Bankruptcy Ontario: Free Information about Bankruptcy in Ontario

Ontario Personal Bankruptcy Blog

Ontario Personal Bankruptcy Blog provides free personal bankruptcy information and helps Ontario residents dealing with their debt.

Below are the most recent personal bankruptcy questions. Be sure to check out our Frequently Asked Questions page for answers to more common questions about personal bankruptcy in Ontario. Remember, you can always post an anonymous question, as well as arrange for a free consultation with a personal bankruptcy expert near you.

  

Recent Bankruptcy Questions:

Posted on Tuesday, December 16, 2008

Divorce and Bankruptcy

Questions: I am recently divorced with children. I have given my wife the house and healthy support payments so that my children can live comfortably and without too much disruption to their lives. My wife was stay at home before so I transferred debts to my name in the form of unsecured lines of credit. I have a good income and a good company pension but my employer has recently refused to pay me a substantial amount of money which I earned through a contract with them. This missing money has left me in a serious shortfall. I am considering personal bankruptcy to shed the dept load. My questions are: Will the courts demand a big chunk of my good income and will this impact my support payments or are the support payments protected? What happens to my company pension?

Answers: There are a number of complexities in your situation, so you should consult a bankruptcy trustee to review your unique situation.

In general, a company pension is not impacted by a bankruptcy.

As for your income, while you are bankrupt you are required to make a contribution to your bankruptcy estate based on your income. It's called a surplus income payment, and the more you earn, the more you pay while bankrupt. However, the child support you pay is considered a reduction in your net income, so your child support payments reduce your surplus income in a bankruptcy.

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posted by Questions @ 6:20 AM   0 comments

Posted on Friday, December 12, 2008

Surplus income payments in Bankruptcy

Question: If I can not make the full surplus income payments in my bankruptcy each month, what happens? Will my discharge be delayed? How long will I be given to catch up? Will a trustee garnish my wages for the missed payments?

Answer: Yes, if you are not able to pay the full amount of your surplus income payments each month, it is possible that your discharge will be delayed, and the trustee does have the power to garnishee your wages.

If you are behind in your payments, or believe you may fall behind, it is essential that you arrange a meeting with your trustee and discuss your situation. It is usually possible to work out a repayment plan. The trustee may be able to extend the bankruptcy to give you time to make the required payments, but the sooner you make those arrangements the sooner your bankruptcy will be able to be completed.

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posted by Questions @ 7:07 PM   0 comments

bankruptcy and running for office

Question: is there any restriction for a bankrupt from running for office?

What is the average discharge time?

Answer: There is nothing in the Bankruptcy & Insolvency Act that prevents a bankrupt from running for office. However, the fact that the person was or is bankrupt will probably become known during the campaign, which may hamper their chances of being elected.

The average discharge time in a first bankruptcy with no surplus income or other issues is nine months, but if there are issues the discharge can take longer.

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posted by Questions @ 7:49 AM   0 comments

Posted on Thursday, December 11, 2008

Bankruptcy Annulment

Question: what are the criteria that might have to be satisfied for a consumer to have the bankruptcy order annulled?

Answer: The most common reason for annulling a bankruptcy is that all debts have been paid in full. If, for example, the bankrupt person inherits a lot of money while bankrupt and is therefore able to repay the debts in full, the court will annul the bankruptcy.

The filing of a proposal which is then accepted by the creditors will also result in the bankruptcy being annulled.

It is highly unusual that a bankruptcy is annulled, so if you require an annulment you should speak to your bankruptcy trustee, or a bankruptcy lawyer.

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posted by Questions @ 5:31 PM   0 comments

Posted on Tuesday, December 09, 2008

Bankruptcy and Revenue Canada

Question: Can I include capital gains taxes that Revenue Canada still says I owe (even though I have appealed it)? I got divorced a couple of years ago, and my credit has been destroyed. I am considering bankruptcy pending the outcome of my revenue canada appeal. Thank you.

Answer: Yes, taxes owed to Revenue Canada are discharged in a bankruptcy.

If you believe your appeal will be successful, it makes sense to wait until the appeal is decided before making a decision on bankruptcy. There are some unique rules with respect to taxes and bankruptcy, so you should consult a bankruptcy trustee for full information.

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posted by Questions @ 5:18 PM   0 comments

Posted on Monday, November 24, 2008

new property prior to discharge

Question: Can i purchase property before i receive my discharge? Can the trustee seize this property if there is an increase in its value before my bankruptcy is complete?

