Ottawa Ontario Personal Bankruptcy Blog

Divorce and Bankruptcy

2009-06-16T23:07:00.004-04:00

Question: I am in the middle of a divorce and we have many accumulated debts together. The house was taken by the bank but we are left with all the other household debts. What happens with the house? Am I still responsible? Also what happens when the debts are in both of our names?

Answer: If a debt is in both names (you and your ex), you are both responsible for the entire amount of the debt. If a bank repossesses a house and sells it, and does not recover the full amount owing on the mortgage, they will pursue you for the difference.

The same is true for debts that are in both names. If one of you does not make the payments, the lenders will pursue the other person for the full amount owing.

Divorce is one of the leading causes of bankruptcy in Canada, so if you believe that you will not be able to pay all of your debts in full, you should consult an Ottawa bankruptcy trustee to explore all of your options.

Animals and Bankruptcy

2009-02-12T17:44:00.003-05:00

Question: If I declare bankruptcy, will I loose my pet dog and my horse I use for work- I am a riding coach ?

Answer: It depends on their value. Unless your pet dog and horse are very valuable, it is unlikely that you would lose them if you filed for bankruptcy. We suggest that you contact an Ottawa bankruptcy trustee who can review your situation and advise you of your options in more detail.

Death and Bankruptcy in Ottawa

2009-01-13T15:31:00.003-05:00

Question: My husband has passed away. He has business debts and credits cards and leases which I have not co-signed on.

His only assets are RRSP's and a small life insurance policy of which I am the beneficiary.

Am I responsible for his debts as the executor of his estate?

Answer: No, you are not responsible for someone else's debts, unless you have co-signed for them. As executor of his estate you will work with your lawyer to liquidate his assets and use those assets to pay his creditors; your lawyer can provide you with more information.

2nd bankruptcy

2008-12-15T18:46:00.001-05:00

Question: I have been advised that one of my creditors is objecting to my discharge, i had made a consumer proposal of $500 a month for 5 years which they did not accept ... Should I get a lawyer, I am not getting too many answers from my trustees, any assistance would be appreciated. I was last bankrupt in 1999.

Answer: As a second time bankrupt, you are required to attend a discharge hearing to obtain your discharge. If you are not satisfied with the assistance your trustee is giving you then yes, you could hire a lawyer to represent you at your discharge hearing. However, in most cases the easiest course of action is to request a meeting with your trustee prior to your discharge hearing so that you fully understand what will happen at the hearing, so that you can prepare for it.

Pending Wedding to someone who is bankrupt

2008-11-04T23:56:00.003-05:00

Question: I am engaged to someone who is filing bankruptcy. My credit is solid and I have no financial issues. Will my credit be negatively affected by marrying someone who has filed bankruptcy?

Answer: No, your credit is not affected by your spouse's bankruptcy. However, in the future, your spouse will not be as good a co-signer for you if they had not gone bankruptcy.

For more information, please see this article on Does Filing for Bankruptcy in Canada Affect my Spouse?

Curious about when to consider bankruptcy in Ottawa

2008-10-27T12:50:00.000-04:00

Question: When should a person consider bankruptcy in Ottawa? Single Mom with 2 children with an annual income of 35000, but I seem to only make dents in the interest alone. I have finally paid off my student loan but I am maintaining things now. I have yet to inquire about my debts as I don't want to see what their is let alone have people calling and harassing me all the time without a game plan first. What are the reprecussions of filing bankruptcy to spending the next 15 yrs paying off debt?

Answer: You are correct, bankruptcy is a way to deal with your debts, but it also has some negatives:

First, there will be a note on your credit report for six years after you are discharged, so it will be more difficult to borrow in the future.

Second, while you are bankrupt you are required to make payments based on your income, so if your income increases, your payments increase.

Finally, you may lose some of your assets, such as your tax refund and GST credits.

To determine if bankruptcy is the correct option for you, you should make a list of all of your debts and then call an Ottawa bankruptcy trustee for a free initial consultation, so that you can review your options and decide which option is best for you.

jointly owned property

2008-09-27T21:51:00.002-04:00

Question: 3 people jointly own a piece of property, one person has a mortgage on the property that has been co-signed by the other two parties. If the person with the mortgage goes bankrupt or files a consumer proposal how can that affect the other two people and could they lose the property or have a lien placed on it?

