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Archive for July, 2009

Child support and bankruptcy in Toronto Ontario

Saturday, July 18th, 2009

Question: My ex and I have signed agreement through a mediator for me to pay her 250 a month in child support. I am currently in my 3rd month of bankruptcy in Toronto and cannot afford the support payments and falling behind on my bills. What should I do?

Answer: You are in a very difficult position. You should follow the following approach.

First, take a close look at your monthly budget and cut your monthly expenses by as much as possible. Eliminate all unnecessary expenses, such as cable TV, eating out, and anything else that can be cut. You must get your expenses down as low as possible.

Second, talk to your family and friends to see if anyone can help you meet your expenses.

Your goal is to stay current with your monthly living expenses, your child support payments, and your bankruptcy payment. If you fall behind on child support the FRO has the power to suspend your driver’s license and garnishee wages. If you fall behind on your bankruptcy payments and you don’t get caught up your bankruptcy period will be extending, increasing the cost of the bankruptcy.

If these steps do not allow you to get caught up, you should discuss your child support situation with your ex wife, or with your lawyer. At the very least making partial payments may keep you from getting too far behind.

You should also discuss your situation with your bankruptcy trustee. If you will be falling behind on your payments your trustee will be more willing to work with you if they understand your situation, and if you keep them informed. They can explain in more detail all of your options.

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Declaring Bankruptcy in Toronto on Professional Student Line of Credit from RBC

Wednesday, July 15th, 2009

Question: I owe a great deal of money to the Royal Bank as a result of pursuing a Law degree. I have graduated law school. I am curious if it is possible to declare bankruptcy in Toronto on an RBC unsecured professional student line of credit (+65k). I heard that loans that go toward a professional designation (i.e. JD in law) are omitted. Is this the case?

Answer: Yes, you are correct. If you obtained a loan from a bank for the purpose of pursuing a professional designation, and you are currently working using that designation, it is likely that the bank will oppose your discharge from bankruptcy, and the bankruptcy court in Toronto will require you to repay most, if not all, of the loan. There are numerous cases on this point. This is particularly an issue if you live and work in a big city like Toronto, because that is where these types of professional jobs are most common.

Your first option will be to talk to the bank and work out a repayment plan. Your next option may be to offer a consumer proposal.

As this is a very complicated area of law, we would also strongly recommend that you consult an insolvency lawyer experienced in these matters.

NOTE: Your question refers to a student line of credit, not a government guaranteed student loan, such as OSAP. If this was a government guaranteed student loan, it would be automatically discharged if you filed bankruptcy in Toronto if you filed bankruptcy seven years after you ceased to be a student (subject to the normal bankruptcy conditions).

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A few questions about bankruptcy in Ontario

Monday, July 13th, 2009

Question: What information do I need to divulge to go bankrupt? What if a small amount of my debt is recent debt? (Within the last 3 months). I’ve recently tried to spend money to make money to try get out of debt and it has not worked and I’m worried that to a trustee that will look like rampant spending.

Answer: When you declare bankruptcy all creditors are notified, and they are required to send the trustee a summary of all transactions for the past three months. If you bought a $10,000 big screen television the day before you filed for bankruptcy that will be a problem, since that’s considered fraud. However, if a month ago you put $50 worth of gas in your car, it will be much less of an issue.

One option is to simply make a payment to the creditor for the amount that you recently spent. If you bought $50 worth of gas with your credit card yesterday, make a payment today to them for $50. Since your balance then goes back to it’s previous level, it’s not an issue.

If the amounts are larger, you should consult a trustee before you file to determine what impact, if any, the transactions may have on your bankruptcy.

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Judgement and Garnishment

Wednesday, July 8th, 2009

Question: I received a garnishment notice today for non-payment of rent from a couple years ago.

A judgment was brought against me & the other person living there at the time (who also signed the lease)for a months rent.

On the Affidavit for enforcement request (form 20P) it names myself and the other person living there.

My question is, if a judgment is brought against 2 people, how are they able to garnish my wages for the full rent?

should they not be going after the 2nd person on the lease and who also has a judgment against him for the other half?

Answer: If two people are jointly responsible for a debt, they are both responsible for the entire debt. In other words, they are each 100% responsible, not 50% responsible each.

The creditor may only garnishee the full amount, so if they do manage to garnishee both of you, they are only entitled to all of their money, not all of the debt times two.

You should probably start by talking to the creditor to see if payment arrangments can be worked out, since if the debt is for two or three month’s rent, it is probably better to settle than to go bankrupt for a relatively small amount.

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Ontario Bankrupty not discharged

Saturday, July 4th, 2009

Question: We filed for bankruptcy in 2006, we have not been discharged due to the fact we have not been able to pay the surplus income owing. Our Trustee determined there was no equity in our home. We kept our mortgage payments up to date and now it is time to renew our mortgage. How can not being discharged effect us with renewing our mortgage? and what action can be taken against us for not being discharged?

Answer: If the mortgage company does a credit check prior to sending your renewal notice, they may discover that you are an undischarged bankrupt, and that may effect your ability to renew your mortgage. It is also possible that since your mortgage payments are up to date they may simply automatically renew your mortgage.

Either way, it is strongly recommended that you find a way to complete your bankruptcy, perhaps by beginning to make monthly payments against the amount that is owing, since eventually being an undischarged bankruptcy will have a very serious negative impact on your ability to borrow in the future.

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Should we go bankrupt??

Thursday, July 2nd, 2009

Question: Here’s the deal….my husband has been out of work for a year and a half and debt is piling on top of debt. I make approx. $2200 a month but am now laid off for the summer months. We are barely managing our day to day bills (mortgage, car payments, insurance) and are hardly ever able to pay external bills such as phone, cable, hydro, etc. And that doesn’t even touch our credit card bills (between us we have about $25 000). What do I do?? I don’t know if bankruptcy is the right option. I want to keep our house and I need a car for work. Please help. I am at a loss.

Answer: Before worrying about whether or not to go bankrupt, the first step is to get your expenses as low as possible. With the recession it’s possible it will take a while longer for your husband to find a job, so expense reduction is critical.

You want to keep the house, but if you don’t have enough money coming in each month to pay the mortgage, that may not be possible. You may need to consider selling the house to reduce costs, and find a place to rent. You could also consider taking in a boarder to help with the costs.

The next item on the list is your car. You need a car for work, but not necessarily the car you have now. You could consider selling the car to pay off the loan, and replacing it with a less expensive used car.

These are just suggestions, since I don’t know what you are paying for your house and your car, and whether or not it’s possible to replace them with a less expensive alternative.

Once you have your expenses under control, then it will be necessary to consider options for dealing with your debts. The most common reason for filing bankruptcy in Ontario is to prevent your wages from being garnisheed. If you are both not working at the moment, it may not be necessary to file bankruptcy until you are back to work.

If your husband returns to work, a consumer proposal may be a better option.

For more specific advice, contact a licensed Ontario bankruptcy trustee who will help you evaluate your options and decide on the best course of action.

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