May 28th, 2009
Question: The house and mortgage is registered under my spouse’s name but my name is in a ownership title as well.
Both of us are running our own businesses. Since recession started in 2008 our businesses are very slow and we barely break even.
To increase sales we were convinced to advertise with Yellow Pages, so we did. That kind of advertising brought in no business whatsoever. At this moment both of our businesses owe Yellow Pages $100,000.
I was the one who signed contracts with them.
Do you suggest to file my personal bankruptcy or just write them a consumer proposal ? if it’s a proposal what kind of monthly payment would make my life easier ?
Answer: Under current rules you can only file a consumer proposal if your debts are less than $75,000, so if you owe $100,000 to the yellow pages, you can’t file a consumer proposal. It may be possible to file a Division 1 proposal, which is more complicated. The monthly payment would depend on what you can afford.
It may also make sense to simply file bankruptcy, depending on your income and the value of the house.
We suggest you contact a licensed bankruptcy trustee to review your situation and help you crunch the numbers to determine which option will work best for you.
May 21st, 2009
Question: what happens if you don’t show up for bankruptcy court?
and if the trustee has been discharged, then how long will it take for an automatic discharge for the person who filed? And if the trustee is discharged and the debtor did not comply with all the provisions, what happens to the debtor, an automatic discharge?
Answer: In a normal first bankruptcy if you have completed all of your duties and no-one objects, you are eligible to receive an automatic discharge at the end of nine months.
If you don’t complete your duties, the trustee is required to object to your discharge, and a discharge hearing is scheduled in bankruptcy court. At the discharge hearing the trustee will explain which duties have not been completed, and the Bankruptcy Registrar or Judge will determine the conditions of discharge.
For example, if you had surplus income during the bankruptcy and you did not make the required payments, the court will issue an order requiring you to make the payments.
If you do not appear in bankruptcy court, the court may simply issue a “No Order”, which means the trustee can now apply for their discharge, but you remain bankrupt. Because you were not discharged, your debts are not discharged (that’s the effect of a bankruptcy discharge).
If you were not discharged, you should contact your trustee and determine what duties remain to be completed, and then ask them to make an application to court to obtain your discharge.
May 19th, 2009
Question: I filed for bankruptcy in feb 2009. I might be offered a job in the near future for 10 months. The job will be full time and i would be making 25 dollars an hour. I am supposed to be discharged in the Nov 2009. How is the job going to affect me. Will the bankruptcy period be extended even though the duration for the job is only 10 months or maybe even less than that. Also what surplus income would i be owing the creditors ( i have declared a 2 person family when filing)…..thanks in advance;)
Answer: Here’s an article that explains in detail how to calculate surplus income. In simple terms, each month you send the trustee proof of your income (paystubs) and allowable deductions (child care receipts, medical expenses, etc.) and the trustee compares your next income to the allowable limit for your family size. If you are over the limit, you pay half of first $1,000 you are over, and 75% of the remainder.
If you have significant surplus income, it is possible that a bankruptcy will be extended longer than the minimum nine month period. Your trustee will determine whether or not an extension is warranted. In your case you have already been bankrupt for four months, and your new job perhaps won’t start until month five or six of your bankruptcy, so given the short period of time you are earning the extra income, and the temporary nature of the job, it is possible that your bankruptcy will not be extended.
However, we suggest you discuss this with your trustee immediately, so that you are prepared for whatever will happen.
May 12th, 2009
Question: I’ve been negotiating with my collectors with some success except one. I have a small unsecured debt with a retail chain. I tried to negotiate with them and make payments but they refused and said they had to go ahead and garnish my wages.
In anger, I stupidly made the comment go ahead, I can’t do anything else.
Will they go ahead with this wage garnishment? The last thing I want is my employer to know I’m in trouble.
Answer: Probably not, but they might. It costs money for a creditor to go to court, sue you, and obtain a wage garnishment. In most cases if the amount is small they won’t bother.
However, if you don’t pay, a creditor can take you to court and attempt to garnishee your wages. If they do, you are left with three choices:
1. let the garnishment continue until they have been repaid in full (including legal costs)
2. file a consumer proposal; or
3. file bankruptcy in Ontario.
