or is the net price after what would be legal and real estate fees be the final amount owed by myself ie:(300,000 – 100,000mtg – 5%real estate – 2% legal = 179,000 to be paid)?

Answer: The trustee is required to negotiate a settlement with you for the value of the house. In most cases you will obtain an appraisal and confirmation of the mortgage balance, and then negotiate with the trustee for a fair settlement, which may involved the trustee giving some consideration to selling costs. The trustee is not permitted to simply do a mathematical calculation as you have shown; they must negotiate a fair settlement for all parties. However, the numbers you have quoted would in most cases be fairly close to the actual amount that would be required to be paid. Your trustee can provide you with more information.

Posted in home equity | No Comments »

Surplus Income Assessment

Friday, March 27th, 2009

Question: I declared bankruptcy, was assessed, and given 9 months of payments at $170.00. I lost my job and found a new one during that period and sent all of the info to my trustee. Turns out, she had left the company, and didn’t forward any of my info on, so at the end of the 9 months – I was behind in my payments – I was re-assessed. They decided that I owed an additional $11,000+ in surplus, and I now have over 21 months of payments to make!!!!!!! The largest chunk of my debt was a personal loan – that I will need to re-pay once I’m discharged – and the person has not filed any paperwork to be able to recoup any of the funds. (I’ve asked for this person to be removed, and was told no) If I take that amount out, add in the $3000 tax return they received along with the $11k in payments, I am paying back as much, if not more, than I originally declared! Something seems off to me, can anyone help?????

Answer: It does appear that your situation was not handled in a professional manner. You have three choices:

First, you should request a meeting with the senior trustee at the firm you are dealing with to see if they can sort out the problems.

Second, you could request a discharge hearing in court, which will probably happen anyway, and explain your situation to the bankruptcy judge.

Third, you can contact the Office of the Superintendent of Bankruptcy (they monitor all trustees) and they can investigate on your behalf.

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Can I keep my motorcycle if I go bankrupt in Ontario?

Thursday, March 19th, 2009

Question: If I have a car worth $800.00 and motorcycle worth $6,500.00 with no liens against them, will they try or can they take the motorcycle – or would I have to pay the difference of total value $7,300 – $5,650.00?

Please let me know

Answer: If you file bankruptcy in Ontario, you are permitted to keep one motor vehicle worth up to $5,650. So yes, in your case you would be required to pay the difference, $7,300 – $5,650 or $1,650 if you wanted to keep both vehicles.

Posted in what do I get to keep if I go bankrupt | No Comments »

SURPLUS INCOME & DISCHARGE

Wednesday, March 18th, 2009

Question: What is the common length of time under CURRENT laws that a person waits for discharge with surplus income? Is there a ladder scale based on the amount of surplus a person has and if so is a person with over $1000 surplus already paying a premium with .75 for anything over $1000 making any further extension compared to anyone else with surplus unfair.

Answer: Currently there are no set standards, which is why the proposed new bankruptcy laws will mandate that a person with surplus income is bankruptcy for a minimum of 21 months. Under current rules if a discharge hearing is called, the court decides on the appropriate length of the bankruptcy.

Posted in bankruptcy discharge, surplus income | No Comments »

can I go bankrupt twice in my life?

Tuesday, March 17th, 2009

Question: My husband & I went bankrupt 10 yrs ago and now because he is not working and we are separating and I cannot afford all the debt and daily living expenses, what happens if we separately go bankrupt? I have a good job, but need my truck to go to work, It’s worth 7 or 8 thousand and I have 11000.owing? I am so scarred.

Answer: Yes, you can file bankruptcy a second time. The process is more complicated and costly than a first bankruptcy, but it is possible. Another option may be to consider a consumer proposal as an alternative to bankruptcy. You should consult a bankruptcy trustee for a detailed review of your particular circumstances.

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Can I go bankrupt without affecting my husband?

Tuesday, March 17th, 2009

Question: Can I go bankrupt without affecting my husband? I have many thousands of dollars on credit cards. One of my cards is about $21,000 no interest. Another credit card at $8,000.00, and one I share with my mother at $8,000.00. I am laid off and finished with EI. No income. I have and old car. Our house is in my husbands name because of my credit and I don’t own anything or have any investments.

Thank You,
Desperate to be free again.

Answer: Yes, if the debts are in your name, your bankruptcy will only impact on your credit. Here is an article that explains in more detail how a bankruptcy in Ontario will effect your spouse.

Posted in bankruptcy and spouse | No Comments »

consumer proposals

Sunday, March 15th, 2009

Question: when does the consumer proposal take effect ? at the time of signing or creditor acceptance ?

Answer: Upon signing the proposal, the proposal administrator (your trustee) will electronically file it with the Office of the Superintendent of Bankruptcy, and it immediately takes effect, meaning that your creditors cannot sue you or take any other action. The creditors then have 45 days to vote on the proposal. If a majority of the dollar value of the creditors accepts the proposal, the proposal is then deemed to be approved.

If the creditors do not accept the proposal, the proposal is defeated, and the creditors have the right to pursue you, which may then make it necessary for you to file bankruptcy.

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Who is included in the number of persons in a household to calculate the threshhold amount?

Wednesday, March 11th, 2009

Question: I am trying to help a friend manage through the bankruptcy process. Her threshold income (for surplus income purposes) amount seems to have been set at the level for 2 people ($2300 or so) but she is supporting a daughter in university too. Shouldn’t she be included too?

Perhaps now that my friend is in bankruptcy, her daughter’s student loan entitlement will go up…? Actually, her daughter’s university costs contributed to putting my friend in this spot – she worked multiple jobs to help fund university – which raised her income so her daughter wasn’t eligible for much in the way of student loans; because the daughter didn’t get enough student loans, my friend had to work more; which further reduced the student loan eligibility – and so on into a downward spiral! Now that my friend has fallen into bankruptcy, it would seem that there’s still this problem because the threshold seems to be excluding helping her daughter. It looks like her daughter may have to drop out – which would be a tragedy for them all. So – is it right that her daughter in university doesn’t count in the threshold amount even though my friend has to pay for her rent, food, clothing and other expenses?

Answer: The surplus income threshold is based on the “family unit”. In most cases a child attending university, who is supported by the family, remains a part of the family unit, and therefore yes, she probably should be included.

We suggest your friend raise this issue with the bankruptcy trustee (who may not even be aware of the daughter at university). If the trustee does not agree with this approach, the bankrupt has the right to request mediation as a starting point to resolving the matter.

Posted in bankruptcy mediation, surplus income | No Comments »

Archive for March, 2009