Archive for Category 'personal bankruptcy Canada', page 2

Question: I have a credit line of $18,000. and one $10,000. also a personal loan that is now $7,500. and 2 credit cards totalling $14,000.  All this together is around more that $50,000.  So far I have always paid my monthly dues and never been late, however i can’t anymore

What can happens if i just stop paying all of them?

And can my creditors claim my childrens federal/provincial benefits?

Answer: No, your creditors cannot take money from someone else for your debts, including from your children.

If you stop paying your creditors, they can call you and send you letters, and eventually take you to court and sue you and attempt to garnishee your wages.  Once a wage garnishment starts, your options are to let the garnishment continue until it is paid, or file a consumer proposal or go bankrupt to stop the garnishment.

Question: I have recently met with a credit counsellor and was advised that my only options based on my income (I am currently working doing odd construction jobs and some music gigs as I play guitar which equals about $2400 a month and this may increase as my friend and I get more construction jobs) are consumer proposal or bankruptcy. I chose consumer proposal because I can afford to pay something and want to be responsible plus it will be purged from my equifax report 3 years ater my last payment whereas bankrupsy stays forever. Also my girlfriend and I intend to marry one day and she doesn’t want a bankrupsy to haunt us as she works for a bank.

My question is that I have no assets except a humvee that is basically worthless if I tried to sell it, in fact the leasing company issued the buy back out at $1500 and deplated it. However, my concern is that when my creditors see that I own a humvee they think its worth thousands. Mine was purchased on lease to own in 1997 for $90000 which I paid off last month. However the leasing company deplated it because it does not work and will not pass emissions or certification. The reason for this is because the transmission blew and all the parts had to be removed including tires and is basically gutless as I sold off parts to pay my debt in my 3 year struggle to try to hold onto my business and had no money to keep it maintained.  Also, I have to file my last 3 years in taxes and close my old business that went belly up before the proposal. I owe past taxes which is a large part of my debt but this total (35k of a 70k debt) could be substantially reduced once I close out my business by filing my returns. The trustee quoted $24k as a proposal but said CCRA will probably not accept this and we will have a meeting.

My questions are this: what information do I have to bring to my first meeting with the trustee regarding my debts and truck? What questions will be asked of me at the proposal meeting if there is one. In my past tax returns prior to 2001 I reported my truck as a capital item which they refused to accept anyway even audited me. Its been such a nightmare. Your advice would be greatly appreciated. Thanks.

Answer: Before we provide answers to your questions, we should correct your statement about credit reports:

You are correct that a consumer proposal remains on your credit report for three years after the proposal is completed.  A bankruptcy remains on your credit report for six years after you are discharged, so it is not correct to say that a bankruptcy remains on your credit report forever.

Regarding Canada Revenue Agency (CRA), your trustee is correct; they will ususally not accept a proposal if you have not filed your tax returns.  In fact, they may file a proof of claim based on what they guess you might owe, which may give them enough votes to defeat your proposal.  Therefore you should not file your proposal until you have filed all outstanding tax returns.  It is a waste of time to file a proposal that will almost certainly fail.  Get the tax returns filed, which as you say will probably lower what you owe, so it’s to your advantage to file them first.

Now, to your questions.  Bring to your meeting with your trustee all information regarding the truck.  Ideally, you should have a humvee dealer give you a written appraisal on it before you file your proposal.  By getting an appraisal first, it is unlikely anyone will question what it is actually worth.

At the first meeting of creditors, if there is one, CRA will ask what happened to your vehicle, and they will want to know what happened to your business.  They will also want to know how you plan to keep your taxes current in the future.

If you are not satisfied that your trustee explained all of this to you, we suggest you consult another trustee for a second opinion.

Question: Is 2nd time bankruptcy different from the first time?

Answer: Yes, a second personal bankruptcy in Canada is more complicated than a first bankruptcy.  With a first bankruptcy you are eligible to be automatically discharged after nine months.  In a second bankruptcy a court order is required to give you your discharge, so a second bankruptcy can last anywhere from 12 to 21 months or longer.

