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Ontario Personal Bankruptcy Blog

Posted on Monday, March 31, 2008

If I am a co-signer what happens to me?

Question: How am I affected if I am a co-signer on a loan and the loan holder claims Bankruptcy?

Answer: As a co-signer, you would be fully responsible for the loan if the primary borrower goes bankrupt.

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posted by Questions @ 10:15 AM   0 comments

Posted on Thursday, March 27, 2008

consumer proposal in Ontario

Question: what happens if I am in consumer proposal and my income has dropped to where I cant pay all of my monthy bill. I do have a five year proposal and in to it of year and a half. am I allowed to redo the proposal?

Answer: It is possible to amend a proposal if your circumstances have changed. You should contact the trustee that is acting as your proposal administrator and advise them that your circumstances have changed. They will review your situation, and advise you on whether or not it makes sense to ask the creditors to amend the proposal. If your income has dropped significantly, another option may be to file bankruptcy in Ontario. You should contact a trustee to discuss this option.

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posted by Questions @ 3:04 PM   0 comments

How is coapplicant determined?

Question: I fileda consumer proposal in Dec.07. It was refused outright by the creditor to whom I owed the largest amount, with no renegotiations accepted. I was told by the trustee I had no option but to declare bankruptcy, based on our family monthly budget. I filed bankruptcy Jan. 08. Feb. 08 my spouse recieved a letter declaring him to be co-applicant on that same account. We know that he was not a co-applicant on the initial card application, but did receive an additional card on that account at a later date. At no time during the consumer proposal did he recieve a call from the creditor asking for payment. It was not until after the bankruptcy was filed that he was contacted. During the consumer proposal process we were asked if anyone had cosigned/co-applied for my debt. We did state that he was a secondary card holder but understood him to be an authorized user. He never signed any application. My spouse is currently enduring stressful hassel from the creditor. He has requested proof of his signature as co-applicant. We know we did not co-apply for anything. The creditor has so far stated that they do not have a signature, but the debt is his because he was issued a card. He is still fighting but it feels like David and Goliath. Is there anything we can do?

Answer: Yes, you can "call their bluff"; you can tell them that your spouse never signed for the card, and therefore is not liable. Their next step may be to take him to court. It will then be up to the credit card company to prove that your spouse is liable for the card. If they can't prove it to a judge, they won't be able to pursue him further.

Of course if they do have a signature on file and can prove it, then he may be subject to a wage garnishment.

A lawyer can advise you further on the possible ramifications of going to court.

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posted by Questions @ 11:29 AM   0 comments

Posted on Tuesday, March 25, 2008

Is my home protected if I claim bankruptcy in Ontario?

Question: Presently I am not working, credit cards are maxed (65K), I also owe reciever general aprox 60K (from a inc small business - which is now non functioning and in the proccess of being disolved - there are no assesst but $12K owed to suppliers). My wife is working (and has a few bills of her own), no bills are behind, we just cant keep up. I am considering bankruptcy (not my wife)Our home has approx $240K of equity - I have taken my name off the title in 2007 - I am still on the mtg. We would like to keep our home, have me claim bankruptcy, get employeed again then rebuild or contiune living.
Is our home in jepordy even with me off the title?
Me with $130K+ of debt - is this the right choice for me? will it affect my wife and home in any way?
Thanks in advance

Answer: If you go bankrupt in Ontario, you will be asked to answer the question: "within the last 5 years, while knowingly insolvent, did you dispose of any property?" Obviously you took your name off title to the house in 2007, which is within the last five years; if you knew you were in financial trouble at that time, then yes, the house, or some portion of the equity, could be in jeopardy.

You have a number of options, one of which may be to offer the creditors a settlement through a proposal to avoid bankruptcy. Bankruptcy may also be an option. You should consult with a trustee to determine your next step, and to ensure you fully understand the ramifications of your decisions.

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posted by Questions @ 6:50 PM   0 comments

Posted on Monday, March 24, 2008

Relocated and rebuilding - Student Loans and Bankruptcy in Ontario

Question: I currently live in Ontario having moved here 6 years ago from Nova Scotia. I have student loans from my time in Nova Scotia. I was last in school in the year 2000 (I borrowed approx $28,000). My life sort of fell apart for a while due to divorce and other factors and I never graduated, but I have been rebuilding my life for the last 6 years. I am now finally making a decent income (around $42,000) and remarried. My wife has a perfect credit rating and wants to buy a home. Im fairly certain my past is going to cause problems with this.I dont want to declare bankruptcy in Ontario but I also dont want to have my lifestyle go back to the poverty level I was in before. I havent heard from CSL (Canada Student Loans) at all until two years ago when they started keeping my income tax refund. that has been the extent of it so far though. How should I proceed? I would like to look at owning our own home within the next year or so but I also want to be realistic.
any help or advice would be appreciated

Answer: Personal bankruptcy in Ontario may not be the correct option for you.

