Ontario Personal Bankruptcy Blog

bankruptcy and cra

noreply@blogger.com (Questions) — Fri, 05 Feb 2010 14:26:00 +0000

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.

2nd Bankruptcy

noreply@blogger.com (Questions) — Wed, 03 Feb 2010 11:55:00 +0000

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.

How Long until bank reposses the house?

noreply@blogger.com (Questions) — Tue, 02 Feb 2010 16:45:00 +0000

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.

will claming bankruptcy in Ontario affect our house?

noreply@blogger.com (Questions) — Mon, 01 Feb 2010 17:14:00 +0000

Question: I am out of work waiting for ei. My bills are getting to much to pay i owe about $6,000 credit card and loan. Me and my wife are separated and she is making the mortgage payments on the house but its still in both are names. How will this affect my chances for bankruptcy in Ontario and how will this affect her?

Answer: The answer depends on the value of your house, and the amount owing on the mortgage.

The difference between what the house is worth, and what's owing on it (the mortgage) is your equity. Since you and your ex-wife jointly own the house, you are each entitled to half of the equity. If you go bankrupt, you are required to give the trustee your share of the equity. If your share of the equity is a small number, it's probably not an issue. If it's a big number, the only solution may be to sell the house.

The first step is to get an appraisal done on the house by a local real estate agent, and get confirmation from the bank as to the amount owing on the mortgage. An Ontario bankruptcy trustee can then provide you with more detailed information.

Another good source of information is this article on What Happens to My House if I go Bankrupt?

consumer proposals and credit ranking

noreply@blogger.com (Questions) — Sat, 30 Jan 2010 20:36:00 +0000

Question: If I do consumer proposal with my credit cards, what does it do to my credit ranking? and for how long?

Answer: According to Equifax, a consumer proposal remains on your credit report for three years after all of the payments are made, and you would be coded as an R7 (a bankruptcy is an R9).

After filing for Bankruptcy and Win the Lottery

noreply@blogger.com (Questions) — Fri, 29 Jan 2010 17:57:00 +0000

Question: What happens if you win a lottery after you've filed and been discharged from personal bankruptcy? Didn't seem to find this question on your Bankruptcy Ontario FAQ section.

Answer: If you win the lottery while you are bankrupt (before you are discharged), the trustee will seize the lottery winnings and distribute the money to your creditors. If you win more than you owe, the trustee would return the difference to you, since all your creditors would have been paid in full.

If you win the lottery after you have been discharged from bankruptcy, the money is yours to keep.

second time undischarged

noreply@blogger.com (Questions) — Thu, 28 Jan 2010 15:20:00 +0000

Question: I lost my job in aug 2009 after 15 years. I now make 9.75 an hour,I am not discharged from a feb 2007 bankruptcy and am due to pay about 3000.00, I have a evcition from my landlord and don't want to relocate my family the only money I have is in a locked in rrsp,I AM APPLYING FOR FINANCIAL HARDSHIP FOR LOW INCOME AND EVICITION this will take time, there will be about 7000.00 left over if aproved after my rent is paid based on my 2010 income that I would like to ask for to help for rent for 2010 . can I use some of this money to pay my trustee so I can get discharged, and the balance for rent to come in 2010.

Answer: Perhaps. This is a complicated area, so you should discuss it with your trustee.

If you filed bankruptcy in February 2007 you have probably already had a discharge hearing, where the Bankruptcy Judge determined what was required for you to finish your bankruptcy. It would appear that the judge decided that you are required to pay $3,000. It is therefore possible that you can unlock your LIRA and use the money to pay the trustee.

However, you want to discuss this with the trustee first, since you do not want the trustee to attempt to seize all of the money when it is unlocked.

Again, without more specific knowledge of your case, it is impossible to give a more specific answer.

Credit Card Addict - Is Bankruptcy in Ontario My Only Option?

noreply@blogger.com (Questions) — Wed, 27 Jan 2010 07:01:00 +0000

Question: I have been employed only 6 months in the past 8 years and have been living with close relatives for free. I have been living off my credit cards and line of credit and have reached/exceeded the credit limit. I owe over $40,000. I have no money. My relatives do not know I owe this much money. I have trouble getting a job in my former profession. Can I qualify to file for personal bankruptcy? What else can I do?

Answer: Yes, you would qualify to file bankruptcy. As for other options, that would depend on your future job prospects.

While you may be unable to find a job in your profession, if you are able to find any job, it may be possible to file a consumer proposal as a way to avoid bankruptcy. To file a consumer proposal you would either need your own income, or help from family, to fund the proposal.

An Ontario bankruptcy trustee can provide you with a more detailed explanation of your options.

