bankruptcy « Ontario Personal Bankruptcy Blog

Archive for the ‘bankruptcy’ Category

In so deep a bankruptcy trustee said we have no options

Tuesday, February 16th, 2010

Question: Due failed corp. business we owe more than we are worth personally. The corporation and its bank accounts are closed. The house has 3 mortgages and the house is worth less than the morgage value. Personally we are living on disability income (CPP and a former employee medical plan.) When we went to a trustee we found that we had a short fall of $600.00 per month hence eliminating a proposal or bankruptcy as there is no money left. If we walked away from the house we are no better off. The only bills being paid are the morgages and a car loan which has no equity. We have changed banks and withdraw the money as it comes in and redeposit it to cover debts. We want to know if we are protected and is there any possible way to resolve this issue. I have already had a failed business and went bankrupt once. We are 60 yrs old and in 5 yrs we will be on old age pension. Will our pensions be protected as they would be lower than the individual monthly allowance?

Answer: The trustee you met with has identified the correct issue: your most significant problem is that your monthly expenses are larger than your monthly income. Your first project is to eliminate that deficit. The two obvious solutions would be to give up the house, and perhaps the car.

If your house has three mortgages you are paying a lot to live in the house. Since the house is worth less than what is owing on the mortgages, there is no point in fighting to keep the house; it has no financial value. The logical option is therefore to surrender the house to the mortgage holder, and find a place to rent. That should eliminate your monthly deficit.

You are correct that a consumer proposal is not a viable solution, since you don’t have the income to support the monthly payments. A bankruptcy is a possibility, but because it would be your second bankruptcy, it would be more expensive, and last longer than a first bankruptcy.

Your final option is to do nothing. You have already opened a new bank account at a new bank; that’s good, because your old creditors are not aware of the new account. Banks and credit card companies are generally unable to get a garnishment order against government pensions, so that income is probably safe. You could therefore live off of your pensions, and not deal with the debts.

If you return to work a proposal or bankruptcy may be necessary in the future. Your trustee can provide you with more detailed information.

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chmc debt in repayment by garnishment

Tuesday, February 9th, 2010

Question: hi there,
i live in ontario, canada and have a mortgage deficiency judgment with the cmhc that has been in repayment by wage garnishment for about 3 years. that’s a long story and that’s not important. i think it is odd that i have never received a statement of account activity or amount outstanding. am i entitled to this? if nothing else an end-of-year statement would be nice so that i can get an idea of when this torture will end.

thanks

Answer: Yes, you are entitled to know what you owe, but it is not unusual for CMHC, a government agency, to not communicate the balance owing. Unfortunately losing a home and having CMHC garnishee is becoming much more common.

To find out what is owing, we suggest the following approach:

First, ask your payroll person at work to show you the original garnishment notice; it should have contained the amount owing. You can then deduct what you have paid over the last three years to determine what remains owing.

The next option is to call Canada Revenue Agency (they do most of the collections for CMHC), or call CMHC and ask them for the balance owing.

Posted in CMHC, bankruptcy | No Comments »

bankruptcy and cra

Friday, February 5th, 2010

Question: in a bankruptcy, if there are only 2 creditors to be satisfied, one being CRA and the other party is a ‘common-law’ spouse, is it possible that CRA will not agree to the payout it will receive as set out by the bankruptcy trustee. That is, is it possible that CRA will ask for more money?

Answer: Any creditor can oppose your discharge from bankruptcy, and then attend a hearing in front of the bankruptcy judge to request that you make additional payments. They would have to have a good reason for making that request. Your bankruptcy trustee can explain in more detail whether or not that is likely to happen in your case.

Posted in bankruptcy, bankruptcy discharge | No Comments »

2nd Bankruptcy

Wednesday, February 3rd, 2010

Question: I had a bankruptcy back in 1999 in another province that has been fully discharged and is off my credit bureau. If I go bankrupt again, will the first bankrupt still show, or can I claim under the rules of first bankrupt now?