Answer: In theory, yes, you can purchase property while bankrupt. Practically, it is difficult to qualify for a mortgage while bankrupt. In theory, if you bought a property and it increased in value by $20,000 while bankrupt, the trustee could determine that it is "after acquired property" and attempt to realize on it, so the safest answer is to wait until discharged to buy property.

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posted by Questions @ 12:57 AM   0 comments

Posted on Wednesday, November 19, 2008

proposals and bankruptcy

Question: Can a proposal be done after the 9 month bankruptcy period has been completed ? , with surplus still being paid ?

Answer: Yes, a proposal can be filed at any time. If you have not yet been discharged from bankruptcy, perhaps due to additional payments that you are required to make, it is possible to file a proposal. You should consult your trustee to see if that makes sense; it may be more efficient to simply complete your bankruptcy.

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posted by Questions @ 1:25 PM   0 comments

Posted on Tuesday, November 18, 2008

Immigration sponsorship and bankruptcy

Question: If I file for bankruptcy can I still sponsor my husband/kids abroad?

Answer: In most cases, if you are bankrupt it is difficult to be an immigration sponsor. You should discuss this in advance with your immigration lawyer, or with the government, before you decide to go bankrupt.

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posted by Questions @ 6:12 PM   0 comments

Posted on Tuesday, October 28, 2008

Severance Pay after bankruptcy

Question: If I was to get a small severance from the company I worked for before the bankruptcy, would I have to give it up. I don't have another income.

Answer: It would depend on the amount. For example, a single person is allowed to have net income of $1,836 per month before they are required to make additional payments during their bankruptcy. If you got $1,500 in severance and had no other income, you would still be below the limit. Your trustee can give you a more detailed answer based on your specific circumstances.

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posted by Questions @ 7:30 PM   0 comments

Posted on Monday, October 27, 2008

Are court orders invalid when someone claims bankruptcy?

Question: My estranged husband filed bankruptcy in Aug/08. Over 2 years ago a court order (Superior Court of Justice)stated he was responsible for the remainder of a joint credit line (I paid my obligation when our house sold). In Mar/08 I took him to court and had a little under half of his debt ordered to be paid.He was also found in contempt for not complying with the original order (2 years ago) It is now in collection and the bank is saying I'm responsible. If a court order is made, is it invalid when someone claims bankruptcy? I should mention, the order states and I quote "the applicant (my estranged husband) will be responsible for the balance and liability owing on the joint .....credit line and shall indemnify and save harmless the respondent (me)". I hope this helps answer my question. Would really appreciate your response. Thanks

Answer: In most cases debts are discharged when someone is discharged from bankruptcy. If the debt existed before the bankruptcy, it would be discharged in the bankruptcy.

However, one exception would be debts that relate to child and spousal support. If the court order has in some way characterized the debt as support, it may not be dischargeable in the bankruptcy.

This is a very complicated area of the law, so we strongly recommend that you discuss this with your lawyer (who may need to consult a bankruptcy lawyer to fully answer your question).

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posted by Questions @ 10:02 PM   0 comments

Posted on Sunday, October 26, 2008

Discharge time after bankruptcy

Question: After getting discharged from a second personal bankruptcy how long must I wait until I can act as a president or director of a corporation and also an executor of an estate?

Answer: There are no legal restrictions on being a president or director or executor after you have been discharged from bankruptcy.

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posted by Questions @ 7:39 AM   0 comments

Posted on Thursday, October 23, 2008

bankruptcy vs consumer proposal

Question: We filed for bankruptcy and would like to go for a consumer proposal but will our surplus income effect the amount we should/could offer in the proposal ????

Answer: Yes. In order to get the creditors to accept your consumer proposal, you must offer them more than they would expect to receive in a bankruptcy. For example, if you estimate that you would be paying $500 per month in surplus income, and you assume that because of your high surplus income you would be bankrupt for 21 months (instead of the minimum of 9 months), then your bankruptcy would generate 21 x $500 or $10,500 in realizations for the creditors. Therefore, you would need to offer a proposal of more than $10,500. For example, you may offer a proposal of $200 per month x 60 months, which is $12,000. The amount that must actually be offered will vary in each circumstance.

Unlike in a bankruptcy, once your proposal is approved and accepted, if your income increases, your payment is fixed so it does not increase.

A trustee can provide you with more information.

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posted by Questions @ 8:28 PM   0 comments

Posted on Monday, October 06, 2008

ex husband filed bankruptcy-will I lose my house

Question: my ex husband filed bankruptcy last week only one week after turning the title of the house over to me. Will i be effected?

