Ontario Personal Bankruptcy Blog

RRSP's and bankruptcy in Ontario

2008-05-07T14:03:00.003-04:00

Question: I have a healthy enough RRSP. I had repeatedly been told it was protected because it was "locked-in" and I could not touch it.

When we asses risk it is these pieces of information we consider. Is my RRSP available to creditors in my bankruptcy? It is locked in until 2015 (or longer). Once someone suggested I put it under an insurance but that seemed overkill.

Is it at risk if I go bankrupt?

Answer: Probably. If an RRSP is "locked-in" as a result of previous employment, where your pension is converted to an RRSP, it generally cannot be seized by the trustee. If there is a life insurance component it also is generally not seizable.

However, if your RRSP is invested in a locked in GIC that doesn't mature until, say, 2015, the trustee would be able to seize it.

An added twist is that the rules regarding RRSPs will probably change later this year.

Given these complexities, you should gather all applicable RRSP documents and bring them in to your initial consultation with a trustee, who will be able to advise you on whether or not you will lose your RRSP in a bankruptcy.

Personal Articles and Bankruptcy in Ontario

2008-05-07T13:59:00.003-04:00

Question: Are my exemptions specific to me or do my children have to include their personal clothing, computer etc. in with my assets?

And on the same topic. If my husband has assets and I have assets, is the bankruptcy only interested in my assets?

Both of our cars are in his name, does that mean one must be assigned to me?

My husband guaranteed a percentage of some of my loans. Our house is in his name and has little or no equity. Does my husband also have to declare personal bankruptcy? Can he make a proposal to pay his portion over time?

Answer: Only the bankrupt's assets are considered in a bankruptcy. If a wife goes bankrupt, her husband's and children's assets are not considered (unless she transferred significant assets to them just prior to the bankruptcy).

If your husband has guaranteed some of your loans and you go bankrupt, he could either continue making payments on the loans, or go bankrupt or file a proposal. IF most of your debts are in common, a joint proposal may also be an option.

It's impossible to cover all possible scenarios in a short answer on this web site, so we suggest that you consult a trustee for a free initial consultation.

co applicant filed bankruptcy in Ontario

2008-05-06T16:07:00.003-04:00

Question: my ex husband and i got divorced a year ago. Neither he or i had good enough to assume or even split the $20,000 line of credit . He was maintaining the interest on it. I just found out he has gone bankrupt and the bank is coming after me for the money. I cant afford to pay all of that and I am drowning in debt as it is, what is my options?

Answer: If you can't afford to pay the bank in full, you have four options:

First, you could do nothing, or pay them what you can afford. Unfortunately you run the risk that they take you to court and attempt to garnishee your wages.

Second, you could attempt to file a Debt Management Plan through a non-profit credit counsellor. Under a Debt Management Plan you are required to pay the debts in full over a two to five year period, which may not be possible in your case.

The third option would be to file a consumer proposal, where you offer to pay some, but not all, of the amount owing.

If you can't afford that, the final option is to declare personal bankruptcy. Bankruptcy eliminates your debts, but also impacts on your credit rating.

The correct option for you will depend on your monthly income, and whether or not you own any assets, like a car, house, or RRSP.

To find the answers in your specific case we strongly recommend that you arrange a no charge initial consultation with a trustee in bankruptcy licensed by the federal government so that they can review all of your options with you, and then you can make an informed decision.

Bankruptcy and Employment in Ontario

2008-05-05T14:20:00.000-04:00

Question: I am currently sending out resumes and applying for new employment. Will a new employer or potential employer be able to obtain information concerning my recent bankruptcy and will a recent bankruptcy have any bearing whatsoever on my obtaining employment?

Answer: It depends on the employer. If you are getting a job where you must be bonded, it may be more difficult to get bonded if you are an undischarged bankrupt. Other professions, such as investment advisors, may not employ you while you are bankrupt in Ontario.

However, in the vast majority of cases being bankrupt has no impact on a potential job. Most employers don't do credit checks as part of the hiring process, so they probably won't even know you are or were bankrupt.

To avoid surprises, if you are offered a job and the employer requests permission to do a credit check on you, be sure to disclose to them in advance that you are bankrupt; they will find out if they do a credit check, so in most cases it's better if they hear about your bankruptcy from you first.

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

2008-04-28T18:57:00.000-04:00

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.

materials to take to meeting with bankruptcy trustee

2008-04-21T11:09:00.003-04:00

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.

How long does a lien take to get?

2008-04-18T17:20:00.003-04:00

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.

Student Loan!!

2008-04-18T12:46:00.002-04:00

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.

bankruptcy then inheritance

2008-04-06T11:08:00.002-04:00

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.

Corporate Bankruptcy in Ontario

2008-04-01T21:38:00.004-04:00

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.

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

2008-03-31T10:15:00.002-04:00

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.

consumer proposal in Ontario

2008-03-27T15:04:00.003-04:00

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.

How is coapplicant determined?

2008-03-27T11:29:00.002-04:00

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.

Is my home protected if I claim bankruptcy in Ontario?

2008-03-25T18:50:00.003-04:00

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.

Relocated and rebuilding - Student Loans and Bankruptcy in Ontario

2008-03-24T06:32:00.000-04:00

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.

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

2008-03-20T20:23:00.002-04:00

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.

Corporate Bankruptcy in Ontario

2008-03-20T14:51:00.003-04:00

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.

Income tax while undischarged

2008-03-19T11:31:00.002-04:00

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.

Bankruptcy question regarding business partnership

2008-03-14T17:10:00.002-04:00

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.

Personal Bankruptcy in Ontario

2008-03-14T11:42:00.003-04:00

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.

Help please - should I file bankruptcy?

2008-03-10T15:01:00.000-04:00

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.

Credit cards and bankruptcy

2008-03-03T08:15:00.004-05:00

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.

2007 Tax Return Being Held After Bankruptcy Discharge

2008-02-29T16:27:00.002-05:00

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.

Shared Property and Bankruptcy

2008-02-26T20:16:00.003-05:00

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.

Mortgage and bankruptcy in Ontario

2008-02-21T21:44:00.003-05:00

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.