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

Separating and Bankruptcy

Tuesday, June 30th, 2009

Question: My spouse and I are separating. If he goes bankrupt, will I lose the house? His name is still on the mortgage.

Answer: The answer depends on a number of factors.

First, in a bankruptcy, the bankrupt person will lose the house if it has equity. Equity is the difference between what the house is worth, and what’s owing on the mortgage. If there is minimal equity, he would not lose the house, which means you would not lose the house. If there is equity, he would be required to pay his share of the equity to keep the house.

The next issue is the mortgage. If your spouse goes bankrupt, the bank may remove his name from the mortgage. The bank may only allow you to keep the mortgage if your income is sufficient to qualify for a mortgage on your own. This may not be an issue immediately, but it may be an issue when the mortgage is up for renewal.

You should consult a family law lawyer to advise you more fully on your options for keeping the house.

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How does Bankrupcy work when you have no Income

Monday, June 29th, 2009

Question: I currently have no form of income, I have creditors breathing down my neck for money that I cannot possibly give to them! How would bankruptcy work for someone with no income?
Thank you

Answer: The main reason most people file bankruptcy in Ontario is to prevent their creditors from garnisheeing their wages. If you have no income, then you have no wages for them to garnishee. If you have no assets, there is nothing for the creditors to seize, so could simply do nothing. The creditors may continue to harass you, but if there is nothing for them to get, legally there is nothing they can do until you return to work.

Alternatively, you could go bankrupt, but bankruptcy costs money. Trustees in Ontario charge a minimum contribution each month, plus you lose your tax refund and GST credits while bankrupt. If you have no income, it may make more sense to wait until you have an income to go bankrupt.

However, if you don’t want to deal with the phone calls from creditors, and you have a way to pay for the cost of the bankruptcy, that is also an option.

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bankrupt recently now someone wasnts to sue me

Friday, June 26th, 2009

Question: I bought something in a little shop and was making payments on it . the shop keeper refused to give me reciepts as he said . just pay what you can when you can. Personallty he did not want it to go through his records
he showed up at my house threatening to take back what i bought ( a bird ) ..
is this a secured debt ?
Can he take my bird ?
He threatened a wage garnishment
what do i do …

Answer: First, if someone shows up at your house threatening you, you should call the police.

Second, if you have filed bankruptcy, your unsecured debts are included in the bankruptcy. The shopkeeper should have been listed on your statement of affairs, so the trustee should have notified him of the bankruptcy. If this was not done, you should contact your trustee immediately.

It is doubtful that he registered a lien on your bird; that’s the only way it could be a secured debt. He should file a claim with the trustee, who can then investigate whether or not it is a secured debt.

A creditor cannot garnishee your wages while you are bankrupt, unless they get the prior permission of the bankruptcy court, which is highly unlikely in your case. Your trustee can provide you with further information.

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Bankruptcy Vs. Proposal

Thursday, June 18th, 2009

Question: Hi, I have already gone through bankruptcy before approximately 15 years ago. Now I’m in a terrible situation with my finances where I can’t make ends meet.

Here is my situation: In the past 6 years, I have been married, had a child, divorced, and now have shared custody of my child. I have been living with a woman for over a year now and she is expecting.

I owe approximately 50K in debt on credit cards and 2 seperate lines of credit.

I make 60K a year.

The woman I am living with has been separated from her ex for over one year. He is claiming bankruptcy, which will force her into bankruptcy as well as she is currently not working and is co-owner of their home and vehicles (her ex and the house is in a western province)

with the arrival of a newborn just before Christmas we are very scared about our finances and our future.

Please help! any advice would be greatly appreciated.

Answer: You have severe financial problems and your situation is urgent, but it is not hopeless. You have a number of options.

One option would be to file bankruptcy in Ontario again. However, a second bankruptcy is more costly and cumbersome than a first bankruptcy. It will last for at least one year (instead of the minimum of nine months in a first bankruptcy), and you are required to appear in bankruptcy Court to receive your discharge.

A better option would probably be to file a consumer proposal, where you make a deal with your creditors and avoid a second bankruptcy.

Whether a bankruptcy or a proposal is the correct option will depend on a number of factors. You earn $60,000 per year, so you have good income, which is generally the most important factor in filing a consumer proposal.

Our debt options calculator can help you assess your different options. Then, contact a licensed trustee in Ontario to arrange for a detailed, no obligation, no cost review of all of your options, and then you can make an informed decision.

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bankruptcy & co-signer (?) on bank account

Monday, June 15th, 2009

Question: My son filed for personal bankruptcy a few month ago & this bankruptcy included his overdraft amount on his bank account, roughly 1000.00. A few years ago, he moved to the U.S., so we went to the bank, so I could get a bank card on his account, to be able to deposit & withdraw money so I could make monthly payment’s on his student loan & other debts he had here in Ontario. Now the bank is coming after me, for this overdraft amount, saying when I signed for the bank card, I became a co-signer on his bank account. This was never told to me when I signed for this. When I called about this, the bank manager said this was true & said the statement would be addressed in both of our names but the statement is only addressed to my son. Another thing my son questioned was, if I am co-signer, why didn’t I have to sign when he went for the overdraft protection? Can the bank come after me for this money & will this ruin my credit if it is not paid. I never heard of being a co-signer on a bank account, a loan yes, but a bank account no!