One way to avoid a second bankruptcy is by filing a consumer proposal.   We suggest you have a bankruptcy trustee review your situation and explain in detail what will happen if you go bankrupt for a second time.

Question: I am self-employed, and have never had trouble in the past, but because of some major legal issues facing the building I live in, the owners in the complex are now being charged several times the typical strata maintenance fees and levies each month.

I am realizing that all my money is being funneled into this, plus paying off a personal loan I had to take out for a previous special assessment in the several thousands of dollars, plus my mortgage payments, lus myBC Medical Services Plan payments twice a year for my family and I, plus payingfortrips to the dentist, plus power, plus property taxes, plus food and clothing for my wife and son, gas for the car, phone, internet (necessary for working from home), and still provide a few basic comforts for my family, namely the cable TV.

At the end ofthe day, I don’t know that I will be able to keep enough money to make my income taxes in April. Every timeItrytoput money away when I cash my cheque, something unavoidable and beyond my control comes along that eats that money up.

Because of the legal battles the building is involved in, it would be extremely unlikely anyone would want to buy my condo if I put it on the market to pay my taxes.

Someone half-jokingly told me I should become a drug dealer because there’s no taxes and the jail term is shorter than if you fail to pay income tax on legitimate earnings.

So, joking aside, is there anything I can do? I am on the verge of serious depression here because I fear I may be bankrupted by factors I can’t control. Please help.

Answer: Yes, there are many possible solutions, including a consumer proposal or personal bankruptcy.  To decide which option is best for you, you should immediately make an appointment to meet with a trustee, who will review your monthly income and expenses and help you decide which option is best for you.  The initial consultation is free, so the sooner you get help, the sooner you will be able to get a fresh start.

Question: I have the following debt:

TD GM VISA $25000
CIBC VISA $15000
MBNA Master-card $6000
MBNA LOC $21500
———————-
Car loan $4000 (with my ex): (this car is under his name)
Car Loan $13500 (jointly with my spouse
———————————
House purchased on May 2007
purchased price $296000
Mortgage $288000
its a joint property with my spouse

currently i am not working for physical condition (accident). now it is very hard for me to pay the high monthly credit card bill.

what can legally my creditors/ collection company do against me, when i am unemployed. Can they sue me? or take equity from our house (jointly with spuose)?

Answer: If you don’t pay your creditors, their first step will be to send you letters and call you to attempt to collect the money.  If they are not successful, the next step may be to take you to court and sue you.  If they do, they will probably be successful, and obtain a judgement against you.

With a judgement, they can enforce the judgement by obtaining a garnishment order from the court, which allows them to garnishee your wages.  Since you are currently not working, that is not something you need to worry about until you are back at work.

In order to take equity from your house they would, after getting a judgement, need to return to court and place a lien on your house.  Then, to get any money from the lien, they would either need to wait until you sell your house, or start foreclosure proceedings.  In your case both of these scenarios are unlikely.  It would be pointless for a creditor to spend money on lawyers to get a lien on a house that has no equity.  If they foreclosed there would be no money left over after the mortgage and real estate fees were paid, and creditors do not typically put a lien on a house and then wait for years until you sell.

You should probably consult with a bankruptcy trustee to review your options; all of the trustees on this site provide free initial consultations.  They may recommend that you wait until you are working again to file bankruptcy, or they may suggest a proposal to creditors, if you are not able to repay the debts on your own, and you want to prevent a wage garnishment.

Question: Can you still get a mortgage eventhough your credit is in r9 or r7? right now i am renting a condo for $1100 a month & pay all utilities. worked fulltime & earn 19 per hour. spouse is earning wsib benefit but eventually will be looking for a job.

Answer: Yes, it is possible to get a mortgage with poor credit.  However, if you are an R7 or an R9 the mortgage will be very expensive, and so may not be a good idea.

In most cases it is best to work on repairing your credit and saving money before you apply for a mortgage.  That may mean talking to a credit counsellor about a debt management plan to pay off your debts, or perhaps even filing a consumer proposal or personal bankruptcy in Canada to discharge your debts and give you a fresh start.

