What Happens If I Lie To My Licensed Insolvency Trustee?
It is a statutory obligation for every person filing an assignment in bankruptcy to make full disclosure of all assets, liabilities, income and living expenses. As well, you must disclose information as to the disposal of any of your assets within the past 12 months (5 years if the asset is real estate). If you intentionally do not disclose significant information to your trustee, you will have your discharge from bankruptcy opposed by the trustee.
You might even be required to appear in court to explain why you did not disclose full and complete information. The court can impose penalties on you, depending on the significance of the non-disclosure. You should also be aware that you are asked under oath to swear that all of the information that you gave to the trustee is reasonable and accurate to the best of your knowledge and belief.
Swearing a false affidavit is called “perjury” and now you may be charged under the Criminal Code as well as under the Bankruptcy and Insolvency Act. Not a good situation to find yourself in when you are already stressed out over your debts.
Now this is an unusual question. The technical answer is: you do not have to tell him or her anything. When you sign the papers to file an Assignment in Bankruptcy, you will be asked to sign a document under the Personal Information Protection and Electronic Documents Act (PIPEDA) which specifies that your trustee will only deal with those people that they are required to do so in order to perform their duty as your trustee. This normally includes only your creditors, Canada Revenue Agency, Office of the Superintendent of Bankruptcy, the court and any collection agencies or lawyers who have been hired by your creditors. If you wish to authorize your trustee to speak to any other party such as your wife/husband, children, employer, brother, sister, etc., you will be asked to do so in writing.
The trustee will not ordinarily disclose your bankruptcy to your employer. The exception is if one of your creditors tries to garnishee your wages. Your trustee can stop the garnishee, but, if the papers have already been sent to your employer, then your trustee will have to send your employer a letter to stop the garnishee.
With respect to your husband or wife, the issue can get more complicated. If they are a creditor, they must be notified for that reason. The usual problem is that your trustee will periodically be sending you documents, notices, etc. and you will have to make sure that your wife or husband does not open your mail. You should be aware that the envelope has only a return address with no name on it. If this is an issue, please speak to your trustee at the initial meeting and we will try to resolve it by way of Email, fax or an outside mail box service.
It is, of course, better to be honest and upfront with your partner about the financial problems and the fact that you have chosen bankruptcy as the solution to your problems.
A proposal is a scheme of arrangement whereby you offer to your creditors something less than the total of what you owe them. That is why you see advertising that you can save up to 75% of your debts and not go bankrupt. The key words are “up to.” Sometimes this is possible, but not always. It depends on who you owe and how much you owe them. Very few proposals require you to turn over your car or other assets as part of the terms of your proposal.
If you do not owe money on your car to a bank or finance company, you need only to disclose the value of the car on your list of assets. Note that your car is exempt in Ontario to a value of $5,650. This increases to $11,300 if it is used for business purposes.
If you still owe money on your car, remember that the bank or finance company does not want your car – they want your monthly payments to continue – that is how they make money. If your payment history has been good, your trustee/administrator of your proposal will be able to assist you in keeping your car.
In exceptional circumstances, you may find that your car payments are much higher that you can afford. The debt on the car may be much higher than the car is worth and you may want to get out of an unfavourable contract. Your trustee/administrator of your proposal can still help you by arranging for your car to be turned in to the secured creditor (the bank or finance company) before you sign the papers for your proposal. The debt owing to the bank or finance company will be estimated as net of the selling price of the car. This debt will be included in your proposal. The estimate will be updated once the car is sold and the actual loss to the bank or finance company is known. Your trustee/administrator of your proposal will often assist you in obtaining a more affordable vehicle either prior to or during the early stages of your proposal.
A good trustee/administrator of your proposal should be considered as a resource person to help you solve all of your financial problems. He or she has seen many similar problems in the past and can assist you in your recovery.
Please also refer to our blog: Bankruptcy – What is a Discharge.
While you are bankrupt, your position is that of an “undischarged bankrupt.” This means that you have to continue to supply budgets, tax returns and other information to the trustee on an ongoing basis. You are not allowed to apply for a loan, line of credit, bank overdraft, mortgage, etc. for an amount over $500 without disclosing that you are an undischarged bankrupt. The chances of being approved are very poor. If you come into an inheritance or win a lottery while you are still bankrupt, your trustee will have a talk with you about who gets the money. The trustee will explain that an “after acquired asset” is an asset acquired by the bankrupt person between the date that you filed the bankruptcy and the date you are discharged from your bankruptcy. You will not be happy with what you hear. Mortgage companies may renew an existing mortgage (usually at a higher than normal rate) but they will rarely allow you to increase the mortgage nor will they issue a new mortgage to an undischarged bankrupt.
Your discharge from bankruptcy is the start of your recovery and rebuilding of your financial life. You will be able to apply for a credit card or line of credit with a reasonable chance of success. Your trustee will assist you in this process. The credit bureaus (Equifax Canada and Trans Union of Canada) both keep a record of your bankruptcy for 6 years after you are discharged (14 years if it is a second time bankruptcy). The faster you get your discharge from bankruptcy, the faster it will disappear from your history. Translation – it will be easier, faster, cheaper to get a credit card or borrow money for the purchase of a car or house after you are discharged from bankruptcy than it is while you are still in the bankruptcy process.