Ontario Personal Bankruptcy Blog: February 2008: Answers to Personal Bankruptcy Questions

2007 Tax Return Being Held After Bankruptcy Discharge

Question: My bankruptcy was discharged July 27, 2006. And my trustee filed my tax returns for that year. For 2007 I filed with H&R Block. A few weeks later I received my assesment, but no refund (which I was owed). They say they are holding it because even though I have been discharged, my trustee has not been discharged yet. Do they have a right to hold my refund because of a bankruptcy that was discharged the year before?

Answer: No, if you were discharged in 2006, you are entitled to your tax refund for 2007. Unfortunately some trustees are less efficient than others, and it takes them a long time to process the paperwork necessary to get their discharge.

You should contact your trustee and ask them to contact Canada Revenue Agency and give them permission to send you your tax refund. You may need to contact your trustee more than once, but that's the only way CRA will send you your refund.

Labels: bankruptcy discharge, bankruptcy Ontario, bankruptcy trustee

Shared Property and Bankruptcy

Question: Hi, I am currently in the process of trying to do a Consumer Proposal and/or Bankruptcy. The problem is the consultants have told me because of my Shared Cottage it will be a problem.
It is currently without mortgage and shared between myself and 3 sisters. Our parents sold it to us for 1$ each.
I am in about 30K debt / 40k with there fee's if all goes through - but does not look like that will happen.
What can I do?

Answer: To start, you need to determine the value of the cottage, and therefore the value of your 1/3 share in the cottage. With this knowledge, you have a number of choices.

First, you could sell your share to your siblings, and use the proceeds to retire your debt, which may eliminate the need to file a proposal or go bankrupt.

Second, you could ask your siblings to allow you to place a mortgage on the property for your share of the equity, and again, use those funds to retire the debt.

Third, you could file a proposal, offering the creditors at least as much as your share of the equity in the cottage.

Finally, you could go bankrupt, but the trustee will seize your interest in the cottage, so that probably is not the best option.

If you want a second opinion, we suggest you contact another Ontario trustee for a review of your situation.

Follow up Question: I posted earlier - was wondering what the implications of seizure on a shared asset. What happens?I owe 40K and the cottage is shared 4 ways and it's value is lets say 300K and its mortgage free.

Follow Up Answer:

In your case your share of the equity in the cottage is worth more than what you owe. If you went bankrupt, the trustee would attempt to seize your share of the equity ($300,000 divided by 4, or $75,000) by either putting a lien on the cottage or trying to sell your interest to your siblings. Since your debts are not that high, one of the other options noted in the original post would make more sense.

Labels: bankruptcy Ontario, bankruptcy trustee, consumer proposal

Mortgage and bankruptcy in Ontario

Question: My mortgage is more than my home will sell for. if i claim bankruptcy is the remaining portion included.(i want out of the home but owe more than its worth)

Answer: You have two options regarding your house when you file for bankruptcy in Ontario.

First, assuming the mortgage holder agrees, you could continue paying the mortgage and keep the house. In your case, because the mortgages are more than what the house is worth, your bankruptcy trustee will not take your house.

Second, since you want out of the home, you could find a place to rent, surrender the house to the mortgage company, and file bankruptcy. When the mortgage company eventually sells the house, the shortfall will be included in your bankruptcy.

There are many issues to consider, so we suggest that you contact an Ontario bankruptcy trustee for a free initial consultation to review your options.

Labels: bankruptcy Ontario, bankruptcy trustee, mortgage

Spouse may need to declare bankruptcy - surplus income

Question: My spouse is 66 and not working,was laid off 10 years ago, wants to work but has not been able to find permanent employment. Has no RRSP money left, is collecting pension and has rather large bank loan so does not have much money to contribute towards living expenses.

I am over 65 and still working to support both of us but want to retire. My salary is good but if I retire my pension income will not cover our living expenses and most of my spouse's pension goes to the bank loan.

If my spouse declares bankruptcy and I am still working how does the surplus income work. Is my salary considered also? If so I may have to consider retiring before bankruptcy is declared.

Help. I am tired and want a life. We live frugaly as we have no extra money to do anything extra.

Thank you.

Answer: Yes, your income is considered for purposes of the surplus income calculation. In a bankruptcy, the more the family earns, the more you are required to pay. However, the bankrupt only pays the surplus income based on their portion of the family income, so the amount your spouse would pay if she went bankrupt is more dependent on her income than on yours. There are good articles on the internet about surplus income, but since the calculation is somewhat complicated we recommend you meet with a trustee to have the calculation done for you before you decide to file bankruptcy.

