Bankruptcy Definitions Archives - Page 4 of 10

What is bankruptcy?

Posted on March 1, 2015April 16, 2016 by Jordan Rumanek

What is bankruptcy?

Bankruptcy: a person legally declares themselves or their business unable to pay outstanding debts. Depending upon the type of bankruptcy filed, a debtor meets with a judge to determine a payment schedule, or have a legal bankruptcy discharge most debts. Businesses may also declare bankruptcy which either means the business will close or the business will continue to operate with reduced payments to debtors.

Act of Bankruptcy: an act committed by a debtor as defined under the Bankruptcy and Insolvency Act. One of the most common is if a debtor ceases to meet his liabilities generally as they become due. A creditor with a minimum claim of $1000 may file a petition for a receiving order if the debtor has committed such an act within the six months preceding the filing of the petition.

Bankruptcy and Insolvency Act (BIA): a federal statute governing bankruptcy and insolvency in Canada which is applicable to all provinces and territories.

Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.

Are the assets of the debtor’s spouse affected?

Posted on January 10, 2015April 16, 2016 by Jordan Rumanek

Are the assets of the debtor’s spouse affected?

The bankruptcy affects only the person who goes bankrupt. However, if the consumer debtor conveys or transfers property to his or her spouse for a value that is lower than its fair market value within one year prior to bankruptcy, then it is likely that the trustee, or the creditors in certain circumstances, will proceed to set aside the conveyance or transfer. The trustee can attach those assets that have been conveyed or transferred to the spouse or any other person who has not paid fair market value. These are called settlements, fraudulent preferences and reviewable transactions under the Bankruptcy and Insolvency Act. There is also a provincial legislation that is similar to these remedies.

If there is a discharge hearing, the bankrupt is required to submit a statement of income and expenses on a monthly basis to the trustee. The statement of income usually includes the net income of the spouse. In fixing an amount to be paid by the bankrupt as a condition of discharge, the court looks at the combined income, the expenses and the Superintendent’s standards. As a result, it is possible that some of the spouse’s income will be used in making payments to the estate even though the spouse is not bankrupt.

What is a secured debt?

Posted on January 10, 2015April 16, 2016 by Jordan Rumanek

What is a secured debt?

A secured debt can be a debt incurred in order to purchase an asset, like a mortgage given upon purchase of a house. It can also be a loan given with assets pledged as security, such as a finance company that lends you money in exchange for some collateral, such as your furniture or other personal property, which is then registered with the provincial government. As long as the payments are made as agreed, you can keep the secured asset.

If payments are not made, the lender can enforce their security, meaning they can take back the asset pledged against that loan. So if you stop making car loan payments, the finance company will seize the car. If you don’t pay your mortgage, the bank will foreclose on the house. (Note that personal property and furniture pledged against a loan generally cannot be seized, due to provincial legislation prohibiting seizure of such property up to a certain value.)

Bankruptcies and proposals tend not to address secured loans, although they must be declared. Talk to your trustee if you have specific questions or concerns.

Do I lose my furniture if I go bankrupt?

Posted on January 10, 2015April 16, 2016 by Jordan Rumanek

Do I lose my furniture if I go bankrupt?

Generally not.

Recent changes in legislation provide that no creditor may seize furniture or household goods (up to a resale, or garage sale) value of $11,300, even if the furniture has been pledged as collateral for a loan.

The exception is furniture that has been purchased on store credit (and not paid in full). This means that, technically, the store (or their finance branch) that lent money for the purchase of their furniture has a right to repossess it. However, these companies are in the business of selling new furniture (and lending money), not in the sale of used furniture, so do not despair. Talk to your Trustee about your options.

Tag: Bankruptcy Definitions

What is bankruptcy?

What is bankruptcy?

Are the assets of the debtor’s spouse affected?

Are the assets of the debtor’s spouse affected?

What is a secured debt?

What is a secured debt?

Do I lose my furniture if I go bankrupt?

Do I lose my furniture if I go bankrupt?

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