Ontario Personal Bankruptcy Blog

Bankruptcy Discharge

noreply@blogger.com (Questions) — Thu, 03 Jul 2008 13:44:00 +0000

Question: I thought bankruptcy was something other people did, until I had to file three years ago after a marriage cleaned me out.
I have to date paid about Eleven thousand dollars to a trustee based in North York. They keep threatening to oppose my discharge if I don't send them more payments, However, a few days ago I finally reviewed the court documents, and found the court judgment was for Eight Thousand three Hundred Seventy six dollars ( $8376.00)only. The Trustee has also cashed my cheque for June 2008, and it is not included in the statement they sent me. I cant file my income tax because I need the documents they filed on my behalf three years ago.
Finally my Question, Do I Have to keep paying forever? despite the court decision ?
How do I get out of this mess ?
Thank you sincerely.

Answer: If you believe that you have paid more than required in your bankruptcy, you have three options.

First, you should request a meeting with the trustee responsible for your file. Ask to meet directly with the trustee, not a clerk or administrator. Ask the trustee to explain the court discharge order that states how much you are required to pay to get your discharge, and ask for an accounting of how much remains owing. If in fact you have paid the full amount, request that the trustee proceed to obtain your discharge, and to provide you with all outstanding paperwork.

Second, if you are not satisfied with the trustee's explanation, you can apply to bankruptcy court in Toronto for directions. The trustee will be required to attend. You can provide proof to the court that you have paid the amount required in full, and you can ask the court to grant your discharge. You can hire an insolvency lawyer to assist you in this process.

Finally, you can contact the Office of the Superintendent of Bankruptcy and request that they investigate the matter.

Selling my house before declaring bankruptcy in Ontario

noreply@blogger.com (Questions) — Sun, 29 Jun 2008 18:05:00 +0000

Question: Hi. If I sell my house and move my money to an offshore account and then file for bankruptcy (all my debts are unsecured) will there be any repercussions?

also

Would I be able to sell my house to my brother and rent it from him. Then file for bankruptcy?

Answer: When you file for bankruptcy in Ontario, the trustee will ask you a number of questions, including "in the last five years did you sell any property?" If you sold your house and moved the money to an offshore account, you would be required to repay the money to the trustee before you would be discharged. Since all real estate transactions are easily traceable, lying about this is a criminal offense, and the maximum penalty is a jail sentence. So the answer to your question is yes, there would be serious repercussions.

You are able to sell your house to your brother and rent from him, but again, you must sell the house at fair market value, and the proceeds of the sale must be turned over to your trustee for the benefit of your creditors.

Student Loans and Bankruptcy in Ontario

noreply@blogger.com (Questions) — Sat, 21 Jun 2008 14:22:00 +0000

Question: I have now been paying back my student loans (through a B.C. debtors assistance program) for almost ten years. (I live in Ontario now and have a canada loan and a BC loan.) Despite paying almost $30,000 I owe more now than I did when I started. I of course am considering bankruptcy at the ten year mark but am devastated that I will then have to wait another 7 years before I am clean (I am in my mid forties now) I wonder if there are other options. Am I able to offer my creditors a certain amount on the dollar to clean this up. A family member has offered to help me financially. Any advice that you may have would be greatly appreciated.

Answer: You have three options.

First, keep paying until the loans are paid off; this will have the best impact on your credit, but with the interest is obviously very costly.

Your second option is to declare bankruptcy. If you have been out of school for more than 10 years your student loans will be automatically discharged in the bankruptcy. The rules are somewhat complex; more information is available on the student loan bankruptcy canada web site. Once the bankruptcy is finished you can begin to re-build your credit. You are correct that the bankruptcy remains on your credit report for seven years, but if you have a good job and can save money you can generally re-build your credit in a much shorter period of time.

Your final option would be to file a consumer proposal, where you offer a settlement to your creditors. If you have family that can help, it may be possible to offer a lump sum to the creditors of an amount less than the full amount owing, and they may be willing to write off the remaining balance. Whether or not they will accept the consumer proposal depends on your level of debt, your family income, and your other assets.