Answer: Since the bank account had overdraft protection, it is both a bank account and a bank loan. The first step will be to ask the bank to show you a copy of the paperwork you signed agreeing to be liable for the overdraft. If they can’t prove that you are liable, they should stop threatening you.

If you did sign for it, then you are liable for the overdraft. In that case it may be simplest to pay them if the amount is reasonable. Alternatively, you can let them pursue you, but if they do it will have a damaging impact on your credit.

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Is it Possible to discharge student loans without going bankrupt?

Thursday, June 11th, 2009

Question: Is it possible to have a student loan discharged (older then 7 years) with out claiming bankruptcy. I do have other debts that have gone to 3rd party collection agencies but I’m working with almost all of them to repay the relatively small debts.

My student loan is the biggest obstacle and I haven’t been able to make payments on it for sometime. Bankruptcy is the last resort for me and I think I’d be okay if I could just get rid of this student loan.

Answer: A student loan can only be discharged by paying it in full, making a settlement with the lender, by filing a consumer proposal, or by declaring bankruptcy. You could contact the lender and see if you can work out payment arrangements. If not, it may be necessary to consider one of the other options.

If you haven’t been able to make payments on it for some time, it is likely that your income isn’t sufficient to continue servicing it even if they did reduce the interest, so a proposal or a bankruptcy may be the only logical option.

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how much can one make and still declare bankruptcy?

Wednesday, June 10th, 2009

Question: I just found out that my fiancee has around $35,000 in debt, including credit card, unpaid personal bill, line a credit (paying interest only) as well as being overdrawn. We live together in my home and share utility bills, food, line of credit (in my name with joint items). He has been paying for about 1/3 of our bills but because he’s so strapped (with personal debt) he can’t pay his. He makes $60,000 a year, has a vehicle valued at $1,800 – does he make too much to declare bankruptcy and if he can – can he get out of his debt but still help with our joint bills ???

Answer: If you file bankruptcy in Ontario, the amount you are required to pay while bankrupt is based on your net family income. Assuming your fiancee is currently a single person with no children, he is allowed to earn $1,870 per month (take home pay). He then would pay half of the first thousand he is over that amount, and three quarters of the rest. This is called surplus income. For example, $60,000 per year may be around a net after taxes of $3,750 per month, so the surplus owing would be $3,750 – $1,870 = $1,880, so 50% of $1,000 and 75% of $880 = $1,160 per month. (Here’s a surplus income spreadsheet you can use to do the math).

If he is paying $1,160 per month in a bankruptcy, it is likely the bankruptcy would last for up to 21 months (instead of the usual 9), so for him a consumer proposal is probably a better option.

Either way, yes, if he files a bankruptcy or a proposal he will then be able to devote the rest of his income to helping with your living expenses.

Obviously the math is somewhat complicated, and it’s a difficult decision, so we recommend that you meet with a licensed Ontario bankruptcy and proposal professional to review all of your options before making a decision.

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What happens in Bankruptcy Court in Ontario?

Sunday, June 7th, 2009

Question: I filed bankruptcy 8 months ago was everthing ok till now and my trustee told me I have to go court soon . What s waiting for me now in the court?

Answer: In most cases in a first bankruptcy you are eligible to be automatically discharged after nine months. If you were bankrupt before, or if you have not completed all of your duties, or if any of your creditors have objected to your discharge, you are required to attend a discharge hearing in bankruptcy court.

At the hearing the Bankruptcy Registrar will review your case, and determine what further duties you will be required to perform to get your discharge (such as making additional payments).

For more information, you should consult your trustee and ask them to explain in detail what will happen at court, what questions you will be asked, and what you need to do to prepare.

Here’s an article on the effects of a bankruptcy discharge for more information.

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keeping our house if we go bankrupt in Ontario

Sunday, June 7th, 2009

Question: I was recently married,we bought a house together about a year ago before we got married ,she bought a truck for me about 2 years ago,i recently found out that she owed a lot of money on it and the payments are way behind,along with a few other debts,…what id like to know is with her name on the title of the house ,is it possible for her to claim bankrupcy and for me to beable to keep the house,…i can handle all the debts of the house and bills,but with this all added on theres no way i could afford it,…they are also threatining to reposses the vehicle,…all we care about is our home,…thanks

Answer: Whether or not you can keep your house if you go bankrupt depends on the value of the house, and the amount owing on the mortgage. Here is an article that answers the question: What Happens To My House If I File Bankruptcy?

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Consumer proposal

Saturday, June 6th, 2009

Question: I recently undertook to do a consumer proposal, but was unable to find the funds within the time frame allowed. My financial circumstances have now changed and feel I could re-do the proposal.

Having failed to meet the deadline, how long do i have to wait in order to re-write the proposal?

Answer: Under current rules a consumer proposal is a one-shot deal. If the proposal is rejected by the creditors, or if you fail to meet the terms of the proposal and it fails, you cannot file another consumer proposal for the same debts.

The only way to file a second consumer proposal would be to go to court and get permission from the Bankruptcy Registrar to file another proposal. You would be required to provide an explanation of why the original proposal failed, and why you believe this proposal will be successful. Your proposal administrator can provide you with more information.

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Archive for June, 2009