When a consumer debtor files an assignment in bankruptcy, the trustee requests that the consumer debtor turn over all of his or her credit cards. Each holder of the credit card will be notified of the bankruptcy and as a general rule, there will be no further extension of credit. While the consumer debtor is an undischarged bankrupt, the consumer debtor cannot borrow any moneys over $1,000 without revealing that the consumer debtor is an undischarged bankrupt.
Once the consumer bankrupt is discharged, however, the consumer’s credit rating will be returned assuming that the requirements of the holder of the credit card can be met. Usually within one year of a bankrupt’s discharge, one will be able to obtain new credit cards. However, if this is a second bankruptcy or there are special problems arising out of the bankruptcy, there may be some difficulty in re-establishing credit. Credit reporting agencies, such as Equifax, may be consulted by credit card companies before issuing new credit cards. Once discharged, the consumer should contact and advise such credit reporting companies of the particulars of discharge, namely the date, court, judge and any conditions that may have been imposed and satisfied.
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.
For most people, the value of furniture, personal property and household goods are well within the exemption levels permitted by each province. In other words, the Trustee will not seize your assets, unless the resale value (usually close to the garage sale or online classifieds value) is above these thresholds:
In Ontario, the following values apply:
• Household Furniture valued to a maximum of $11,300.00
• Personal possessions (clothing etc.) to a maximum value of $5,650.00
• Tools of Trade to a maximum value of $11,300.00
• A car or truck to a maximum value of $5,650.00
• Certain life insurance policies and pensions
• Farmers tools to a maximum of $28,300.00
If the value of your property is higher than the exemptions given, most commonly with a car or truck, you will be required to pay the difference, not the full value, to the Trustee.
Please note that if you are self-employed in Ontario, your car or truck can sometimes also be considered as a Tool of Trade, which increases their exemption from $5,650.00 to $11,300.00. It is also possible to keep two vehicles – the first vehicle exempt, as a personal vehicle, the second exempt as a business vehicle.
Contact Rumanek & Company Ltd. for more information on bankruptcy in Ontario and debt solutions. Please fill out the bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt and bankruptcy in Ontaio for more than 25 years.
Question: I have clients that I cannot refinance. Their Thornhill condo was appraised at $335,000, against mortgages of $239,000. Their combined monthly pension income is $2605. Total unsecured debts are $22,421.
They would like to keep their condo, although I think this is a mistake–75% of their income goes to shelter. If they were to do a proposal or bankruptcy, could they keep the condo and the car?
Answer:
Your clients have some decisions to make.
They certainly can keep their condo and car, as long as they keep the payments in good standing. A proposal or bankruptcy need not impact secured creditors. They should be aware that though they are living on a fixed income, they do have sufficient equity in their property to pay their unsecured creditors in full. They have a number of options available to them, depending on how much they are able to pay each month, who is on title of the property, do they have life insurance, help from family members, the availability of reasonably priced quality rental housing, etc. Your clients should meet with a licensed Trustee in Bankruptcy to guide them through these possibilities, so they can make the most informed decisions possible.
Contact Rumanek & Company Ltd. for more information. Or please fill out the form on the contact us page for additional information. Or if you would like a free evaluation please fill out the 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.
Almost all unsecured debts, like, credit cards and lines of credit, are included in a bankruptcy, although you may need to change banks. If you are self-employed, HST, WSIB, and money owed to suppliers are generally covered, although this may impact your future business and should be discussed with your Trustee. Old phone, utility, and rental agreements are covered as well, as long as you are no longer at that address or using those services.
Which debts are not included in a bankruptcy?
Most of the debts that are not eliminated by bankruptcy are still included in a bankruptcy while it is ongoing. Section 178 in the Bankruptcy and Insolvency Act lists the debts that survive bankruptcy, or come back when your bankruptcy is over. Most of these debts are stayed, meaning the creditor cannot collect or pursue you without court approval, but once your Trustee is discharged from the file, they can resume pursuit of their debt, with interest. For example:
• Child and spousal support and maintenance;
• Fines and penalties that have been imposed by a Court;
• Damages for bodily harm, sexual assault or wrongful death;
• Debts proven to be a result of fraud, embezzlement, misappropriation or theft while in fiduciary capacity;
• Debts proven to be a result of obtaining property by false pretences of fraudulent misrepresentation;
• Student loans less than seven years old;
If any of your debts are for situations noted above, make sure to discuss your options with your Trustee.
Are there debts that I have to keep paying when I am in bankruptcy?
Some debts have to be paid, even during a bankruptcy:
Debts related to open accounts, such as cellphones you intend to continue using, generally must be paid;
Debts relating to utilities (such as electricity or heat) can be included in a bankruptcy, but you may be required to pay a significant deposit to keep the service active;
Payments for leased, financed, or rented items which you want to keep, such as a car or a computer, or the mortgage on your home.
As difficult as the conversation may be, discuss these issues with your Trustee. Your best choice for a financially healthy future may be to let go of your smartphone, sports car or dream house.
What if I forgot an account that should have been included in my bankruptcy?
This issue is especially important in consumer proposals, as the voting is by majority, based on the amounts owed to the creditors who vote.
If the debt is small relative to your others, call the Trustee and ask them to send the documents to the new creditor. If the forgotten debt is large, the amount the others receive would go down quite a bit, so their acceptance of the original amount would not be valid any more. Your Trustee may feel it is appropriate to update your documents and notify all the creditors of the change. A new vote would be required as well.
In a bankruptcy, creditors receive their share of funds collected by the Trustee from asset realization or monthly payments. If the amount is large compared to the other debts, the Trustee may find it appropriate to notify creditors, so your documents would then have to be amended and signed again. If the amount is small, the Trustee would just add the new creditor to the list.
In general, if the file is complete, and you had intentionally excluded a debt, you would have to ask the Trustee if the creditor would have been entitled to a payout from your estate. If so, you are personally liable to that creditor for the amount they would have received had you disclosed the debt. If there was or would have been no payout, the debt is discharged when the bankruptcy is discharged.
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.
Which debts can be included in a bankruptcy?