You have options, so we suggest you contact a licensed trustee in Ontario for a no-charge initial consultation to review your options.

Kicked in the head again, what about the house?

noreply@blogger.com (Questions) — Sat, 21 Jun 2008 02:31:00 +0000

Question: Hi. Just bought a house with 100% mortgage 6 months ago, so essentially there is no equity in the house. I may be looking at bankruptcy as the only option at this point. Never missed a payment; all associated bills up to date. Will I have to sell/lose the house?

Answer: If you go bankrupt in Ontario, if you want to keep your house, you are required to pay to the trustee the equity in your house. In your case, if there is no equity, you would be able to keep your house.

Of course the other question to ask is whether or not it makes sense to keep the house. If there is no equity, and if the housing market in Ontario is declining, it may be better to surrender the house, find a place to rent, and then file bankruptcy.

Each person's situation is unique, so to fully explore your options contact an Ontario bankruptcy trustee for a free initial consultation.

Can creditors/Trustee oppose my discharge after the fact

noreply@blogger.com (Questions) — Sun, 08 Jun 2008 18:07:00 +0000

Question: Hi, i got discharged 2 weeks ago from my first time bankruptcy. I'm planning to buy a house immediately from a private financeire and borrow the down payment from a relative.

1. Can any of my creditors/trustee void my bankruptcy based on the fact that i will own a house not long after my discharge.

2. Does the loan have to be registered anywhere or is an agreement on paper good enough

3. If yes, how long can i wait before i can own something and guarantee that no one will come after me.

Thanks alot

Answer: Once you are discharged, your bankruptcy cannot be re-opened, so you are free to buy a house or do whatever you wish. The only exception to that rule would be where the trustee or a creditor can prove that you lied or did not fully disclose your assets while bankrupt.

In your case, you have a relative that is willing to loan you the down payment on a home, so you are free to do as you wish.

Our only caution would be to be very careful getting back into debt at this time. The real estate market in Ontario is declining, so borrowing from a relative and borrowing for a mortgage puts you back in debt, which may prove difficult to service if the value of your new house declines over the next two years. In most cases it is better to save for a significant down payment, and then buy a house in the future with a minimum amount of mortgage debt.

Bankruptcy in Ontario

noreply@blogger.com (Questions) — Sat, 07 Jun 2008 19:04:00 +0000

Question: I am separated from my spouse and he is not paying his share of debt which is forcing me into personal bankruptcy. I have tried to sell my home to cover these debts but have not until now and find myself sinking deeper and deeper. My husband has been gone since Nov 07 and has contributed nothing to any debt. Is there some recourse I can take as I would not be declaring bankruptcy if he would pay the debt he owes me. We were married for 30 years and it is before the courts now but I may not be able to last until the court date.
I have tried to save my credit and at this point it is ok but I can no longer keep up. Please advise what I can do.

Answer: Unfortunately there is no way to speed up the court process. Your options are as follows:

First, you can talk to your lawyer about strategies to speed up the court process.

Second, if you are able, you could sell your house and use the funds to deal with your debt. If you are faced with a multi-year legal fight, it may be best to sell the house now and get out of debt now, rather than waiting until your credit gets worse.

Please note that this is a very generic answer, since we don't know the value of your house, or what you owe. It may therefore be wise for you to discuss your situation with an Ontario bankruptcy trustee to determine your possible options.

407 ETR and Bankruptcy in Ontario

noreply@blogger.com (Questions) — Wed, 04 Jun 2008 08:45:00 +0000

Question: The 407 has been charging an insane amount of money as "interest" to me...Will that bill be erased on a claim of bankruptcy in Ontario?

Answer: The rules are subject to change, but as it stands now debts owed to 407 ETR are discharged in a bankruptcy in Ontario. However, it is possible that at some point in the future debts to 407 ETR will be added to your license plate or driver's license renewal cost, in which case you will need to pay them in order to renew your license.

Monthly Payments and Income Tax Question

noreply@blogger.com (Questions) — Tue, 03 Jun 2008 14:59:00 +0000

Questions: I have two questions. The first is:

I have a certain amount that I pay monthly to my trustee and would like to know if my mortgage payment increases (or have other increases), will this affect the amount that I pay to them (decrease it)?