Question:  Hello, will I be considered a “second time bankrupt” in this situation: 23 years ago, my now ex-husband and I filed for bankruptcy, jointly, in the province of Quebec. That was mostly due to his over-spending but since many things were in both of our names, we had to declare bankruptcy together. A few years later, we divorced.

I’ve been very good with my credit all along, until the last three years. Although I’m not late with payments, I keep digging myself deeper into debt; so far $25,000 and counting. If I declare bankruptcy, how will this impact me? Will I be considered a “second time bankrupt” and will it stay on my credit report for 14 years? Besides that, would there be anything different than a first time bankrupt would be subject to?

Answer: Yes, because this will be the second time you will be declaring bankruptcy in Canada, you will be considered a second time bankrupt.  The most significant difference between a first and second bankruptcy is that in a first bankruptcy you may be eligible for an automatic discharge from bankruptcy after nine months.  In a second bankruptcy you are not eligible for an automatic discharge; only the bankruptcy court can grant your discharge, which means that you will be bankrupt for more than nine months (typically 12 to 21 months or longer).

A bankruptcy trustee can provide more specifics about how a second bankruptcy would impact you in your province.

Question: I had managed to stay out of debt for nearly 40 years, but in the last 3 years I have accumulated $15,000 in debt. (went back to school) $5000 of that is credit card and $10,000 is a line of credit – both to the same bank. I make the minimum payments, however, it seems that my monthly minimum payments have been slowly increasing each month. I work permanent part time and am not managing to pay off the principle. Before I read this blog and new anything about debt repayment I phoned my bank. I asked if I could have my interest payments lowered. They said no flat out. Then I asked if there was some kind of fixed payment plan where I could consolidate my debt into one payment. I was informed that there was, but in order to qualify I would have to pay $325 monthly for 5 years. (totalling of course $19,500) But, they said that because my income to debt ratio is so high they wouldn’t feel comfortable doing that. My income is about $24,000 a year. I have no assets – no house, no rrsp’s a car worth about $1000, old used furniture and my clothes. What do you think is my best option?

Answer: If your income is $24,000 per year before taxes, it will be difficult to repay your debts in a reasonable period time.  We suggest the following approach:

First, make a budget to see exactly what you can afford to repay.  If you can afford to repay the debt, a debt management plan through a non-profit credit counsellor may be a viable option.

If you can afford to repay some of the debt, but not all of it, a consumer proposal may be a good option; for a consumer proposal, contact a trustee.

If none of those options work, the final option may be personal bankruptcy.  Again, contact a trustee for more information.

Either way, your money problems won’t go away on their own, so the sooner you take action, the sooner you will be able to get a fresh start.

Question:  I have found myself in a position with payday loans,etc after filing bankruptcy 9 years ago. I am interested in cleaning up my entire credit bureau and wiping a clean slate. Due to unforseen circumstances a few years ago I found myself borrowing from one payday company to pay another and since got myself into a bid. I am interested in the best way to fix and pay what I can so that this does not destroy my marriage once and for all.

Answer: There are a number of possible ways to deal with your money problems.

The first option will be to cut your expenses and place yourself on a strict budget, and then use the savings to repay the payday loans.  If the amounts are relatively small, this is a good option.

If you need help with this process, you could contact a non-profit credit counsellor for assistance.

If your credit is reasonably good, another option would be to go to the bank and get a debt consolidation loan.  Since your bankruptcy was nine years ago, it may be possible to qualify for a debt consolidation loan.

Question: My boyfriend and i purchased a car five months ago i am the co-debtor for this vehicle and i am claiming bankruptcy. The car is secured through Royal Bank (the financing company) will they take the car? My boyfriend is not claiming bankruptcy.

Answer: Since your boyfriend is the primary borrower, and he is not filing for bankruptcy, the bank will probably not take the car, provided your boyfriend continues to pay for it.

To be sure, we suggest you contact the bank before you file for personal bankruptcy, and ask them to confirm that they will not take the car if you go bankrupt.