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Ontario Personal Bankruptcy Blog

Posted on Monday, April 28, 2008

Can I surrender my home without major damage to my credit?

Question: I am no longer able to keep up with costs of maintaining my home - due to many factors. I am one month behind on a mortgage payment and was told by my real estate agent that he does not take these kind of sales because the broker is afraid they will not get their money if there is a lot owing to the mortgage company. Can I surrender my home to the mortgage company without claiming bankruptcy in Ontario and/or damaging (further) my credit rating?

Answer: The answer depends on the value of your home. If you surrender the house to the mortgage company and stop making the mortgage payments, the mortgage company will eventually foreclose on your home and sell it. If they get enough money to completely pay off the mortgage and associated costs, you won't owe them any money, so there won't be any long term damage to your credit rating.

However, if there is a shortfall on the mortgage when the house sells, your credit rating may be negatively impacted if you are not able to pay the shortfall.

If you believe you will lose your house, it is often better, if possible, to sell it yourself to maximize the proceeds. If there is a shortfall that you can't pay, bankruptcy or a consumer proposal may be options to deal with the debt.

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posted by Questions @ 6:57 PM   0 comments

Posted on Monday, April 21, 2008

materials to take to meeting with bankruptcy trustee

Question: If I considered going bankrupt and made an appointment to see a bankruptsy professional what materials am I expected to take with me?

Answer: For your first meeting with a bankruptcy trustee you should bring with you a list of all of your debts (including your most recent statements if you have them), a list of assets you own (such as a house, car, or RRSP), and a budget (a list of what it costs you to live each month). Based on that information your trustee will help you review your options and determine what course of action is best for you.

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posted by Questions @ 11:09 AM   0 comments

Posted on Friday, April 18, 2008

How long does a lien take to get?

Question: Hello, I am currently in pretty serious financial trouble. To make my question quick, basically I lost a fortune on my home in a short time due to injury and divorce. I have sold the home and also purchased another (my home is co owned by my father, both the one I sold and purchased) and the deal is supposed to close soon. All I have done is transfer the equity.

One of my creditors has just told me they intend to lien my home. How long does this process take? I am afraid of jeapordizing the deal to sell my home.

Regards,
Josh

Answer: If you owe money to a creditor (say a credit card or bank), to place a lien on your home they must first take you to court, sue you, obtain a judgement, and then enforce that judgement by placing a lien on your home. In most cases that process takes a few months. In Ontario, to sue someone you must give them 21 days notice, so with court delays the entire process usually takes a few months.

However, sometimes actions move quicker than aniticipated, so you should consult a lawyer or bankruptcy trustee for further advice on dealing with your financial situation.

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posted by Questions @ 5:20 PM   0 comments

Student Loan!!

Question: I graduated in 2001 and in 2006 I filled a consumer proposal. By the time my 5 years is done, it would be 10 years passed form my graduation.

Large portion of my proposal was due to my student loan.

What will happen at the end of the proposal with my student loan considering that it would be 10 years passed from my graduation?

I have heard that soon the law in this regard would change to 7 years? is that true? and if it is, then what should I do in order to get rid of this student loan?

Thanks a mil.

Answer: The answer depends on your proposal. Under rules in effect now (spring 2008) a student loan is only automatically discharged in a bankruptcy or consumer proposal if you have been out of school for ten years when you file the proposal, unless the student loan creditor specifically votes in favour of the proposal. You should contact your trustee (the proposal administrator) to ask how the student loans people voted.

If they did not vote in favour, it is possible that they will pursue you for the loan once the proposal is completed. You may then need to go to bankruptcy court and ask the bankruptcy judge to discharge your student loan (which he may or may not do).

New student loan rules have been proposed, which will lower the waiting period from 10 years to 7 years; those rules are expected to come into force later in 2008. Full details on student loans and proposals and bankruptcy can be found on the student loan bankruptcy Canada web site.

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posted by Questions @ 12:46 PM   0 comments

Posted on Sunday, April 06, 2008

bankruptcy then inheritance

Question: If i go bankrupt then recieve an inheritance will it affect my bankrupcy? will i have to pay?

Answer: If you receive or become entitled to receive an inheritance while you are an undischarged bankrupt, the trustee will seize the inheritance and distribute the proceeds to your creditors. If the inheritance is large enough to repay your creditors and all costs in full, your trustee will pay the creditors in full, then annul the bankruptcy and return the balance of the funds to you.

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posted by Questions @ 11:08 AM   0 comments

Posted on Tuesday, April 01, 2008

Corporate Bankruptcy in Ontario

Question: I have a incorporated company with myself as the only share-holder. I have been struggling for 3 years to bring my debt done but am making no headway, I think my debt is too high for a consumer proposal.

I owe the following: 90,000 to biz line of credit, $15,000 personal line of credit for company purchases.

I have business purchases on personal credit cards equal to approx. $30,000 does that mean I have to file personal bankruptcy.

I have a leased car for $400 a month...will I lose the car?

I lease a home with personal property like furnishings valued at less than $20000.

I do not owe any of my supliers any money and am current...will they have to be notified if I file if I don't owe them anything?

I owe about $1500 to CPP but no other taxes are owing for pst or corp. taxes.

I have a partner who came on board 3 years ago and has been drowning in debt also, using his cards to draw against for payroll for himself as we tried to dig the company out....how will filing effet him?

Sorry for all the questions and hope you can answer it is a bit of a mess. Last one...what are the fees involved for filing?

Thanks in advance for your time.


Answer: You are asking many complicated questions, which would take about a one hour consultation to answer completely, so I strongly suggest that you contact a licensed trustee immediately to work through the options.


The first issue will be to determine which corporate debts you are personally liable for. If you have not personally guaranteed them, you could close the corporation and walk away; limited liability is one of the main reasons for incorporating in the first place.


If your personal debts are more than you can manage then yes, bankruptcy may be an option. You are correct that your debts may be too large to file a consumer proposal, but it is possible to file a Division 1 proposal if your debts are large. Your trustee will explain these options to you as well.

It is possible to keep a leased car when you are bankrupt, but again the specific answer depends on a number of factors, so we strongly recommend that you contact a licensed trustee immediately to arrange a free consultation to work through your options.


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posted by Questions @ 9:38 PM   0 comments

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