Ontario Personal Bankruptcy Blog: Experts Answer Personal Bankruptcy Questions

Ontario Personal Bankruptcy Blog provides free personal bankruptcy information and helps Ontario residents dealing with their debt.

Below are the most recent personal bankruptcy questions. Be sure to check out our Frequently Asked Questions page for answers to more common questions about personal bankruptcy in Ontario. Remember, you can always post an anonymous question, as well as arrange for a free consultation with a personal bankruptcy expert near you.

Recent Bankruptcy Questions:

Posted on Saturday, October 11, 2008

life insurance and bankruptcy

Question: I have a life insurance policy with a cash surrender value. I also own critical insurance. The life insurance policy has a cash surrender value of 5000 at the moment.Will this money be taken away from me if i file for bankrupcy? will i be able to keep my life insurance if i continue making the monthly payments? What happens with my critical insurance policy if i have a heart attack and i get paid for that? will my trustee garnish any money from that policy? If i make a loan from my life insurance policy before bankrupcy,will that affect me if right after i go bankrupt?
thank you

Answer: The rules surrounding life insurance and bankruptcy are complicated. In general, if your life insurance policy has a cash surrender value, you lose that value. In other words, if you went bankrupt, you would be required to pay $5,000 into your bankruptcy estate in order to keep the life insurance policy. However, the rules are more complicated than that, because the trustee will also consider the named beneficiary of the policy.

Since a critical illness policy probably has no cash surrender value, that policy would probably not be effected by your bankruptcy.

For a complete review of your insurance policies, bring your complete policies to a licensed trustee for a full review before you file bankruptcy.

Labels: bankruptcy Ontario, bankruptcy trustee, life insurance

Posted on Friday, October 10, 2008

What assets are reposessed?

Question: Once bankruptcy is filed and the process has begun, what assets, if any, must be returned or relinquished?

Answer: If you go bankrupt in Ontario, you are permitted to keep one motor vehicle worth up to $5,650 (provided there are no liens or loans against it), as well as $5,650 worth of personal possessions, and $11,300 worth of furniture. Full information can be found in our article on what you lose if you file bankruptcy in Ontario.

Labels: bankruptcy Ontario, what do I get to keep if I go bankrupt

Posted on Monday, October 06, 2008

ex husband filed bankruptcy-will I lose my house

Question: my ex husband filed bankruptcy last week only one week after turning the title of the house over to me. Will i be effected?

Answer: It depends on a number of factors. Your ex-husband's trustee must investigate all real estate transfers over the past five years. The first issue will be whether or not there was any equity in the house at the time of the transfer. If the value of the house was about the same as the amount owing on the mortgage, there was no equity, so it should not be an issue.

If the house did have equity, the trustee will then investigate why the house was transferred to you. If you had a legal separation agreement where you were to receive the house, it is likely that you will not be effected.

As this is a complicated area of law, we suggested you contact your divorce lawyer to review your situation and advise you on how to protect yourself in this situation.

Labels: bankruptcy, divorce

Posted on Wednesday, October 01, 2008

Bankruptcy list of creditors

Question: What do you do if you have heard that someone went bankrupt but did not disclose that he owed you money - can you go through small claims court - can you get a list of the creditors of the bankrupt person?

Answer: It is not necessary to go through small claims court. You should simply contact the trustee and advise them that you are a creditor of the person that went bankrupt. If you don't know who the trustee is, if the person went bankruptcy happened anywhere in Canada, you can contact the Office of the Superintendent of Bankruptcy to find out the name of the trustee.

Labels: bankruptcy

Posted on Friday, September 26, 2008

What if I can't pay my debts?

Question: If you are a single parent trying to make ends meet but not able to pay your debts, what happens? Are you taken to credit bureau and have 7 years for it to be placed and or are you taken to court and have a judgment placed against you?

Answer: If you get behind in your debt payments, the creditors will start by telephoning you and sending you letters. If you don't respond, it is possible that they will then take you to court. If they do, they may get a judgment against you, and then they have the ability to garnishee your wages.

Obviously the best answer is to attempt to repay your debts on your own, or make payment arrangements with your creditors. If you can't do that, it may be necessary to consider a consumer proposal or personal bankruptcy. A licensed trustee in Ontario will provide you with a free consultation so that you can review your options and make your decision.

Labels: bankruptcy Ontario, bankruptcy trustee, consumer proposal

Garnishment of Wages

Question: I have a garnishment on my wages at work. I was not notified by my employer that this was taking place. I also have no idea who is doing this to me, nor does anyone at my employment. what I need to know is can my employer legally accept a garnishment of my wages without letting me know? and if not, are they obligated to pay me back what they've taken without my knowledge or consent?

Answer: There are a number of ways that a wage garnishment can start in Ontario.

First, you may have voluntarily allowed your wages to be garnisheed. For example, if you took out a pay day loan, you probably signed a voluntary assignment of your wages, allowing them to send a letter to your employer to garnishee your wages.

Second, a credit union in Ontario can also garnishee your wages if you don't pay your credit union loan.

Third, if you owe back taxes, Canada Revenue Agency can garnishee your wages without a court order.

In all other cases, a court order is required to garnishee your wages. The creditor must sue you, win, and get a judgment against you, which can be enforced by garnisheeing your wages.

You say that "I also have no idea who is doing this to me, nor does anyone at my employment." That's impossible; someone at your employment know who is garnisheeing you, because someone got a piece of paper telling them to garnishee your wages. We suggest that you contact your payroll person, or the president of the company if necessary, to find out who started the wage garnishment. If it's for a payday loan and you only owe a small amount of money, the garnishment will end soon and it may not be an issue.

If it's for a larger amount of money that you can't afford to pay, the only two ways to stop a wage garnishment are to file a consumer proposal, or personal bankruptcy.

Labels: bankruptcy Ontario, consumer proposal, wage garnishment

Posted on Wednesday, September 24, 2008

Bankruptcy annullment

Question: Can someone tell me if it is possible to have a bankruptcy annulled if all the creditors have been repaid in full, and if so, can the Trustee- discharged from the file- or anyone else oppose the discharge?

What would be the procedure in such a case?

Answer: Yes, if all the creditors are paid in full, it is possible to have a bankruptcy in Ontario annulled. The trustee would send a notice to all known creditors to confirm that they have proven their claims in full. After a thirty day period, the trustee would then apply to court for the annullment. For more information, contact your trustee.

Labels: bankruptcy Ontario

Posted on Thursday, September 18, 2008

Ensuring Bankruptcy is Removed From Credit Report

Question: In December of this year it will be 6 years from my discharge (first bankruptcy in Ontario). What steps should I take to ensure the bankruptcy is removed from my credit reports?

Answer: According to Equifax, a bankruptcy will automatically purge from your credit report six years after you are discharged from bankruptcy, so there is nothing you need to do. If you want to be sure that your bankruptcy is removed from your credit report, two months after the six years is up, request a copy of your credit report to ensure it is correct. If there is a problem, you can send a copy of your discharge certificate to the credit bureau to have your bankruptcy removed.

Labels: bankruptcy discharge, bankruptcy Ontario, credit report