Will Bankruptcy in Ontario affect my mom's house?

noreply@blogger.com (Questions) — Tue, 26 Jan 2010 17:49:00 +0000

Question: Hi, I'm thinking of declaring bankruptcy in Ontario due to too much debt. However, 2years ago I co-signed a house for my mom. She is in ownership/title of her home, I'm not in title. But I'd like to ask if my bankruptcy will affect her home in any way. Please advise! Thanks.

Answer: Since your mother owns the house, and you have only co-signed the mortgage, your bankruptcy does not affect the ownership of her house. When you go bankrupt you lose your assets, but you do not lose assets owned by someone else.

However, it is possible that when your mother's mortgage comes up for renewal the mortgage company may want another co-signer due to your bankruptcy, so that is something your mother should prepare for in the future.

second bankruptcy in Ontario and tax return

noreply@blogger.com (Questions) — Mon, 25 Jan 2010 17:19:00 +0000

Question: I filed for a second bankruptcy in Ontario (previous in 1990) in March 2008 along with my husband, because of his business failure. The Trustee filed our returns for 2007 and 2008. We did not receive any assessment notice from Revenue Canada. According to her we will be discharged this year. Will I be entitled to my tax return refund for 2009 or is it dependent on my discharge date? Will Revenue Canada inform me if the return goes to the trustee and not to me? Thank you.

Answer: That's a question you should ask your trustee. Under normal circumstances Canada Revenue Agency will send your tax refund for all prior years (2007 in your case) and the year of bankruptcy (2008 in your case) to your trustee for distribution to your creditors. In most cases your tax refund for the year after bankruptcy does not become property of the estate, and is returned to the bankrupt.

Bankruptcy in Ontario and E.I.

noreply@blogger.com (Questions) — Sat, 23 Jan 2010 21:36:00 +0000

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.

income tax refund and bankruptcy in Ontario

noreply@blogger.com (Questions) — Sat, 23 Jan 2010 01:58:00 +0000

Question: If i declare bankruptcy in Ontario what happens to my tax refund cheque I receive from the gov't?

Answer: When you declare bankruptcy in Ontario, you automatically lose your income tax refund for the year of bankruptcy, and for any previous years for which you have not yet received your income tax refund.

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

noreply@blogger.com (Questions) — Thu, 21 Jan 2010 17:59:00 +0000

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).

Need Help - taxes owing - is bankruptcy the answer?

noreply@blogger.com (Questions) — Thu, 21 Jan 2010 03:49:00 +0000

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.

Can Personal Bankruptcy in Ontario Be Denied?

noreply@blogger.com (Questions) — Tue, 19 Jan 2010 20:07:00 +0000

Question: Can a person's claim/file of bankruptcy be denied/rejected for any reason?

Answer: If you owe more than $1,000 and you are insolvent (meaning your debts are larger than your assets, and you are unable to pay your debts), then you are eligible to file bankruptcy in Ontario. You meet with a licensed Ontario Bankruptcy Trustee, and if bankruptcy is the correct option for you, they will electronically file the bankruptcy on your behalf. No other humans are involved, so no-one else can stop the bankruptcy from occurring.

However, any creditor may object to your bankruptcy ending. A creditor can object to your discharge if they believe you could have filed a consumer proposal instead of filing bankruptcy, or if you are hiding assets or not being honest. If you complete all of your duties it is unusual for a creditor to object to your discharge.

An Ontario bankruptcy trustee can provide you with more information.

Co signers responsibility in a bankruptcy filing in Ontario

noreply@blogger.com (Questions) — Tue, 19 Jan 2010 04:47:00 +0000

Question: My friend co signed on a line of credit for her friend who is about to file for personal bankruptcy. My question is what portion of the line of credit is she responsible for? Wll she be responsible for the entire line of credit? How will this affect he credit rating if she decides to pay it off?

Thanks.

Answer: A co-signer is responsible for the entire amount owing, in the event that the primary borrower declares bankruptcy in Ontario. The best option for the co-signer is to talk to the bank now, and advise them that they will continue making the payments. By continuing with the payments the loan remains up to date, so it should have no negative impact on the co-signer.

Trustee's Discharge From Bankruptcy

noreply@blogger.com (Questions) — Wed, 13 Jan 2010 20:46:00 +0000

Question: I filled for personal bankruptcy in November 2007 and was discharged in August 2008. I have recently discovered, however, that I am not discharged by my trustee. Can you tell me when my trustee should discharge me and what are they still able to do until then?
Thank You

Answer: You should talk to your trustee to confirm your exact status. You say that you were discharged in August 2008, but you are not discharged. You can't be both.

It is possible that you were discharged, but your trustee is not yet discharged. That's not unusual. Your trustee must finish their work, including filing all tax returns (some of which may not be filed until after you are discharged), and they must complete their paperwork and file it with the government to get their discharge. This has no direct impact on you, so it's not something to worry about.