Answer: It depends on a number of factors. Your ex-husband's trustee must investigate all real estate transfers over the past five years. The first issue will be whether or not there was any equity in the house at the time of the transfer. If the value of the house was about the same as the amount owing on the mortgage, there was no equity, so it should not be an issue.

If the house did have equity, the trustee will then investigate why the house was transferred to you. If you had a legal separation agreement where you were to receive the house, it is likely that you will not be effected.

As this is a complicated area of law, we suggested you contact your divorce lawyer to review your situation and advise you on how to protect yourself in this situation.

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posted by Questions @ 10:52 PM   0 comments

Posted on Wednesday, October 01, 2008

Bankruptcy list of creditors

Question: What do you do if you have heard that someone went bankrupt but did not disclose that he owed you money - can you go through small claims court - can you get a list of the creditors of the bankrupt person?

Answer: It is not necessary to go through small claims court. You should simply contact the trustee and advise them that you are a creditor of the person that went bankrupt. If you don't know who the trustee is, if the person went bankruptcy happened anywhere in Canada, you can contact the Office of the Superintendent of Bankruptcy to find out the name of the trustee.

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posted by Questions @ 11:55 AM   0 comments

Posted on Saturday, August 02, 2008

Re: Bankruptcy

Question: How long does bankruptcy stay in place? What happens if you do not apply for discharge?

Thank You

Answer: The minimum bankruptcy period is nine months. Your trustee will apply for your discharge, unless you have not completed all of your duties, in which case the bankruptcy remains open until you receive a court discharge. If you are currently an undischarged bankrupt, you should talk to your trustee to determine what is required to complete your bankruptcy.

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posted by Questions @ 6:03 PM   0 comments

Posted on Friday, July 25, 2008

repossesion before bankruptcy in Ontario

Question: With an impending bankruptcy looming on the horizon....and a person is coming up on 3 months in arrears on a vehicle......and knows that they are going to be coming to pick it up via a baliff sometime ....it is inevitable....is it better to deliver the car back to the dealer- finance company myself and hand them the ownership and keys ?.....or wait for the baliff to show up sometime ?

Answer: It's up to you. If you know you will be unable to make payments and will be losing the vehicle anyway, it's often less hassle to simply return the vehicle now. That way you can also stop your car insurance payments, which also saves you money.

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posted by Questions @ 1:24 PM   0 comments

Posted on Wednesday, July 23, 2008

Ex husband declared bankruptcy 6 months after separation

Question: i am in a legal pickle re: my ex husband-he signed over our house to me in a legal, bank exchange during the week after we separated in Aug 2006. The deal, or so I thought, was that i take over a 58K joint credit debt (refinance the house) he incurred mainly via gambling during our marriage.

i was not aware he would go on to declare bankruptcy for 87K 6 months later. he did not/refused to declare where any of the money he spent went when we split. So, having no choice, and him refusing to get a separation agreement in place, we exchanged the house free and clear, so i thought, 58K debt I would take on for the equity (about 100K in total). I had creditors looming and i had to refinance immediately.

Of course his trustee is looking to get the money out of me now, and we are going to trial in the fall on this issue. he hasn't been added as a party and i don't think he will motion to be. i want to keep it in family court because there are several variables involved.

Ex was not making a claim for equalization at the time he declared bankruptcy - he refused to get a separation agreement regardless of written inquiries from my lawyer for months. We separated in Aug 2006, he "declared" bankruptcy in May 2007.
I am wondering if you have knowledge about family court rulings and bankruptcy.

Also, 45K of the 87 he is claiming is money he took from his mentally ill brother while he was supposed to be managing it after his mother died (300 a month or so). Can someone deemed incapable of managing this own funds be placed on a list as a creditor?

Why would the trustee not make my ex propose a repayment plan to his brother (Small monthly payment, as he was to do via his managing role to begin with because the brother had gov't benefits and a lump sum from their dead mother would have negated his benefits) and then a repayment plan to the other creditors? It seems logically that he added this amount (45K) he could have paid back in order to exceed the 70K threshold for consumer proposals?

Also, are my RRSPs (in my name) exempt from this -- they are gone anyway on legal fees now?

I am looking to retain my asset for my daughter. Any advise is appreciated. its a real mess...

Answer: We have one simple bit of advice for you: get a lawyer.

The issues you raise deal with very complicated areas of both bankruptcy law and family law.

In most cases, if a spouse receives a house pursuant to a separation agreement, the spouse can keep the house, even if the other spouse goes bankrupt (subject to certain conditions). In your case it does not appear that there was a legal separation agreement, so this will probably be an issue that the courts must decide (hence your need for a good lawyer).

