Question: My wife and I are in debt of about $200,000 due to a number of circumstances. My wife is now disabled, cannot work and is on Social Assistance. I am also filing with Social Assistance as I have been diagnosed with extreme anxiety and depression. I am currently not working. Here are my circumstances:
My vehicle was recently reposessed.
I have a pre-loaded debit card with $1700
I have money in the bank $5000 + but my rent each month is $1320.00
I have about $3,000 liquid cash.
I am trying to establish an OnLine business and last month I earned $60 + as I cannot work in a normal environment due to medical condition.
I have made an Online investment (which if it continues to do well) will provide me with some financial relief and over the next 6 months I could start to make as much as $20,000 a month but there are no guarantees that this will last.
If it does last I will stop accepting Social Assistance.
For this to work I cannot touch the small investment I made and I need the CASH that I have to Live on until such time the $amount accumulates sufficiently for me to draw a monthly income.
If I declare bankruptcy will I lose all my Online Income?
My wife and I are so afraid right now that the stress level is killing us day by day and we have both been a participant in the Mental Outpatient Dept for Mental anguish and depression.
We want to do the right thing but having a little money behind us is the ONLY STABILITY WE HAVE and if we lose that security then our mental anguish will probably worsen.
We just don’t know what to do
Thanks
Answer: You are in a very difficult situation, but there is hope. First, you have asked the question about what will happen to your income if you file for personal bankruptcy. When you are bankrupt you are required to report your income each month to your trustee. If you have surplus income while bankrupt, you must pay a portion of your surplus income to your trustee. These surplus income payments are calculated based on your family size and monthly income. If you earned $20,000 in one month, you would definetely have surplus income. Therefore, if you think the business will be successful, personal bankruptcy is probably not a good option for you.
A proposal to creditors is an option, but given your level of debt and limited income at this time it may not be possible to create a viable proposal.
Your final option would be to open a new bank account at a new bank and use it for all of your day to day living expenses, and do nothing further with your creditors until you have more income. Since you have no wages to garnishee, there is very little your creditors can do legally. If you believe your on-line business will be successful, that may be your best option.
Follow up question: That you for your response.
May I kindly ask another related question.
If my OnLine internet business achieves the success that I expect then I would receive my funds from an Electronic Payment Processor similar to Paypal and which would be attached to my Bank Account
The Bank Account is for a registered Ontario Incorporated Corporation with a Board of Directors which is currently NOT ACTIVE and has NO debts and has never had ANY Debts.
If such funds were submitted to the Incorporated Bank Account would that be safe from any debtors?
I believe the funds would be safe but I would appreciate confirmation of that fact.
Thank you
Follow up answer:
Generally, yes, money in a corporate bank account is safe from seizure by personal creditors, unless they have a court order to seize the bank account, although if the account is at a bank that you owe money to they could attempt to take money (whether it’s legal or not). Obviously if the business is a success you will have the funds available to pay the creditors, so it should not be an issue.