On the other hand, it's possible that you were not discharged. If that's the case, you need to talk to your trustee to find out what you didn't do, that you need to do, to get your discharge.

Cra/directors liability/Personal Guarantee on corp bank loan

noreply@blogger.com (Questions) — Mon, 11 Jan 2010 16:33:00 +0000

Question: Two years ago I closed down my company. The bank insists I signed a personal guarantee ($65g) I say I did not. Now the matter is going to trial. (already went to hearing)
PST was owed $100K principle and $28k in interest and penalties because of the directors liability I agreed & paid $100k out of my own pocket which covered the principle. They have now decided that they want to collect the $28k in interest and penalties this matter is being debated as I write. We are dealing with the government here anything can happen and fairly fast.

I transfered ownership of house to my spouse 2 years ago, seeing as I had spent the equivalent of my share of the equity and she wanted to protect what was left. Seemed a good and fair idea but was it?

I have $30k RRSP. no contributions for 3 years. How safe is it?

I do not want to go bankrupt. I am ok with being a sob and giving everyone a hard time. I have at all times been 100% upfront with reporting etc to the CRA. They have said that they will charge me with fraud re title transfer I told them to "grow up"
Any advise? I know I have touched on a lot but advise would be good.
Oh yeah. I am in my 60s. self employed & losing my eyesight, in a few years will be unable to work.

Answer: The most obvious first step is to consult with your lawyer, and determine what will be the likely result of the issues that you describe. It is unlikely that CRA will charge you with fraud, but that is a question best answered by a lawyer. Your chances of success in the legal action with the bank are also best left to the opinion of your lawyer.

Another option would be to declare personal bankruptcy. Again, legal advise would be required before you make that decision.

In a bankruptcy you lose any contributions you have made to your RRSP in the last year; if you have not contributed for three years, the RRSP cannot be automatically seized by the trustee.

Since you transferred you house to your spouse two years ago, the trustee will be required to determine whether or not you were insolvent at the time of the transfer, and if you were, what was the value of your equity at the time of the transfer. If your share of the equity was, say, $20,000 at the time of the transfer, it's likely you would be required to repay $20,000 as a condition of your discharge from bankruptcy.

Another issue in a bankruptcy is that you are required to pay a portion of your surplus income while bankrupt, so the more you make, the more you pay. If you have good income now, that will increase the cost of your bankruptcy.

As you can see, your situation is not straight forward, so you should consult both a lawyer and a bankruptcy trustee for more information.

No job, What action to take?

noreply@blogger.com (Questions) — Sat, 09 Jan 2010 16:27:00 +0000

Question: Have been unemployed for more than a year. Now on Assistance. What is the best action to take? Am close to losing my home,within a month of two. No other funds available.

Answer: Unfortunately your situation is becoming more common as the recession continues. Our best advice is to determine your priorities, and act accordingly.

If you are likely to lose your home, your first priority is to find a place to live. That may mean renting a place, or moving in with a friend or relative. Either way, that's something you want to arrange now, while you have a month or two; you don't want to leave that to the last minute.

Your next highest priority will be to live, and pay for food and other living expenses. Your goal will be to find a place to live that allows you to survive on assistance and cover your rent and living costs.

Your next priority is to find a job, but obviously you are hard at work on that already. Given how hard it is to find a job, your goal will be to get whatever job you can to meet your living expenses. It's easier to find a job when you already have a job, so it probably makes sense to take any job that pays more than you are getting on Assistance, and then hope that job leads to something better.

Finally, your last priority will be to deal with your debts. You want to pay your debts, but at the moment you don't have the income to service your debts, and your creditors can't garnishee your wages until you are working again. So, until you are working, servicing your debts is not a priority.

A final word of advice: we strongly recommend that you bank at a bank where you don't owe any money. If you owe money to Bank ABC, and your Assistance cheque is deposited into Bank ABC, it's very easy for the bank to take the money and apply it against your debt. Therefore you should open a new bank account at a new bank, and only use it to pay your normal monthly living expenses (rent, food, etc.).

Once you are working again you can contact a credit counsellor or an Ontario bankruptcy trustee to make a plan to deal with your debts.

Inheritance and Bankruptcy in Ontario

noreply@blogger.com (Questions) — Fri, 08 Jan 2010 16:02:00 +0000

Question: If someone is bankrupt in Ontario and falls heir to a some of money, is it applied to the the debt? My opinion is that is should be but there are those who disagree.

Answer: Yes, if you become eligible to receive an inheritance while you are an undischarged bankrupt in Ontario, or anywhere in Canada, the trustee will seize the money and distribute it to your creditors. If you inherit more than is required to repay your creditors in full, once the creditors are paid in full the rest of the money will be returned to you.

