Question: I am in a very difficult situation. I am recently separated from my wife of 21 yrs. She has filed for divorce. She left me with all of the bills, two mortgages, etc… and also has petitioned for spousal support.
Based on my current income here is my situation:
- I take home slightly more than $6500/ month
- My ex-wife is entitled, per the courts, to $2900/ month in spousal support.
- I give her $1100 per month in child support.
- Between the two mortgages, I owe approximately $130,000 more than the house could be expected to get on the open market. I have defaulted on the two mortgages, and the mortgage companies have threatened to garnish my wages.
- I also have over $10,000 in credit card debt.
Between all the debts I owe, the spousal and child support, the credit card bills, my living expenses, etc… I do not take home nearly enough to live on.
What are my options?
Is bankruptcy my only alternative?
If I declare bankruptcy, what will follow?
Should I take a job in another country, can my creditors and ex-wife compel payment still?
I need help.
Answer: You should start by talking to two professionals: a divorce lawyer, and a bankruptcy trustee. Your divorce lawyer can advise you on what you will be required to pay in child and spousal support, and can advise you on whether or not you are required to continue paying if you live the country.
Even though your house is worth $130,000 less than the amounts owing on the mortgages, you could keep the house, and keep paying the mortgages. Whether or not you can do that will depend on whether or not you have the cash flow to carry the mortgages.
Alternatively, f your house is worth $130,000 less than what is owing on the mortgages, there is probably no financial reason for keeping the house. Your best option may be to surrender the house to the first mortgage holder, and let them sell it. You will then be liable for the shortfall of perhaps $130,000, which may be more than you can service.
You could then file either a consumer proposal or bankruptcy in Ontario to deal with the debts. The correct option will depend on what you can afford to pay each month, which will depend on what you are paying in child and spousal support. This analysis is somewhat complicated, so you should discuss this with an Ontario bankruptcy trustee.