If I get money back from filing my income tax, I understand that my trustee takes that amount and distributes it to whomever, does this money get included into the amount that I am required to pay back and does it decrease my monthly payments?

I hope these questions make sense.

Thanks

Answers: When you go bankrupt in Ontario, you are required to report your income each month to your trustee. If you have what is called surplus income, you are required to make extra payments while bankrupt. These payments are based entirely on your income, not your expenses, so if your mortgage payments increase, your surplus income payments remain the same.

Also, you are correct, your tax refund is an asset of your bankruptcy estate; it is distributed to your creditors, but it does not reduce your monthly payments, because again your monthly payments are based on your monthly family income.

Your trustee can provide you with more detailed answers based on your specific situation.

UPON RECEIVING A LETTER OF DISCHARGE

noreply@blogger.com (Questions) — Fri, 30 May 2008 04:09:00 +0000

Question: After receiiving my letter of discharge, I was told to request a credit report, and then amend the file with a letter including my letter of discharge. What happens if I don't?

Answer: Once you have completed the duties in your bankruptcy, you will receive a certificate of discharge from your trustee. Your trustee also sends the certificate of discharge to the Office of the Superintendent of Bankruptcy, who in turn forward that information to the credit bureaus. Therefore your credit report will be automatically updated, so it is not necessary for you to send your certificate of discharge to the credit bureau.

We recommend that everyone check their credit report once a year, whether or not you were ever bankrupt. About three months after your discharge you should request a copy of your credit report, and if your discharge is not properly reflected on your credit report than at that time you could send in your certificate of discharge to correct your credit report.

Owing Canada Revenue Agency and Bankruptcy in Ontario

noreply@blogger.com (Questions) — Wed, 28 May 2008 00:09:00 +0000

Question: If I owe Canada revenue and I go bankrupt in Ontario will the bankruptcy erase the debt?

Answer: Yes, debts to Canada Revenue Agency (CRA), formerly known as Revenue Canada, are discharged in a bankruptcy in Ontario. More information can be found in this article on Revenue Canada and bankruptcy.

Impact on corporate bankruptcy

noreply@blogger.com (Questions) — Tue, 27 May 2008 17:39:00 +0000

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.

mortgage and bankrutcy

noreply@blogger.com (Questions) — Sat, 24 May 2008 14:31:00 +0000

Question: Here is my situation i bought a house a year ago this year i found out my septic needs to be replaced and my water well is under the garage.
I can barely pay the bills now, i cant afford a new septic and well, and i soon won't be able to live here much longer.
I cant sell the house for even half of what i owe on it.I also have about 35000 in visa and unsecured loans.

my questions

1)does the bankruptcy take care of my mortgage

2)should i go bankrupt before or after foreclosure does it make a difference?

thank you

Answer: If you know for sure that you cannot afford to continue living in the house, the best answer may be to find a place to rent now, surrender the house to the bank, and then consider a consumer proposal or personal bankruptcy. In either case the shortfall on the mortgage would be included in the proposal or bankruptcy.

If you go bankrupt and continue making payments on the mortgage, and then some months after the bankruptcy starts decide to surrender the house, you would be liable for the shortfall; the shortfall would not be included in the bankruptcy.

As the real estate market gets worse in Ontario, mortgage foreclosures are increasing. This is a complicated area, and it is important that you get good advice before making a decision, so we strongly recommend that you arrange for a no-charge initial consultation with a licensed bankruptcy trustee.

Consumer Proposal and OSAP

noreply@blogger.com (Questions) — Fri, 23 May 2008 02:01:00 +0000

Question: If my parents are locked in a consumer proposal for four years, can I apply for OSAP funding for university?

Answer: Yes. In most cases even if you yourself were in a consumer proposal or a bankruptcy, you could still apply for OSAP, and subject to your family income in most cases you would be approved.

Pay Increases while Bankrupt

noreply@blogger.com (Questions) — Thu, 22 May 2008 01:58:00 +0000

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.

