Question: After I sold my home because I couldn’t afford the mortgage payments I had $42,000 in equity.
I owed a friend $10,000 as he had been helping me financially and he has just purchased a time share in Aruba with the money that I repaid him.
In addition I have three (3) sons
My first son has already filed for bankruptcy
My second son has filed with a consumer proposal
My third son is a deadbeat – he is not working, has no money and no ambition and is heavily in debt and he is shacked up in a small apartment with a girl friend and the girlfriends mother
I had always promised to try and help my kids so when I had the $42,000 I gave them $5,000 each.
Out of the $42,000 I had I was left with $17,000.00
I had been personally enemployed for a while and I have just started a commission only job with a furnishing company and so far I am making about $800 – $1,000 per month.
My rent alone is $1,320.00 month.
My question is as follows:
It is my understanding that if I have favored some debtors over others (Like my friend of 30 + years) then through bankruptcy the money could be reclaimed from them.
What happens if the money has been spent?
My friend just bought time share in Aruba which can be proven and each of my 3 sons used the money to help them pay bills and now the money has gone.
What happens in this situation if I declare bankruptcy?
I have very little left as over the past 3 months I have been living off my remaining $17,000 and that’s all the money I have to support my wife and I.
My wife is disabled and cannot work and she get’s absolutely NO financial benefit of any kind.
Thanks
Answer: This is a complicated question that you should discuss with a lawyer or a bankruptcy trustee. There are many possible answers, but the simple answer is this: if you did prefer one creditor over another, and if the money cannot be recovered, the bankruptcy court may extend the length of time that you are bankrupt, and require you to repay some or all of the money.
In your case, since you still have cash left, a consumer proposal may be a better option to attempt to negotiate a lump sum settlement with your creditors.