April 12th, 2009
Question: I owe $72,000 and I have mortgage of $308,000 my house worth now $310,000 if i want to sell plus broker commission so if i declare bankruptcy would i lose my house?
Answer: If your house has $2,000 in equity before selling costs the trustee would most likely not take your house if you declared bankruptcy. You would need to confirm with the mortgage company that they will also allow you to keep your house.
If you cannot afford the house, it may be better to surrender the house prior to declaring bankruptcy so that the resulting shortfall, if any, is included in the bankruptcy.
More information can be found in this article on what happens to my house after I file bankruptcy in Ontario?
April 11th, 2009
Question: I am currently working full time, but I am about to return to school full time in the fall. I currently have debts that right now I am finding hard to make ends meet with, so I am planning on going back to school to change careers to increase my income. While I am in school there is no way I will be able to afford to make my payments. Can a student go bankrupt? Are there any special rules when students file for bankruptcy?
Answer: Yes, a student can go bankrupt. Anyone can go bankrupt, provided they have more than $1,000 in debts, and they are unable to pay those debts.
The real question is: should a student go bankrupt? In most cases a person declares personal bankruptcy because they are unable to pay their debts, and they don’t want their paycheque to be garnisheed. They are going bankrupt for protection from their creditors. If you are in school full time and are not working, you don’t have wages, so there is nothing to garnishee.
There are costs to going bankrupt. You will be required to make a monthly payment to the trustee, and you will lose your GST credits and tax refunds while bankrupt. You must decide whether or not it is worth it to incur this cost while you are a student. A licensed Ontario bankruptcy trustee can provide you with more information.
There are specific rules if you go bankrupt after you graduate, and if you have a student loan. More information is available on the student loan bankruptcy Canada website.
April 11th, 2009
Question: If a person files bankruptcy in Ontario are they able to launch a civil suit against an employer?
Answer: Yes, but if you are bankrupt any “winnings” you get from a lawsuit become property of your bankruptcy estate and are turned over to your creditors, so it only makes sense to sue someone while bankrupt if you have a reasonable expectation of recovering more than enough money to repay your creditors in full.
April 6th, 2009
Question: Just curious about surplus income payments and ones discharge date. Currently it states an automatic discharge at 9 mths if you complete all that is required. Hence, even if you make your surplus payments what would determine if they decide to extend your bankruptcy beyond the automatic 9 months?
Answer: It is possible that a bankruptcy can be extended past nine months, even if you complete all of your duties.
First, if you were previously bankrupt, you are not eligible for an automatic discharge after nine months.
Second, if you had significant surplus income during your bankruptcy, it is possible that one of your creditors may object to your discharge, on the basis that you had sufficient income to file a consumer proposal as an alternative to bankruptcy.
You should discuss your expected income with your trustee before filing bankruptcy, so that you can understand the chances that your bankruptcy will be extended due to surplus income.
April 4th, 2009
Question: Though I have filed personal bankruptcy and included debt owed 407, I still cannot get new plates for a used car to assist me in re-entering the workforce.
Do I have any options?
Answer: Unfortunately in Ontario the current practice is for the Ministry of Transportation to deny license plates until 407 ETR fees are paid, even if a bankruptcy has occurred.
Your only options are to pay the outstanding fees, or to have someone else register the car in their name.
April 2nd, 2009
Question: If i go bankrupt in Ontario will i be clear of any taxes outstanding?
Answer: Yes, taxes are discharged in a bankruptcy. However, there are a number of issues to be aware of with respect to taxes and bankruptcy, so you should consult a licensed Ontario bankruptcy trustee for more information.
April 2nd, 2009
Question: My sister has a loan in her name and myself as the co-singer, I make the payments from my bank account (same bank that the loan and my credit card is from). If I close the account and open another account some where else and have them withdraw payments from that account do I still need to claim this in my bankruptcy as my sister is the principal on the loan?
Answer: Yes. When you file bankruptcy in Ontario, you are required to disclose all debts, whether or not they are co-signed. Your sister will remain liable for the loan, as it is in her name as well.
April 2nd, 2009
Question: My wife is the sole owner of the home we lived in before we separated. I am separated with my wife for 4 months but not yet divorced. If I file for bankruptcy now, will my wife be affected? Will creditors be able to do anything with her home?
Answer: The simple answer is no. If you go bankrupt, your ex-wife’s home is not affected, because she owns it.
However, this is an issue that you should discussed with an Ontario bankruptcy trustee before you decide to file, as there are other factors to consider, such as whether or not your ex-wife co-signed for any of your debts, and whether or not you ever had an ownership interest in the home.
April 1st, 2009
Question: I lent my friend $8000 and he still owes me $4000. He went bankrupt but prior to the bankruptcy he had a notarized letter stating that he would pay $400 monthly and he stoped payments as soon as he filed for bankruptcy. It’s a personal loan and I’m not on his list of creditors. Can I still sue him for the remainder that he owes or is he off the hook?
Answer: His debt to you would be included in the bankruptcy, unless there was fraud involved. You should ask for the name of his trustee so you can at least be added to the list of creditors, and participate if any funds are distributed as a result of the bankruptcy.
March 31st, 2009
Question: I filed bankruptcy and owed 407ETR. My understanding was that the debt to them was discharged.
However, when plate renewal time came it was rejected until I was able to pay the 407ETR bill that supposedly was discharged in my bankruptcy.
I fully understand that I am responsible to pay for the actual use of the highway, but what I DON’T UNDERSTAND is, how can they charge me interest on a debt that was included in the bankruptcy? How can you calculate interest on a debt that, technically (and legally), no longer existed.
Please clarify if this is correct and legal?
Answer: Technically, yes, the debt to 407 ETR is discharged in the bankruptcy. However, 407 ETR has an agreement with the Ministry of Transportation that your license will not be renewed if there are amounts outstanding to 407 ETR. Their reasoning is that driving is a privilege, not a right, and they can withhold your license or your plates for whatever reasons they deem expedient.
At some point someone may challenge this interpretation in court, which may prevent 407 from doing this in the future. Unfortunately most people who go bankrupt in Ontario do not have the resources to fight this in court, so for now 407 ETR is in the driver’s seat, so to speak.