Child Tax Credit and Bankruptcy in Ontario

noreply@blogger.com (Questions) — Wed, 21 May 2008 17:47:00 +0000

Question: If I go bankrupt will I lose my child tax credit for my kids?

Answer: If you go bankrupt in Ontario, the trustee will NOT take your child tax credit. However, each month that you are bankrupt you are required to report your income to the trustee, and if your income goes above a certain limit (based on the size of your family), you will be required to pay a portion of that surplus income into your bankruptcy estate. Please contact an Ontario bankruptcy trustee to do a calculation for you of the cost of bankruptcy based on your income and family size.

Divorce settlement and bankruptcy in Ontario

noreply@blogger.com (Questions) — Tue, 20 May 2008 16:53:00 +0000

Question: I have been left no alternative after being seperated and receiving no interim settlement then to declare bankruptsy. I have one question. When we finally do settle our financial matters from the divorce, will the money I get from the settlement I receive, will it be seized as part of the bankruptsy? I might have a sum of approx $75,000.00.

Thanks

Answer: In most cases, yes, if you receive a large sum of money while you are bankrupt, the money will be seized and distributed to your creditors. If you owe less than $75,000, you probably don't want to go bankrupt, because when you receive the money you can pay your creditors directly. If you owe more than $75,000, bankruptcy may be the correct option. A trustee can explain the implications and help you decide whether or not bankruptcy is the correct option in your situation.

time frame to transfer house before bankruptcy in Ontario

noreply@blogger.com (Questions) — Sat, 10 May 2008 03:23:00 +0000

Question: i have a house paid fully if i sell the house or transfer it to another name then file bankruptcy after 3 or 4 months is it ok? is my house safe? can i do it?

Answer: No, if you own a house that is fully paid for with no mortgage, and you go bankrupt in Ontario, you will lose your house.

When you go bankrupt you must answer the following question: "Within the last 5 years, while you new you were insolvent (ie. in financial trouble), did you sell or transfer any assets?" If you were to sell your house, or transfer it, and then go bankrupt 3 or 4 months later, that fact would be disclosed to the trustee. (Even if you lied to the trustee and didn't disclose the sale you would probably still get caught, since all house sales are recorded by computer and are easily searchable). If you did sell the house, your bankruptcy would probably not end until either you got the house back, or paid to the trustee the equivalent value of the house.

More information can be found in this article on Will I Lose My House If I Go Bankrupt?

Credit reports and bankruptcy in Ontario

noreply@blogger.com (Questions) — Fri, 09 May 2008 18:33:00 +0000

Question: I'm not exactly sure of everything I owe, so will my bankruptcy trustee get a credit report for me to get a total of all debts?

Answer: Most trustees are able to get a copy of your credit report before you file bankruptcy in Ontario. You can also get a copy of your credit report yourself at Equifax. A credit report is not necessary before filing bankruptcy, since all of your debts are included in the bankruptcy, whether or not they appeared on your bankruptcy paperwork, although obviously it is best to notify all creditors at the time you file.

Questions and Answers

noreply@blogger.com (Questions) — Wed, 07 May 2008 18:14:00 +0000

Question: I asked an Anonymous Question. Where do I go to read the answer?

Answer: If your question is posted, you can scroll down to find it. However, due to the volume of questions we receive, many of which are repeats of questions we have already answered, not all questions are answered. Click on the Find A Trustee link to send a question directly to a trustee in your city for a personalized answer.

RRSP's and bankruptcy in Ontario

noreply@blogger.com (Questions) — Wed, 07 May 2008 18:03:00 +0000

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

noreply@blogger.com (Questions) — Wed, 07 May 2008 17:59:00 +0000

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

noreply@blogger.com (Questions) — Tue, 06 May 2008 20:07:00 +0000

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

noreply@blogger.com (Questions) — Mon, 05 May 2008 18:20:00 +0000

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?

noreply@blogger.com (Questions) — Mon, 28 Apr 2008 22:57:00 +0000

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

noreply@blogger.com (Questions) — Mon, 21 Apr 2008 15:09:00 +0000

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.