First, under current rules (early 2008), student loans are not automatically discharged in bankruptcy until you have been out of school for ten years. Therefore, if you went bankrupt today, your student loans would not be automatically discharged. New rules have been proposed by the federal government, and we expect them to come into force later in 2008 or early in 2009. The new rules will reduce the waiting period to seven years, so if you plan to go bankrupt, it may be wise to wait until the new rules come into force.

Up to the minute information on student loans and bankruptcy can be found on the Student Loans Bankruptcy Canada web site. On that site, and on this site, you can sign up for a free e-mail alert service that will alert you to when the new rules come into force.

Second, there are a number of negative implications to bankruptcy. The cost of bankruptcy increases with your family income, so it's possible that a consumer proposal may be a better option. Without knowing your full circumstances it is impossible to give you a more precise answer.

A licensed Ontario bankruptcy trustee can provide you with more recommendations on your specific situation.

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posted by Questions @ 6:32 AM   0 comments

Posted on Thursday, March 20, 2008

Can I keep my house, condo and car if I go bankrupt in Ontario?

Question: I have no mortgage on my house and both of my cars(under my name) are paid for,one is worth $3500 - wife uses and the other $6500 - I use. My total debt is roughly $460,000 and my home is only worth $320,000. I have a boat worth $230,000 which has a mortgage for the same value of the boat, using the equity of the house to secure it. I also have a condo that I co signed with my parents which has a mortgage. My parents can afford to make the payments on the condo mortgage on their own. Will I be forced to sell my house or the condo or one of my cars if I declare bankruptcy in Ontario?

Answer: If you own a house with no mortgage when you go bankrupt in Ontario, you are required to either surrender the house to the trustee, or give the trustee the equivalent cash value (presumably by borrowing from a family member or other source, which is difficult to do).

If you own a house or condo that is fully mortgaged, the trustee will not take it, since it has no equity value. The same is true of a car or boat secured by a loan for it's full value.

In Ontario you are permitted to keep one car worth $5,650 or less, so if you own two cars, with no liens against them, you would either be required to surrender one of the cars, or buy the car back from the trustee.

You have many different options for dealing with your debts, so we suggest that you contact an Ontario trustee for further information.

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posted by Questions @ 8:23 PM   0 comments

Corporate Bankruptcy in Ontario

Question: I have a question...We are a numbered company. We have been struggling to keep our trucking business afloat,,but going further behind each month. If our corporation files bankrupcy..do we lose our personal assets, like our house and car?? We also inherited a house that is mortgage free,,will it go to the trustee??

Answer: If a corporation goes bankrupt, the owners of the corporation do not automatically go bankrupt; that's one of the main reason for incorporating in the first place.

However, if you are a director of the corporation, and you have unpaid government source deductions or GST, the government can pursue you for those debts personally. Also, if you have personally guaranteed bank loans or leases, you can be pursued personally. In either case, it may therefore be necessary for you to go personally bankrupt in Ontario.

If you own a house with no mortgage and go bankrupt in Ontario, you will lose the house. The only way to keep the house in a bankruptcy would be to give the trustee the cash value of the house, which may be impossible, unless you have a family member who can help you raise the money. To keep the house, a proposal may be an option.

You situation is complicated, and we have only given you a very brief answer to your question. We strongly recommend that you contact an Ontario trustee for a free initial consulation to review your options in more detail.

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posted by Questions @ 2:51 PM   0 comments

Posted on Wednesday, March 19, 2008

Income tax while undischarged

Question: I am not yet discharged from bankruptcy. i have to complete one counselling meeting and have an outstanding amount owed to the trustee.I also have not file my tax's for the years 2004, 2005,and 2006 so my question is does my tax return go towards the outstanding amount which is owed to the trustee and will i recieve any amount from my tax return which exceeds the amount owed to the trustee.

Answer: No, any tax refunds that are generated for the "pre-bankruptcy" period are property of your bankruptcy estate, and will be distributed to your creditors. Your trustee can provide you with more information.

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posted by Questions @ 11:31 AM   0 comments

Posted on Friday, March 14, 2008

Bankruptcy question regarding business partnership

Question: Hi, Thanks in advance for answer my questions!
It looks like I will have to go bankrupt but my husband does not. We own a small business together. Will the bank close our business account which is in both names? and all our joint accounts and lines of credit? Should we open a new account at another bank before this happens in order to insure that our business keeps running with out a hitch? We are planning to incorporate and put the company soley in my husbands name. Is there any reason we couldn't do this?