Thank you

Answer: Yes, the first bankruptcy will still show. All bankruptcy trustees in Canada are required to search the database before filing a bankruptcy, and the database is Canada-wide, and includes all bankruptcies since 1973. So regardless of which province you filed in, the first bankruptcy will show, and you will be subject to the rules for a second bankruptcy.

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How Long until bank reposses the house?

Tuesday, February 2nd, 2010

Question: I currently reside in my girlfriends home, she declared bankruptcy Jan 1/10 how long do I have to get out of the house before the bank repossess it? I don’t want to loose any of my belongings?

Answer: It depends on how far in arrears she is on her mortgage payments. Banks generally begin foreclosure proceedings when you are at least three months in arrears, but it can often take longer than that before they are in possession of the house.

If you are certain that the bank will be taking the house, the best solution is to find a place to rent now and move, so that you are not waiting until the last minute to find a place to live.

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Bankruptcy in Ontario and E.I.

Saturday, January 23rd, 2010

Question: Can you go bankrupt while collecting E.I.?

Answer: Yes, although if you are receiving Employment Insurance that indicates that you are not working, and therefore have no wages to garnishee, so a bankruptcy may not be necessary until you return to work. An Ontario bankruptcy trustee can explain the pros and cons of filing bankruptcy while unemployed.

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FIled bankruptcy 7 yearas ago, did not get discharged, now more trouble

Thursday, January 21st, 2010

Question: As the title says, I filed bankruptcy 7 years ago, due to circumstances the final fee was never paid to the trustee and I am still undischarged. I recently spoke with the trustee and the discharge can go ahead.

However I have accumulated a $20000 debt with revenue canada, and they are garnishing 40% of my income. What can I do about this, if anything?

Answer: The short answer is there is very little you can do. You are an undischarged bankrupt, so you can’t file bankruptcy to eliminate your tax debt until you are discharged from your first bankruptcy.

The most logical approach would be to work with your trustee to get your first bankruptcy finished. At the same time, you could talk to Revenue Canada to see if they would agree to lowering the amount they are garnisheeing, although there is no guarantee they will make any changes.

Once you are discharged from your first bankruptcy you can talk to an Ontario bankruptcy trustee about a second bankruptcy or a proposal. (A second bankruptcy lasts longer and is more costly than a first bankruptcy, so consider all options before filing bankruptcy for a second time).

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Need Help – taxes owing – is bankruptcy the answer?

Thursday, January 21st, 2010

Question: Me and my twin opened a drywall company as sole partners. Since we have been in business no taxes have been paid but did file for the 2 years. The amount owing is around $80,000. Our business is still running strong bringing in around $75,000 each after all deductions. What is the best solution while avoiding bankruptcy?

Answer: The first option would be to determine, based on your cash flow, how much you can afford to send to Canada Revenue Agency each month. If you can afford to send them $5,000 per month, you will have the debt paid in 16 months. Obviously the faster you pay it the better, because at some point Revenue Canada will contact you looking for their money.

If you cannot make payment arrangements, you may have no choice but to consider a proposal or bankruptcy, but repaying it on your own is the best option if possible.

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After bankrupcy debts

Sunday, January 3rd, 2010

Question: Are creditors allowed to pursue debts that were not known by the creditor after bankrupcy? I forgot about a debt to a communications company and now I am being harassed by a credit agency. What are my rights?

Answer: No, all debts that existed at the date of bankruptcy are included in your bankruptcy, whether or not you remembered them. You should contact your trustee and ask them to send a creditor’s package to the creditor that is calling you (presumably because they were never notified of the bankruptcy).

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Bankruptcy Search

Sunday, December 20th, 2009

Question: If I want to see if someone has filed for bankruptcy, can I serarch on the web to see if that is true?

Answer: Yes, you can search for bankruptcy filings on the Office of the Superintendent of Bankruptcy web site. Each search costs $8.

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