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Ontario Personal Bankruptcy Blog

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.

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posted by Questions @ 2:50 PM   0 comments

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.

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posted by Questions @ 1:12 AM   0 comments

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.

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posted by Questions @ 11:21 AM   0 comments

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.

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posted by Questions @ 3:08 PM   0 comments

Posted on Wednesday, September 17, 2008

Avoiding Bankruptcy in Ontario by Selling Assets

Question: My ex wife and I are doing everything we can to avoid bankruptcy in Ontario. While are finances are bad we are paying as much as we can. We took back a leased vehicle are we can't afford the payments. We had cashed an RESP in for $8,000 in August 2008. With that money my ex wife bought a used vehicle and used the rest to pay some bills. I am selling a 4 wheeler for $2,000 and using that money to pay down some debt. If our efforts do not work will the fact we sold these assets to avoid bankruptcy cause us issues?

Answer: Possibly. If you decide to file a consumer proposal or bankruptcy you are required to disclose whether or not you disposed of any assets within the past year, and you must disclose what you did with the money. Selling a $2,000 vehicle is probably not a big issue, and using the money to buy another inexpensive vehicle is also probably not a big issue.

However, if you use the money to prefer one creditor over another, it could be a problem, because the other creditors may oppose your discharge from bankruptcy and request the return of the money.

Before you start selling assets and repaying some, but not all, of your debt, it would be wise for you and your ex to meet with a licensed trustee to review all of your options, so that you understand all of the implications of your actions.

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posted by Questions @ 9:52 AM   0 comments

Posted on Monday, September 15, 2008

Chaning a Bankruptcy to a Proposal in Ontario

Question: Can you change from a bankruptcy to a consumer proposal after property has been sold by the bank that held the mortgage ? and there is still unsecured debt owing? THANKS

Answer: Yes, it is possible to file a consumer proposal while you are bankrupt. If the proposal is accepted, the bankruptcy is annulled, and you can deal with your debts by completing the proposal.

However, only debts that existed when you filed bankruptcy will be included in the consumer proposal, since it becomes, in effect, an extension of the bankruptcy. This is a complicated area of insolvency law, so you should consult with your bankruptcy trustee to determine if this is possible in your situation.

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posted by Questions @ 2:52 PM   0 comments

Posted on Saturday, September 13, 2008

House in Spouse's Name and Bankruptcy

Question: My husband is contemplating bankruptcy due to debts that are impossible to pay back. He was the guarantor only on the house mortgage; the house has been solely in my name for over 20 years. We have received a letter from a collector indicating that they will be filing a writ of sale and seizure on our property - is this even possible when it is in my name and if so, what happens in regards to the house and mortgage in regards to a filing of bankruptcy. Will I be affected?

Answer: If it is your house, and if it has always been your house, then one of his creditors cannot seize your property to pay his debts.

Here is a link to a detailed article about the impact of bankruptcy on a spouse.

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posted by Questions @ 3:01 AM   0 comments

Posted on Friday, September 12, 2008

consumer proposal

Question: Does the trustee do your taxes for the year that a consumer proposal is done?

Answer: No. Unlike in a personal bankruptcy in Ontario, the trustee does not do your income taxes. You will file them, and if you are eligible to receive a refund (because you don't owe any money to the government), you will get the refund.

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posted by Questions @ 2:38 PM   0 comments

Posted on Wednesday, September 10, 2008

income tax the year of bankruptcy

Question: Why is the income tax during the year of bankruptcy done for you by the trustee ? and why do you lose any refund after paying a surplus payment for the 9 or 21 months ?

Answer: The short answer is: because it's the law. Under the Bankruptcy & Insolvency Act, all assets (except those that are exempt, such as your personal belongings) become assets of your bankruptcy estate, and they are distributed to your creditors.

To determine whether or not the government owes the bankrupt any money, the trustee is required to file all outstanding tax returns, including a tax return up to the date of bankruptcy. If there is a refund, it goes to the creditors. If there are taxes owing, they are discharged in the bankruptcy.

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posted by Questions @ 8:44 PM   0 comments

Posted on Thursday, September 04, 2008

Credit Card Debt and Bankruptcy in Ontario

Question: Is your credit card debt wiped out when you file for bankruptcy in Ontario, or can the credit card company still demand payment?

Answer: Credit card debts are discharged when you go bankrupt or file a consumer proposal in Ontario.

The only exception would be if you have committed fraud. For example, if you bought a $3,000 big screen TV on your credit card the day before you filed for bankruptcy, that would be considered fraud, and you would be required to repay that amount.

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posted by Questions @ 6:59 PM   0 comments

Can a bankruptcy be annulled??

Questions: In July 2006, my stock broker messed up one of my stock trades, causing me $300,000 in damages in one day. I was forced into bankruptcy as a result in May.2007. The matter was investigated by IDA (Investors Dealers Association), and the broker was found guilty, and they offered me a settlement of $100,000, if I sign a document that promises not to sue them. I am still in bankruptcy, as one of my creditors has opposed my discharge.
My questions include:
1. Since the broker's actions caused my bankruptcy, and they were found guilty, is there any way for me to have the bankruptcy annulled?

2. My trustee wants me to sign the settlement, however, I consider the settlement to be insufficient. Is there a way for me to have the right to sue the broker transferred back to me?

3. If the trustee refuses to pursue a better settlement offer from the broker on my (and the creditors) behalf, do I have any legal recourse?

Answer: You are asking some very involved questions. We recommend you consult a lawyer with experience in bankruptcy law.

In general, yes, it is possible to have a bankruptcy annulled. You would apply to bankruptcy court for the annullment. The most common reason for annulling a bankruptcy would be that all of the creditors have been repaid in full. If you are not able to repay the creditors in full with the settlement, it will probably be difficult to get an annullment.

The other option would be to file a proposal. The proposal, if accepted by your creditors, has the effect of annulling the bankruptcy. Your trustee can provide you with more detail, or you can consult another trustee. If you file a proposal, any proceeds received from the settlement would go to you (which you may then use to fund your proposal).

Again, as for your legal rights regarding your trustee, you should seek detailed legal advice.

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posted by Questions @ 12:35 PM   0 comments

Posted on Tuesday, September 02, 2008

house in wife's name

Question: I am considering going bankrupt. Our home is in my wife's name solely. I am not on the mortgage nor did I co-sign. She owns it on her own and pays for it. I run a separate business and wonder if she will be affected. We do not share any cards or loans nor have co-signed or have supplementary cards. We are completely separate financially. How can this affect her? Please advise.

Answer: Your bankruptcy does not directly impact on your spouse. She does not lose her house. There will be nothing on her credit report if you go bankrupt.

For a more detailed answer, here is an article on how bankruptcy will affect your spouse.

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posted by Questions @ 8:39 PM   0 comments

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