Answer: Yes, if you are going bankrupt in Ontario and your husband is not, you should both open separate accounts in each of your names, and close all joint accounts. It is often wise to do this at a new bank. As for the business, it depends on the current value of the business. If the business has no assets and no value, then yes, it would be wise for your husband to incorporate the new business in his name. However, if the existing business has value, you do not want to be accused of hiding assets before you go bankrupt, so you should discuss that in advance with your bankruptcy trustee.

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posted by Questions @ 5:10 PM   0 comments

Personal Bankruptcy in Ontario

Question: I have been diagnosed with several lifelong debilitating illnesses and have not been able to work. I owe considerable credit card debt. My spouse has been trying to pay my debts but it has now become impossible to do so and still maintain their debt such as the mortgage, taxes, utilities, credit cards etc. My spouse is current with all her debt. My spouse had a supplementary card on one of my credit cards but does not recall if they used it as they never bought anything significant. I have a 10 year old vehicle owned outright with very high mileage that is likely worth less than $6000.00.

If I declare personal bankruptcy how does it affect my spouse (per the credit card)and the house (that is in their name only) that has been paid for solely with their money from inheritance and an accident injury settlement?

Answer: The first consideration will be whether or not it is necessary for you to go bankrupt in Ontario. If you own no assets, and have no wages, even if you don't pay your debts the credit card companies cannot garnishee wages that you don't have, so one option for you would be to do nothing.

If you decide to declare bankruptcy, your spouse's house is not impacted. It's their house that they paid for, so your bankruptcy would not effect their asset.

As for the credit card, if it's a joint card, if you go bankrupt your spouse would be liable for the payments. If it was a supplementary card that your spouse never applied for and never used, they would not be liable for it.

These are complicated issues and you have a number of decisions to make, so we suggest you contact an Ontario bankruptcy trustee to arrange for a no-charge initial consultation to review your options.

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posted by Questions @ 11:42 AM   0 comments

Posted on Monday, March 10, 2008

Help please - should I file bankruptcy?

Question: I have been in serious debt for aproximately 3 years, and I have gotten a second job to try to pay the debt down, but I am struggling more now than before. I make approx $2800/m after tax. My monthly debt payments are approx 2400 including insurance, rent, utilities, and credit card/ loan debt. That does not include food, gas, etc. I am unable to get a consolidation loan as my debt servicing is too high, and I'm running out of ideas on how to pay things down. Of the $70,000 I owe, 47,000 is on a secured vehicle loan in which they consolidated some of my debt. The vehicle is worth max $20k. I am only 27, and I am unable to purchase a home/condo as I owe too much, and I have been considering bankruptcy for over a year now. I have a few questions. 1) Is it worthwhile to file bankruptcy? 2) If I was to file bankruptcy, would my employer be notified? 3) What would happen with my vehicle? Thank you in advance for your assistance.

Answer: Filing bankruptcy in Ontario is a possible option, but given your income you should also consider a consumer proposal. Your employer would not automatically be notified, unless your wages were being garnisheed.

As for your vehicle, it would depend on the lender. However, since the vehicle is worth $20,000 and the loan is $47,000, it would probably make more sense to surrender the vehicle and include the entire debt in the proposal or bankruptcy. Obviously you would need a replacement car before filing.

There are a number of ways to accomplish this, so we suggest you contact an Ontario Bankruptcy Trustee for a free initial consultation to review your situation in more detail.

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posted by Questions @ 3:01 PM   0 comments

Posted on Monday, March 03, 2008

Credit cards and bankruptcy

Question: My spouse filed bankruptcy in the middle of 2004. He was discharged in August 2005..I was sent an authourized credit card application soley in my name in November 2005 and put him down as a co applicant with his social insurance #...Not even thinking that I was going to recieve a credit card on my income, I was issued one along with one for my husband. I was told since he could not get one with out being a secured card I was soley responsible for the account and this card was issued to myself and him.
Now the question... I had to file for bankruptcy due to a business venture gone bad last year(2007)...they have been harrassing me and calling for my husband to pay this balance on the card wich is $2200, can they do this?...and if I was soley responsible for this card and he could not get one on his own...would they not look at his social insurance number on my application and deny him one and issue me one alone. I called them and asked about this and they told me that they would issue me a card and him one but since his bankruptcy, I was soley responsible to pay my account.....Please Please help.

Answer: If your spouse never signed for the card, and never used the card, then they are not responsible for the card. However, if your spouse did use the card, it is harder to make the case that he is not responsible. He has a few different choices.

First, he could ask for proof from the credit card company that he is responsible for the card. If they can't prove it, then presumably they can't take him to court and attempt to get a judgement against him.

Alternatively, he could offer to make payment arrangements.

Ultimately if they sue him it would be up to a judge to decide whether or not he is liable, and that will depend on the specific facts of his case.

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posted by Questions @ 8:15 AM   0 comments

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