As for his brother, yes, if he is a creditor, he can be included in the bankruptcy as a creditor. It is not possible to make repayment arrangements with only one creditor; all creditors must be treated similarly. The only exception would be in the case of fraud; fraud is not discharged in a bankruptcy, and therefore the money can be repaid. Again, legal advice is required, since it is the job of the court to determine whether or not fraud has occurred.


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posted by Questions @ 2:53 PM   0 comments

Posted on Thursday, July 17, 2008

Court awarded damages and bankruptcy

Question: I sued a person for property damage and won, at the time the person was not working so I waited to make a claim for the amount owing. As soon as he got back to work he filed personal bankruptcy. Does the bankruptcy eliminate the court awarded damages that are owing to me? (the award was in small claims court - Ontario and had no restrictions on the claim and even included current and future interest).

Answer: In most cases the answer is yes, the debtor's bankruptcy will discharge the debt to you, even though you have a court order. There are a few rare exceptions to that rule, so you should consult your lawyer, or the bankruptcy trustee handling the case.

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posted by Questions @ 12:01 PM   0 comments

Posted on Tuesday, July 15, 2008

House sale and gambling before bankruptcy

Question: If I sold a house 3 years ago because of a divorce, split the proceeds in a settlement, and now find my financial situation has forced me to file for bankruptcy, will I be obligated to repay that amount? Financial difficulty was brought on by first child support, then by gambling.

Answer: It depends on when you got into financial trouble. If all of your debts were incurred in the last three years after your divorce, you were not insolvent at the time of the sale of the house, so you would not be required to repay the house proceeds. However, if you were in debt at that time, it is possible that some extra payments may be required in your bankruptcy.

A bankruptcy trustee can provide more details. It is also likely that if a significant portion of your debts are as a result of gambling, your bankruptcy may be extended, so a consumer proposal is another option your trustee will advise you to consider.

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posted by Questions @ 7:19 PM   0 comments

Posted on Tuesday, May 27, 2008

Impact on corporate bankruptcy

Question: We keep our boat at a marina which rumour has it my file for bankruptcy. Could we or our boat be in any jeopardy? We owe the marina no money.

Answer: If you own the boat, it does not form part of the assets of the marina, so if the marina goes bankrupt you should still be able to retrieve your boat. However, if the marina goes bankrupt and the trustee takes over the operations, there may be a period of time where access to the marina becomes difficult, so to be safe you could consider removing your boat now and storing it somewhere else.

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posted by Questions @ 1:39 PM   0 comments

Posted on Wednesday, May 21, 2008

Pay Increases while Bankrupt

Question: Am I obligated to tell my trustee about pay increase as a result of a performance review?

Answer: Yes, you are required to report to your trustee each month your income, regardless of why it increased or decreased. Failure to disclose your income could result in your bankruptcy discharge being opposed, meaning that your bankruptcy period could be extended.

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posted by Questions @ 9:58 PM   0 comments

Posted on Thursday, January 31, 2008

Ripped off by employer bankruptcy

Question: An employer, files bankrupcy. The employer does not inform creditors, employees nor any one associated with the bussiness. The employer continues to run the bussiness into the groud. The question is, are the transactions and financial obligations that are accured AFTER the initial filing of bankrupcy ( 1= years there after) new or are they covered by the protection of the application?

Answer: You are asking a complex legal question. First, if a corporation declares bankruptcy, a trustee is appointed, and the trustee notifies all known creditors of the bankruptcy. A creditor's meeting is held, and a notice of that meeting is published in the local newspaper. Therefore it is impossible for the employer not to inform creditors, unless they have deliberately withheld information from the trustee. If that's the case, you should contact the trustee or a lawyer.

However, if a bankruptcy did occur, any transactions or obligations incurred after the bankruptcy are new; they are not covered by the bankruptcy.

Again, we would strongly suggest that you contact a lawyer for further information on this specific case.

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posted by Questions @ 1:46 PM   0 comments

Posted on Wednesday, July 04, 2007

Second Bankruptcy in Ontario

Question: What happens after a second bankruptcy in Ontarioand how common are they? Can you ever get credit after a second bankruptcy?

Answer: Exact statistics are not available, but experts estimated that over 10% of all people who declare bankruptcy will do so more than once.

In a first bankruptcy in Ontario you are eligible to receive an automatic discharge after nine months, if you have completed all of your duties, and if no creditor objects.

In a second bankruptcy in Ontario (the rules may differ in other provinces) a discharge hearing is held in Bankruptcy Court, and the bankruptcy judge or Registrar will determine how and when your bankruptcy will end. Since it takes time to schedule the court hearing, a second bankruptcy will last for at least 12 months, and 21 months is not uncommon.