Labels: bankruptcy and spouse, bankruptcy Ontario, surplus income

should i filed for bankruptcy

Question: I'm 66 years old.retired. My income is my pension. the ex filed brankuptcy. In the agreement he took full responbility of the credits card,one is my named. the creditor are now calling me several times. Can they seige my pension. What should I do? thank you

Answer: It is virtually impossible for a credit card company to seize your pension. The only obvious exception would be if you have a credit card with XYZ Bank, and your pension is deposited into your bank account at XYZ Bank. They could take the cash directly out of your bank account. The solution would be to bank at a bank where you don't have any money.

You could go bankrupt, but in general if your income is from a pension, it cannot generally be garnisheed, and therefore you could simply tell the creditors that you are unable to pay. FOr more information, contact a local Ontario trustee.

Labels: bankruptcy Ontario, bankruptcy trustee

Leasing a car prior to bankruptcy?

Question: I am currently unemployed but close to receiving a job offer. I currently own a car, however it is old and has a lot of rust on it. Friends and family are advising me to dispose of it and get a new or newer used car in order to present a more positive image to my new employer (I am in sales).

This presents me with a dilema. Can I lease a car prior to bankruptcy and maintain the lease through the bankruptcy process or would I run into trouble?

Answer: Yes, it is not uncommon for someone to lease a car prior to going bankrupt. Because the leasing company is a secured creditor, you can continue to pay them while you are bankrupt.

However, while most leasing companies don't care if you are bankrupt or not, there are some that may terminate your lease because you went bankrupt. Therefore, before you go bankrupt, we suggest you talk to a bankruptcy trustee to find out which leasing companies in your city are least likely to cause problems during a bankruptcy.

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

leasing an apartment and bankruptcy

Question: I owe approximately $65,000.00,(student loans, car lease, credit card etc) and make 11 an hour. My question is if i declare bankruptcy, can i get out of my apartment lease? A family member has offered to let me stay with them until I get back on my feet after declaring bankruptcy.

Answer: The short answer is yes. If you declare bankruptcy you could leave your apartment. You would add your landlord to your list of creditors, and if there was anything owing on your lease that would be included in your bankruptcy.

Of course you could also stay in your apartment and keep paying rent if you wanted to keep your apartment.

Labels: bankruptcy Ontario

Tax returns and bankruptcy in Ontario

Question: My husband filed bankruptcy in Ontario in September of 2007. Will he recieve a tax return for that year or do they take it?

Answer: In general, you lose your tax refund for the year you file bankruptcy. Therefore it is unlikelyt that your husband will receive a tax refund for 2007.

Labels: bankruptcy Ontario

locked in rrsp, retired, should I go bankrupt in Ontario?

Question: I am not able to repay my debt as my income is in a locked in rrsp and I can only withdraw 6.8 percent a year. It covers my rent. I am 68 years old and tired of tying to explain this to the creditor who calls several times a day.
What should I do?

Answer: The first option is stop explaining it to the creditor that is calling. When they call, simply say, "I am retired. I don't have enough income to pay you. Thanks for calling." Then you hang up the phone. Don't have a discussion with them. Don't try to explain. Simply tell them the facts, and then hang up. They may keep calling, but just keep telling them the same thing.

Eventually they will either give up, or take you to court to collect their money. If you have no wages to garnishee or any other assets, they won't be able to collect. (In virtually all cases it is impossible to seize a locked in RRSP).

Your other option is to declare bankruptcy in Ontario to get rid of the debt. Bankruptcy is a possible option; for more information you should consult an Ontario bankruptcy trustee.

Labels: bankruptcy Ontario, bankruptcy trustee

Ontario Personal Bankruptcy Blog

Posted on Friday, February 29, 2008

2007 Tax Return Being Held After Bankruptcy Discharge

Posted on Tuesday, February 26, 2008

Shared Property and Bankruptcy

Posted on Thursday, February 21, 2008

Mortgage and bankruptcy in Ontario

Spouse may need to declare bankruptcy - surplus income

should i filed for bankruptcy

Posted on Tuesday, February 19, 2008

Leasing a car prior to bankruptcy?

Posted on Tuesday, February 12, 2008

leasing an apartment and bankruptcy

Posted on Thursday, February 07, 2008

Tax returns and bankruptcy in Ontario

Posted on Saturday, February 02, 2008

locked in rrsp, retired, should I go bankrupt in Ontario?