Running on a treadmill

noreply@blogger.com (Questions) — Mon, 04 Jan 2010 17:52:00 +0000

Question: Hi, I'm seeking information for my Mom who is considering bankruptcy. She lost her job a year ago and her severance has run out as of January first. She has been pounding the pavement on trying to find a new job and has had no luck. Her and my Dad are divorced and no child payments are required due to the age of my brother and I. She has remortgaged her house 3 times, and has numerous credit card debt, retail cards, a car loan, debt consolidation loans etc. In total I'm unsure of her entire balances but I know she is having trouble making ends meet even with my brother and I helping out as much as we can. She is currently in process of applying for EI and that won't be enough to cover any of her debts. What kind of options does she have?

Answer: She has a number of options. Ultimately the correct decision will depend on her future expected income.

If she can't find a job and her only income is from Unemployment Insurance, and if you and your brother can't contribute a lot of money, it may be necessary for her to sell the house and find a place to rent to reduce her expenses.

She could try remortgaging the house again, but that's probably not a practical solution if she has minimal income.

She could also file a consumer proposal or bankruptcy. However, most people who file a consumer proposal or bankruptcy are doing it to prevent their wages from being garnisheed; in her case, until she is working again, that may not be necessary. Again, the correct solution will depend on her future income expectation.

She should contact an Ontario bankruptcy trustee for a no charge initial consultation. Before that meeting she should prepare a list of all of her debts (and gather up all of her credit card statements and other creditor information) so that the trustee has full information to explain all of her options.

After bankrupcy debts

noreply@blogger.com (Questions) — Sun, 03 Jan 2010 13:36:00 +0000

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).

Plan on going back to school after filing a proposal

noreply@blogger.com (Questions) — Thu, 31 Dec 2009 20:32:00 +0000

Question: I'm planning on doing a consumer proposal and planning on going back to school and would probably need to apply for a student loan. On top of this I have a 6-7 year old student loan with up to date payments on it. How do you assess this situation?
Thank You

Answer: A student loan is only automatically discharged in a consumer proposal or bankruptcy if it is more than seven years old at the time of filing. If yours is six years old, it would not be discharged. You are still able to apply for a new student loan, and in most cases you would be accepted even if you file a proposal.

In most cases a proposal is filed because the debtor has surplus income, which makes a bankruptcy in Ontario more expensive. If you return to school full time you would probably not have surplus income, so for you a bankruptcy would also be an option (assuming you have debts other than a six year old student loan).

As you can see there are a number of factors to consider, so your best option would be to consult a licensed Ontario bankruptcy trustee for a free initial consultation to review your specific situation.

What to do, confused

noreply@blogger.com (Questions) — Tue, 22 Dec 2009 20:32:00 +0000

Question: Hi, this is my situation, I only have two student loan debts one is a provincial and one through a bank, my 7 years have passed and I was advised to file for bankruptcy, but I don't want to lose my childs RESP or my newly financed car. Should I tell the creditors that I am planning to file, to see if they could make a deal with me for monthly payments to pay off a agreed portion of my balance or should I go ahead with my bankuptcy. And how do finance companies usually respond when you tell them you are filing?

Answer: Yes, bankruptcy should be a last resort, so attempting to work out payment arrangements would be a good first step. If you can't reach an agreement, bankruptcy is an option. In most cases car loan lenders will allow you to keep your car if you go bankrupt, provided you are not behind, and you continue to make your monthly payments. Your Ontario bankruptcy trustee can provide you with more information.

Should I go Bankrupt???

noreply@blogger.com (Questions) — Mon, 21 Dec 2009 17:45:00 +0000

Question: I feel my options are slim. I have been unemployed for over a year just got a full time job last week. Over this past year I have managed to just hold on to everything I have lots of outstanding bills and debts the biggest is my car which I owe $14,000 on still. With only being on EI I have scraped by. My car payment a whopping $350 a month is drowning me. I'm always behind 2 or 3 payments and the car company keeps telling me they should have taken the car. I have recently told them I can't do it anymore I would voluntarily give the car up and they are still sitting on it. Recently it was towed away due to road conditions we are no longer allowed to park on city streets after 9pm so I called the car company told them to get the car and they agreed they would. Now I'm still getting calls about my late payments and them asking me when will I be making the payments. the car is impounded still. What happens in this situation with Bankrupsty?

Answer: Once the car company repossesses your car, they become and unsecured creditor for the balance owing. If you file for bankruptcy anywhere in Canada, that debt would be included in the bankruptcy.

Since you no longer have the car and have no intention of making payments on it, you should ensure that all automatic payments from your bank account have stopped. You should also open a new bank account at a new bank to protect any money in your bank account. A bankruptcy trustee can provide you with more information.