Answer: If you file bankruptcy in Ontario, you are required to either surrender your house to the trustee, or pay to the trustee the equity in your house.  Equity is the value of the house (the difference between the value of the house, and the amount owing on the mortgage and other charges).  If there is no equity, you could keep your house (provided you keep the mortgage in good standing).  In your brother’s case, if the house is owned jointly by him, his sister, and his brother, he would only be required to pay his share of the equity (presumably one third).

He should get an appraisal on the house, and confirm the balance owing on the mortgage, and then meet with a trustee to discuss his options.

For the car, if there are no loans against it, you can keep a car worth up to $5,650 if you go bankrupt.  Since his car is old, it is probably not worth more than that amount, although again he can have it appraised to be sure.

More information can be found in this article on what happens to your house if you file bankruptcy in Ontario, and what happens to my car if I file bankruptcy in Ontario.

For a review of his exact situation, he should consult an Ontario bankruptcy trustee for a no charge initial consultation.

We owe a lot due to trying to run a small business and we have hit the wall if we have to pay minimum payments to cards. We are considering bankruptcy but if a judgement is reached how is handled in? are we still liable?

Answer: No. The point of bankruptcy is to discharge your debts. If you file bankruptcy, all court actions from credit card companies stop. If they have a judgment it is “stayed”, which is a fancy word meaning the credit card company or the collection agency can’t use the judgment to garnishee your wages. In fact, your trustee will contact the court and advise them that you have filed bankruptcy, which will stop further court proceedings, and suspend any that are already in progress.

Your Ontario bankruptcy trustee can provide you with more information.

Answer: Good question. It is a common misconception that a bankruptcy trustee works for the creditors. A bankruptcy trustee doesn’t work for the creditors, but they also don’t “work” for the debtor.

A bankruptcy trustee in Ontario is appointed by the court to administer the bankruptcy. The trustee’s job is to ensure that all rules are followed, by both the creditors and the bankrupt person. For example, the bankrupt is required to report their income each month, and to provide the trustee with information to file their taxes, so the trustee makes sure all information is provided.

However, if a creditor was to try to garnishee the bankrupt’s wages after the bankruptcy starts, that’s against the rules, so the trustee would obtain a court order to stop that.

The bankruptcy trustee is the “middle man”, like a referee in a hockey game, making sure both sides follow the rules.

Your question is: should I talk to a lawyer before I talk to a bankruptcy trustee? A lawyer works entirely for you, so if you want someone just to advise you, then yes, you can see a lawyer. However, for a lawyer to review your situation and advise you may cost a lot of money, and most people in financial trouble can’t afford the cost of a lawyer.

Our advice is to do your own research first, before visiting a trustee. There are many web sites that discuss ways to deal with deal with debts. Some sites focus on consumer proposals; others discuss personal bankruptcy in Canada. By researching your options, you will have a list of questions to ask your trustee, which should allow you to decide for yourself which option is best for you.

If I claim bankruptcy, I want to keep the van and continue to make the payments.

Do I claim bankrutpcy for just my corporation or personally too. The one credit card is in the business name; the line of credit is personal and two other credit cards are in my name personally.

I am also paying child support monthly. Any income I earn each month is paid to my corporation. My debts exceed any income.

What will happen potentially if I claim bankruptcy and if I earn sales commissions in the future under a new company/corporation which I will open after bankrupting this one? Would they take the house if I don’t sell it? What else do I need to consider and how much would it cost to go through bankruptcy and how are those fees paid? Thanks for your advice.

Question: You are asking many complicated questions. To fully answer the questions we would require more information. We suggest you contact an Ontario bankruptcy trustee who will give you a free initial consultation, and review all of your options in detail.

In general, yes, you can keep your van and keep making the payments on it, even if you go bankrupt.

In general, it would be you personally that would go bankrupt, not your corporation.

As for your income, when you are bankrupt you report your income each month to your trustee, and you are required to pay half of your surplus income into your bankruptcy estate. If you earn large commissions, the cost of your bankruptcy goes up.

Again, due to the complexity of your situation, a face to face meeting with a trustee is essential to fully explore all options.

A person that has declared bancruptcy:

Living at home and paying for a room?
Living with friends?
Living with boy/girlfriend?

What happens if these people don’t wanna get involved?????