Answer: It depends on the value of the property. The bankruptcy trustee must turn the bankrupt's one third interest in the property into cash, so the other two parties could conceivably buy out the bankrupt and keep the property. To start, and appraisal should be done on the property, and the mortgage balance confirmed, and from there the bankruptcy trustee can advise you on the next steps.

Personal Bankruptcy in Ottawa and House

2008-04-08T10:20:00.003-04:00

Question: Our home was transferred to my husband's name more than a year ago. My name is not on the title nor is it on the mortgage or insurance. This was done to protect this asset against a possible lien for a debt that I was personally responsible for. Would this home be protected should I file for personal bankruptcy in Ottawa?

Answer: When you file for bankruptcy, you are required to disclose whether or not you sold a house in the previous five years "while you were knowingly insolvent". In your case you transferred the house to protect it from a creditor, so you were probably insolvent. Whether or not it would be an issue in your bankruptcy will depend on the value of the house and the mortgage balance at the time of the transfer, and your other debts.

As this is a significant issue, we suggest you consult a bankruptcy lawyer or an Ottawa bankruptcy trustee for more information.

rrsp and bankruptcy in Ottawa

2007-10-27T21:29:00.000-04:00

Question: I have a managed rrsp to which I have contributed for the last 20 years. is this vulnerable if I go bankrupt in Ottawa? is the law about to change? Thanks Jennifer

Answer: Potentially, yes. If your RRSP is not locked in, you will probably lose it if you file for bankruptcy. There have been many proposed rule changes, but as of today no changes are imminent.

For full details, and for a free initial consultation, we suggest you contact an Ottawa bankruptcy trustee.

Consumer Proposal and Collection agency

2007-10-20T21:32:00.000-04:00

Question: Good day, I co-signed on a personal loan a few years ago, without me knowing, the primary borrower files for a consumer proposal, which was eventually accepted.

Now a year later, without written notice, I am receiving phone calls from a collection agency, in reference to that original loan, saying that they will turn this to a legal suit within the coming weeks.

It turned out that when the creditor accepted my friend's consumer proposal, they struck her name from the bills, leaving me as the sole debtor. Without notice, they sent the file to a collection agency, which is now threatening legal action, in a short period of time.

In my eyes, this means that the creditor would end up receiving twice the original loan amount, as they are receiving the money from the consumer proposal, which I have not signed nor seen a copy, and the amount that they want to collect from me.

Having contacted the trustee that did up the proposal, I've had verbal confirmation that a clause was put in to "NOT hold the co-borrower liable of this debt". The collection agency had no knowledge the the proposal, and I've arranged for them to receive a copy from the trustee, but as my name is not on the proposal, I am unable to get a copy myself.

How can something like this happen and what recourses do I have?

Answer: First, a consumer proposal is a public document. We suggest you contact the trustee, and advise them that you are a creditor in the proposal, since you are owed money as a result of co-signing the loan. You will then be able to obtain a copy of the proposal.

Second, you should contact the bank (not the collection agency), and ask them to advise the collection agency that they have already agreed to remove your name from the debt as a result of the acceptance of the consumer proposal.

If you are not successful with this approach, you should consult a lawyer.

On a side note, it is very unusual for a proposal to contain a clause eliminating liability for a co-borrower, so you will want your lawyer to review the proposal to determine your next step.

monthly car payments on new vehicle

2007-06-16T23:28:00.001-04:00

Question: What will happen to my new car if I go bankrupt in Ottawa? Will I lose my car?

What will happen to my new car if I go the proposal way. Will I lose my car?

Answer: The answer depends on the value of the car, and the amount owing on it. If you go bankrupt in Ottawa, or anywhere in Ontario, you are allowed to keep one motor vehicle with no loans against it worth up to $5,650. If the vehicle is worth more than that amount, you can pay the excess amount to the trustee for the benefit of your creditors, so you could keep a $6,650 car by paying the trustee $1,000.

