My brother has a small business where he has about 10 employees.  He is worried sick that he owes Canada Revenue Canada just over $100,000.  Should he just put the company into bankruptcy?  Can they do anything to him personally?

Answer:

Your brother sounds like he may need some professional help and should seek the services of a licensed bankruptcy trustee.  Putting his company into bankruptcy may not be the answer.  We do not have enough information as to what assets he has in the corporation, what is the company’s cash flow etc.  CRA has the right to raise a directors liability for any source deductions your brother did not remit to CRA and he may have some personal exposure.

CRA has some powerful legislation and we can only recommend that your brother seeks help as soon as possible to explore his options.  Most  trustees provide a free initial consultation and he should immediatly take advantage of this.

I used my line of credit ($20,000) for the purposes of going to school.  Since I used this money for school and I have only been out of school for two years, does this debt survive bankruptcy?

Answer:

The short answer to this question is no the debt does not survive bankruptcy and the debt can be discharged.  Lets look at the legislation wording to clarify.

Under Section 178  (1) (g) of the Bankruptcy and Insolvency Act,  (BIA) it states:

“An order of discharge does not relase the bankrupt from any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred

(i)before the date on which the bankrupt ceased to be a full or part time student as the case may be, under the applicable Act or enactment or

(ii) within seven years after the date on which the bankrupt ceased to be a full or par time student”

While Subsection 178 of the BIA applies to loans made by the Federal and Provincial governements, it does not apply to a non government or private lender of student loans.  Since your line of credit is essentially an unsecured debt and not under the Canada Student Loans Act, or the Canada Sutdent Financial Assistance Act,  your line of credit debt could be discharged as it would not fall under Section 178 (1)(g). 

The creditor who lent you this money however, has the right to object to your discharge.   The Court will take into account if this is your only creditor for example.  If so and you benefited with a higher education for the rest of your life,  the Court might make you pay back some of this money under a “conditional order”. 

The Court may decide that you as a bankrupt should not be able to take advantage of the release of the debt provision while having the sole creditor pay for your education.

My neighbour went bankrupt over 5 months ago and drives a BMW.  How can someone in bankruptcy possibly be able to drive a BMW?  I think it is a 2009.

Answer:

You state your neighbour drives what you describe as a 2009 BMW.  From the limited facts you bring up, there are many possibilities.  Is it truly his or her vehicle, whether he or she is legally the registered owner,  is it leased, does it possibly belong to his or her employer?  If you were a creditor of your neighbour, you would have the right to call the Trustee and get more details as to why they are allowed to continue to keep the vehicle.

The other issue is provided the bankrupt is making all his surplus income payments to his trustee and making payments on the car, it is possible everything is legal and above board.

I owe about $239,000 in debt.  Can I file a consumer proposal?

Answer:

Yes you are eligible to file a consumer proposal.  The Bankruptcy and Insolvency Act allows a consumer debtor to file a consumer proposal provided your debts do not exceed $250,000.    Given the large amount of your debt, your consumer proposal would have to be reasonable and pay the creditors more than what they would receive in a bankruptcy.

I have credit credit card debt of $18,000 but I pay my American Express Card every month.  Can I go bankrupt on just the other credit cards and keep my American Express credit card that currently has a zero balance?

Answer:

No, unfortunately you must surrender all of your credit cards when you declare personal bankruptcy.  You can not pick and choose your creditors.  Even though the American Express credit card is paid off, it is imperative you surrender it to your Trustee.  If you do not do so, you would be in violation of the Bankruptcy and Insolvency Act.

I have a vehicle worth about $31,000 and owe about $30,000. Payments are $600> I need a vehicle for my work, would I be able to keep this vehicle and continue making payments if I declared bankruptcy?

Answer:

The simple answer is yes, you can keep your vehicle and continue to make payments.   In Alberta, under the Civil Enforcement Act, a vehicle equity exemption is $5,000.  In your case, it sounds like there is $1,000 equity which you are allowed to claim as exempt.

Provided that you can afford the $600 payment per month and pay any surplus income payments that may be required, you can keep your vehicle.

I may need to go bankrupt.  My spouse and I keep everything

separate, she owns the home, title is in her name, I have never

been on title, will creditors have any rights to the home we

live in?

Answer:

Generally speaking no,  it is protected as it is not your asset it is your

spouse’s asset.    If you and your spouse have joint debt, once you

go banrkupt they will came after her for payments on those

joint debts.  If she does not pay, they may get a judgement and

put a writ against the property.  This writ will remain against

the property until the debt is dealt with.

I live in Calgary where the housing market is down from the peak in 2007.  I lent my son money for a down payment to buy a house as his mortgage payment was going to be the same as his rent he was paying.  He took out a CMHC mortgage and since I lent him the down payment, I was also listed on the mortgage.    My son lost his job and there was no way I could continue to make payments on his house and pay my bills as I am now retired on a fixed income.   The house went into foreclosure and now there is a $89,000 amount owing so my son went bankrupt.   I just received notification they expect me to pay the $89,000.  Can they do this?

Answer:

Yes they can do this as you are jointly and severably liable.  It appears  you co-signed on the mortgage and since your son has gone bankrupt, CMHC has the right to come after you.

We do not have information about you personally such as what your fixed income is or what assets you own.  It sounds like you can not afford to pay this amount.   You should seek the services of a licenced Trustee in bankruptcy to explore your options.

I filed for bankruptcy last year and at the time i was unemployed.i have a wife and daughter and my allowable monthly income is around 2800. I had since gotten a construction job that was paying quite well when i was working.. But my employment was very unstable.I had a few months where i went over my allowable earnings. But I had almost 4 out of my last 9 months with no employment.I know i am supposed to give my surplus income each month to my trustee But i knew if i had done this i would not have enough money to survive.  Will this create a problem with me being released from my bankruptcy?

Answer:

Yes, it will create a problem from you being released (Obtaining your discharge) from bankruptcy.   The Superintendent of Bankruptcy has issued Directive 11R2 titled “Surplus Income”.  If you have not paid in all surplus income payments to your Trustee, you likely will not get a discharge until the required surplus income payments are made.

I have been discharged from my personal bankruptcy. How long do I have to wait til I can list my house for sale?

Answer:

When you filed for bankruptcy, you cease to have any capacity to dispose of or otherwise deal with your property.  Although you may be discharged now, it does not mean that you have the capacity to sell your house.   Your house may not have been totally dealt with in your bankruptcy so you will need to discuss this with your Trustee.