It is possible to get credit after a second bankruptcy, although it is more difficult. According to Equifax, "If the consumer declares several bankruptcies, the system will keep each bankruptcy for fourteen (14) years from the date of each discharge".

If you believe you will need to declare bankruptcy in Ontario for a first or second time, you should consult a licensed Ontario bankruptcy trustee to explain the process in detail, so you can decide whether or not bankruptcy is the correct option for you.

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posted by Questions @ 8:12 PM   0 comments

Posted on Monday, June 11, 2007

will tuition be garnished if i claim bankruptcy

Question: I have returned to school and I was wondering, will they garnish my payments toward tuition or will i be affected in anyway while attending school if i claim bankruptcy in Ontario?
I also was curious to know if rrsp could be used towards tuition as this site mentions rrsp are a good way to rebuild back your credit after claiming bankruptcy.

Answer: No, you do not lose your payments towards tuition if you are bankrupt. In most cases if you are getting a student loan, such as OSAP, while bankrupt in Ontario, OSAP will request a letter from your trustee confirming that the loan proceeds will not be seized.

Yes, you could cash in an RRSP if you are not bankrupt and use the money to pay your tuition, but remember that you may owe more in taxes next year as a result.

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posted by Questions @ 10:42 PM   0 comments

Posted on Thursday, May 24, 2007

bankruptcy and separation

Question: I am considering filing for bankruptcy . I am also in the middle of a legal separation and anticipate receiving some financial consideration. Should I receive a favourable decision which would grant me a small amount of money, will the payout to me be blocked under the law?


Answer: The payout will not be blocked. However, if, while you are bankrupt, you receive a lump sum of money, it is likely that the trustee will seize it for distribution to your creditors. The specific answer will depend on the nature of the payout. If you receive cash, it is likely to be seized. If you receive payment in the form of a pension, it may not be seized.

This is a complicated area, so you should first consult your divorce lawyer, and if required also consult a bankruptcy trustee for more information.

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posted by Questions @ 10:44 AM   0 comments

Posted on Sunday, May 13, 2007

Second Mortgage

I am thinking of claiming bankruptcy. I have a first and second mortgage from different companies. Can I claim Bankruptcy on the second mortgage only and still keep my home and pay only the first mortgage? Also, if I have to include both first and second mortgage in the bankruptcy, how long do I have before i have to move out?

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posted by Questions @ 10:03 PM   1 comments

Posted on Saturday, May 05, 2007

what if i will receive a inheritance while bankrupt

I may receive a inheritance in the range of 150000$ however my debts are 60000$ and my health extremely poor i am looking at going on disability i was defrauded 51000$ of the 60000$ and i am taking a beating on payments since the inheritance was willed to me before filing bankruptcy will the creditors be able to garanshee the full 150000 or just the remainder of the debts owing from the 60000$

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posted by Questions @ 9:45 AM   1 comments

Pre and Post Bankrupcy Tax Reurns

I filed for bankruptcy in May 2006, my trustee filled a pre and post bankruptcy return on my behalf. Do I recieve either of the refunds if there are any?

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posted by Questions @ 9:37 AM   1 comments

Posted on Tuesday, April 17, 2007

us debt and bankruptcy in Ontario

Question: I have an outstanding debt in the usa. I plan to declare bankruptcy in canada. Can I include this debt in my list? The debt also includes my wife's name as responsible for the debt? We are in the process of a divorce?

Answer: Yes, you must include all debts. However, most U.S. creditors will not recognize a Canadian bankruptcy, meaning if you are ever employed in the U.S. they may attempt to collect from you. They cannot pursue you in Canada after you go bankrupt. Your trustee can provide further information.

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posted by Questions @ 4:47 PM   0 comments

Posted on Friday, April 13, 2007

confused about the trustee

Question: I went to a trustee in Jan/07. It is now half way through April. I have given the trustee all my financial info, signed his intake form and now he doesn't return my inquiries.Is this normal?
Please note we have, in Feb had 3 meetings outlining what will happen, and my obligations, etc.

Answer: No, this is not normal. Typically you will have an initial meeting with the trustee to review your options. A second meeting, after you have completed your information form, is also not unusual. Normally at your third meeting you will be signing the bankruptcy paperwork.

If the trustee is not returning your calls, you do not want to deal with that trustee, since if they are not returning your calls now, it is likely that they will not be returning your calls once you file bankruptcy.

We suggest that you contact another trustee