If there is a loan against the car equal to the value of the car, the trustee will not take your car. It will be up to the lender to decide whether or not they will allow you to keep making payments on the car, so you can keep the car.

If you file a consumer proposal, you can keep your car with no loans against it. If there is a loan, as with a bankruptcy it is up to the lender to decide whether or not they will allow you to keep making payments on the vehicle.

This is a complicated area of bankruptcy law, so we suggest you contact an Ottawa bankruptcy trustee for more information.

RRSP and bankruptcy in Ottawa

2007-04-09T09:08:00.001-04:00

Question: Is RRSP money protected in case of a bankruptcy in Ottawa?

Answer: The answer depends on the type of RRSP. If the RRSP is an RRSP that you have contributed to over the years, perhaps at your bank, than it is probably not protected, meaning you would lose your RRSP if you filed for bankruptcy.

If your RRSP is a locked in RRSP, you would generally not lose it if you filed for bankruptcy. An RRSP is typically locked in when you convert a pension from your former employer to an RRSP, or if your RRSP is through work, where your employer is making the contributions.

This is a complicated area, and there are many exceptions to these rules, so we strongly suggest that you contact a trustee to review your RRSP paperwork before you decide whether or not to fie bankruptcy.

Debt at Death do you part?

2006-10-28T09:20:00.000-04:00

Question: Can bankruptcy be used lawfully to eleviate financial burden on your family if you were in danger of or close to dying?

Answer: Unless family members have co-signed for your debts, they are not responsible for your debts. If a person dies, the executor of their estate would liquidate their assets and use the funds to pay the creditors. Any remaining funds would be distributed to the heirs. If a living person goes bankrupt, a trustee would sell any non-exempt assets, and the proceeds would go to the creditors, so a bankruptcy in most cases does not protect family members.

We suggest you contact a trustee for further information.

Joint Account

2006-10-19T09:02:00.000-04:00

Question: My spouse and I have a joint bank account held at a Canadian bank but in US Funds. The majority of the deposits have been from his paycheque (as a portion of his pay is in US Funds). I have deposited about $300 US from Independent work I have done. The account has over $5000 US. I have all his pay stubs that show each week the amount he received in US dollars. If I file for bankruptcy alone, would his money be taken? Can I take my name off this account and move my $300 into an account just in my name. Any advice is appreciated. Thanks.

Answer: A joint bank account belongs 100% to both parties. In most cases we recommend that you open a new bank account, at a new bank, before filing bankruptcy. Therefore, in your case, yes, you should take your name off the joint bank account, and deposit your funds in your bank account. Your trustee will be able to explain this in more detail.

Has your paycheque has been reduced?

2006-06-27T09:39:00.000-04:00

Does This Example Sound Like You?
Those extra hours you were counting on are gone. That regular bonus cheque has disappeared. Hours have been reduced on your shift. However you cut it, you are not taking home what you used to. You needed that extra bit to just get by. Now the bills are piling up. There just isn't enough money to go around. What can you do?

What Can You Do?
The root of your problem may be in your monthly budget. Some people can fix it themselves, by either making more or spending less. If part of your problem is that you are only able to make your minimum monthly payments on your credit cards, you may be digging yourself into a hole which you will need professional help to get out of. If you want to find out what your options are, click here for more information.

Has Revenue Canada frozen your bank account?

2006-06-26T11:38:00.000-04:00

Does This Example Sound Like You?
You own and operate your own business - things were great for the first couple of years, but lately sales have dropped off and in order to pay your suppliers you've let your payments to the government slide. Yesterday they froze your bank accounts. What can you do?

What Can You Do?
Solutions for self-employed people are always a bit more complicated. Depending on the legal structure of your business (sole proprietor, partnership or corporation) your approach may be quite different. Let's say that you're a sole proprietor and therefore you need the account unfrozen immediately. You have the option of filing bankruptcy or possibly a proposal to your creditors. The 2 questions you need to ask yourself are "do I want to stay in business?" and "am I making any money?" We strongly suggest you meet with a financial professional - for more information click here.