Archive for the ‘bankruptcy Ontario’ Category

Question: The only income I make is from Child Tax Benefis for my 3 kids, I am a stay home mom with no other income, but my spouse makes about 5k a month which is more than $3971 for the family 5. There is about $1500 surplus in our income but the income is made by my spouse.
Will I be for sure entitled to pay for 50% of the surplus even my spouse isn’t the one who filed for bankrupt???
PLEASE HELP!!!!!

Answer: You should arrange a meeting with an Ontario bankruptcy trustee to estimate what you would be required to pay in a bankruptcy.   You are only required to pay your portion of the family surplus income in a bankruptcy.

For example, a family of five in 2010 has a surplus income threshold of $3,971.  So, for example, if you receive $471 in child tax credits, and your spouse earns $5,000 per month, your family income is $5,471, which is $1,500 over the surplus income threshold, so if both of you were bankrupt you would be required to pay half of that as your surplus income penalty, or $750 per month.  However, you earn $471/$5,471 or 9% of the family income, so you would only be required to pay 9% of the penalty, or 9% x $750 = $68.

We have over-simplified this calculation for illustrative purposes, but as you can see, since your income is low, the penalty you would pay is also low.

In fact, if your only income is from child tax credits, and you are not planning to return to work in the near future, one option for you would be to not go bankrupt until you return to work, since you have no wages for creditors to garnishee.

The issues you raise are complicated, and so a no charge initial consultation with an Ontario bankruptcy trustee is essential to fully review your options.

Question: My 1st bankruptcy in Ontario was filed 7 years ago right after graduation. I couldn’t include the student loan then; however, now 7 years is up, do I have to re-file for bankruptcy to clear my student loan or can it be included on the previous bankruptcy?

Answer: Your student loan was not automatically discharged when you filed for bankruptcy because at the time you filed it was not old enough (seven years under current rules), so you cannot go back and include it.  You have the following options for dealing with a student loan and bankruptcy:

First, you could simply continue to make payments on the loan.

Second, you could apply to bankruptcy court under the hardship rules and request that the bankruptcy court reduce or eliminate your student loan.  You will need to demonstrate that your current financial situation makes it impossible for you to repay the loan.

Third, you could file a second bankruptcy to discharge the loan.  However, you would need to consult with an Ontario bankruptcy trustee to determine if a second bankruptcy is practical in your situation.