Thanks

Answer: Surplus income is not based on the number of people you live with; it’s based on the family unit. In most cases that’s the same, but if you are sharing a house with friends, your friends are not really part of your family, so their income would not be included in your surplus income calculation. Your trustee can explain in more detail based on your situation.

Answer: If he stops making the mortgage payments, eventually the bank will take the house. They will sell it, and if there is a shortfall, they will pursue both him and you, if your name is on the mortgage. The bank doesn’t care about the fact that he agreed to make the mortgage payments; the separation agreement was between you and him, not you and the bank, so they are not bound by it. If he goes bankrupt, they only person they can pursue is you.

If he sells the house and gets enough money to pay off the bank, that’s great, there is nothing for them to pursue you for.

Filing bankruptcy alone will not make the bank take the house. Many people file bankruptcy and keep their house, provided they can continue to make the mortgage payments, and pay any equity into their bankruptcy estate for the benefit of their creditors. More information can be found on this article about What Happens to My House if I Declare Bankruptcy?

Answer: Each month that you are bankrupt in Ontario you are required to report your income to your trustee. If you earn surplus income, you are required to pay half of your surplus income to your trustee, who will then distribute it to your creditors.

So, the answer to your question, is that if your husband’s income increases, the amount he pays while bankrupt may increase.

I went bankrupt on approx. $35k and my bankruptcy fees are about $1650. Now let’s say I won the lottery today, and had to turn the money over to the trustee. Is the entire amount forfeit?

Secondly, what about after the full discharge. Let’s say I won the lottery the day after being discharged. Is this something that the CRA or the courts or whoever is going to look at and say “wait a second” on?

Thank you for your time and answers.

Answer: If you are entitled to receive a windfall while bankruptcy (such as lottery winnings or an inheritance) the bankruptcy trustee is required to take the entire amount of the windfall. They would then contact all of your creditors to determine the full amount owed, and pay them in full. Once the creditors are paid in full, and the trustee’s fees are paid, the trustee would apply to annul your bankruptcy. Once the bankruptcy is annulled, any money still in the trustee’s possession would be returned to you.

If you win the lottery after you are discharged from bankruptcy you are entitled to keep the money.

Answer: Your husband has two options. First, he could open a new bank account at a new bank, and not pay his credit cards. The credit cards cannot garnishee his wages if he is not working. The government, however, can reduce what they pay him for CPP if he doesn’t pay them.

His other option would be to file bankruptcy in Ontario. The bankruptcy would discharge his credit card debts, and the taxes he owes to Canada Revenue Agency. All trustees offer payment arrangements, so cost should not be a problem. A typical bankruptcy for a resident of Ontario with no assets would cost approximately $180 per month for nine months, although costs will vary depending on the circumstances. He should talk to an Ontario bankruptcy trustee for more information.

Based on my current income here is my situation:

- I take home slightly more than $6500/ month
- My ex-wife is entitled, per the courts, to $2900/ month in spousal support.
- I give her $1100 per month in child support.
- Between the two mortgages, I owe approximately $130,000 more than the house could be expected to get on the open market. I have defaulted on the two mortgages, and the mortgage companies have threatened to garnish my wages.
- I also have over $10,000 in credit card debt.

Between all the debts I owe, the spousal and child support, the credit card bills, my living expenses, etc… I do not take home nearly enough to live on.

What are my options?
Is bankruptcy my only alternative?
If I declare bankruptcy, what will follow?
Should I take a job in another country, can my creditors and ex-wife compel payment still?

I need help.

Answer: You should start by talking to two professionals: a divorce lawyer, and a bankruptcy trustee. Your divorce lawyer can advise you on what you will be required to pay in child and spousal support, and can advise you on whether or not you are required to continue paying if you live the country.

Even though your house is worth $130,000 less than the amounts owing on the mortgages, you could keep the house, and keep paying the mortgages. Whether or not you can do that will depend on whether or not you have the cash flow to carry the mortgages.

Alternatively, f your house is worth $130,000 less than what is owing on the mortgages, there is probably no financial reason for keeping the house. Your best option may be to surrender the house to the first mortgage holder, and let them sell it. You will then be liable for the shortfall of perhaps $130,000, which may be more than you can service.

You could then file either a consumer proposal or bankruptcy in Ontario to deal with the debts. The correct option will depend on what you can afford to pay each month, which will depend on what you are paying in child and spousal support. This analysis is somewhat complicated, so you should discuss this with an Ontario bankruptcy trustee.