It’s up to you to decide which option is best for you. For more information, read this article on How to Stop a Wage Garnishment?
May 5th, 2009
Question: I have a joint car loan (with a bank) with my ex-husband. He has taken over paying the monthly payment until he can take over the loan, but if i claim bankruptcy what will happen to the car loan? Will he be able to continue to make the monthly payment or will this loan become defaulted?
Answer: In most cases he will be allowed to continue making the payments on the car loan. One option would be for him to contact the bank now, before you go bankrupt, and ask to have your name taken off the loan. If the loan is entirely in his name, there should be no issues.
If the bank won’t remove your name, your husband should discuss it with the bank first, and ask them to confirm that he won’t lose the vehicle if you go bankrupt.
May 4th, 2009
Question: I have a government job and over 25 years service and would be eligible for a pension in a few short years. In a bankruptcy is a pension an asset that is taken even before you qualify to get the pension?
thanks for your guidance
Answer: No, if you file bankruptcy in Ontario you do not lose your pension. You are not eligible to receive your pension until you retire, and even then you are only able to receive a fixed payment each month, not the entire amount, which is why it is not seized in a bankruptcy.
There are other factors to consider, so feel free to contact an Ontario bankruptcy trustee to arrange for a free initial consultation.
May 3rd, 2009
Question: I am in my late 20′s and recently lost my job. I have significant OSAP and federal student loans and a credit card debt. I am currently receiving employment insurance, but I cannot afford living expenses let alone making payments on these debts. How would filing bankruptcy affect my EI? Also, will my student loans (most recently from 2004) be discharged? Thanks
Answer: Filing bankruptcy in Ontario does not affect your eligibility for employment insurance.
Student loans in bankruptcy in Canada are only automatically discharged if they are more than seven years old (ie. you have been out of school for more than seven years). Your student loans would therefore not be automatically discharged. If you file bankruptcy when your student loans are more than five years old it is possible, at the end of the bankruptcy, to apply to court to have the loans discharged, but there are no guarantees.
Since you are currently not working, you have no wages to garnishee, so in the short term your best course of action may simply be to use your EI cheque to pay your rent and other living expenses, and then deal with the rest of your debt when you return to work. You can get more information from a credit counsellor or a bankruptcy trustee.
May 1st, 2009
Question: Do I lose my house with a consumer proposal?
Answer: No, the administrator of the consumer proposal will not take your house. One of the main benefits of a consumer proposal is that you keep your house. However, if there is a mortgage on the house, you must continue to make the mortgage payments, or else the bank will take your house if your mortgage falls into arrears.
April 29th, 2009
Question: Am I able to keep my new vehicle which I recently purchased ( financed thru the Car dealership ) if I declare Bankruptcy, since I need it to get to work and to pick up and drop off my daughter to her daycare centre?
Answer: Bankruptcy rules do not allow you to keep a vehicle simply because you require it to get to work, or to transport your children.
However, if the vehicle is financed through a car company, the vehicle probably has no “equity”, meaning the vehicle is worth about the same as the amount owing on the car. In that case your bankruptcy trustee will not seize your vehicle if you go bankrupt. However, you should confirm in advance with the lender that they will allow you to keep the vehicle, provided you continue to make the monthly loan payments. Car finance companies generally don’t have a problem with bankruptcy, but some banks do, so you should also discuss this with your trustee.
If there is no loan against your car, you are allowed to keep a car worth up to $5,650 in Ontario if you go bankrupt. An Ontario bankruptcy trustee can provide you with further information.
April 28th, 2009
Question: I am behind in my child support payments due to lack of work. I love my kids dearly, but I am simply unable to make the payments and could face jail time. If I file bankruptcy or even a consumer proposal, does the outstanding amount disappear or can you negotiate with FRO to accept a smaller amount?
Answer: No, child support does not disappear in a bankruptcy or a consumer proposal, and you cannot negotiate with FRO (Family Responsibility Office) to accept a smaller amount. If your income is reduced, in most cases it is necessary to go to court and have the court reduce the amount you are required to pay. With a revised court order FRO will reduce your payments.
In some cases a bankruptcy may still make sense, if it reduces your other debts and therefore frees up enough cash to allow you to get caught up on your support payments.