Discharged from Bankruptcy, Now What?

[theweaves_dad]

Chris (my son) wants me to post this here for all to answer and give input on.

Chris was discharged from his bankruptcy on March 1, 2012. However, his trustee gave him ONE piece of paper on "building your credit" after discharge. All it basically said was to check his credit with TransUnion and Equifax.

He has done that, and submitted a couple of things that still need to be fixed on there, including the infamous Rogers Wireless, who by the way, told him on the phone in February that his account was closed, yet he got a bill THIS WEEK from them!

He also found some open credit accounts, whom he contacted and closed them as well.

So now what can he do? He knows there is a pre-paid credit card that he can get (when he gets some money to put on it!), also he applied for a PC credit card a couple of weeks ago, as the lady told him that a guy that was undischarged even got one, he is waiting to hear back from them still.

Oh one more thing, he submitted his tax stuff to his trustee. Now he is under the belief that although they are doing 2 tax returns, one pre and one post, that no matter what the outcome of either, he is not entitiled to any refund of any kind and if there is balance owing on either one, he has to pay it out of his pocket. Is this the way it works? Chris thinks that if the post bankruptcy comes out to a refund that he should be getting that... Right or Wrong folks?

Having said that, he is still entitled to get his GST payments etc this year is he not? Or does that get eaten up by the estate as well???

Chris says thanks for any help, advice, tips etc!

[Insane]

When I was looking at bankruptcy I found this website to be uber helpful. Just about every question you have, the answer is there! They even have an ask a trustee section.

http://www.bankruptcycanada.com/

How to get a credit card
http://www.bankruptcycanada.com/creditcard.htm

Rebuilding
http://www.bankruptcycanada.com/rebuildcredit1.htm

As far as the income tax goes, my trustee told me point blank I should file my income tax BEFORE I sign the papers otherwise they'd do it and keep the money. They would keep any outstanding refunds so it was in my best interest to do this before I filed. So before I filed my proposal last year, I did my income taxes so I could keep my refund. Chris probably should have filed his income tax for 2010 before he signed the papers last year. But don't quote me on it, I bet the answer is on that website though!

[Insane]

Changed my mind....I've decided that insulting comments like that don't deserve a response.

[theweaves_dad]

When I was looking at bankruptcy I found this website to be uber helpful. Just about every question you have, the answer is there! They even have an ask a trustee section.

http://www.bankruptcycanada.com/

How to get a credit card
http://www.bankruptcycanada.com/creditcard.htm

Rebuilding
http://www.bankruptcycanada.com/rebuildcredit1.htm

As far as the income tax goes, my trustee told me point blank I should file my income tax BEFORE I sign the papers otherwise they'd do it and keep the money. They would keep any outstanding refunds so it was in my best interest to do this before I filed. So before I filed my proposal last year, I did my income taxes so I could keep my refund. Chris probably should have filed his income tax for 2010 before he signed the papers last year. But don't quote me on it, I bet the answer is on that website though!

Insane,

Thank you for the link, we will look at it when we have time. There was another site that Chris found but we can't find it anymore!

As for the tax return, we are confused as to what you mean. He did file a tax return for 2010 and he was owing RC that year. So that got taken care of in the bankruptcy. His trustee is doing his 2011 return, that is the one he is asking about.

[theweaves_dad]

AHA! Found the link! It was under Internet Explorer not Firefox! Check out this one insane, it has probably the same info as the other site but easier to read!
http://afterbankruptcycanada.ca/2010/07/

[MrsSunshine]

someone can correct me if im wrong but I do not believe that the trustee should be touching your income tax this year. once you are discharged thats it. while in bankruptcy yes, you don't get your income tax or GST but after that its yours. just make sure Chris takes small steps in order to get his credit back. maybe purchase his groceries on a CC once a week. put aside the $ so once the bill comes in he pays it immediately. always make sure he stays on top of his bills, that helps with regaining your credit rating. trying to remember more but I can't.

[MortgageQueen]

Chris (my son) wants me to post this here for all to answer and give input on.



So now what can he do? He knows there is a pre-paid credit card that he can get (when he gets some money to put on it!), also he applied for a PC credit card a couple of weeks ago, as the lady told him that a guy that was undischarged even got one, he is waiting to hear back from them still.

Oh one more thing, he submitted his tax stuff to his trustee. Now he is under the belief that although they are doing 2 tax returns, one pre and one post, that no matter what the outcome of either, he is not entitiled to any refund of any kind and if there is balance owing on either one, he has to pay it out of his pocket. Is this the way it works? Chris thinks that if the post bankruptcy comes out to a refund that he should be getting that... Right or Wrong folks?

Having said that, he is still entitled to get his GST payments etc this year is he not? Or does that get eaten up by the estate as well???

Chris says thanks for any help, advice, tips etc!

First of all, my condolences again on Lynda. I'm so sorry.

As far as I know, you certainly do not pay any taxes owing "pre-Bankruptcy". I don't know about after, but I would think it's a clean slate unless there money "owing"? to the trustee?

[snuffaluffagus]

I was always under the assumption that any money owing to the gov't isn't protected with bankruptcy *shrug.*

I'll ask the same questions I asked my son when he first wanted to get credit cards. Does Chris know why he needs credit? Why does he feel he needs it? What are his long-term goals? Does he know that there are other ways to safely build a good credit rating without having to borrow money nor get/use credit cards?

When my son was 18 with his first full-time job, I suggested that before he got a credit card, he open two savings accounts. One was to be used as a true savings where he would never touch the money he put into it (long-term savings) and the other was to be used as an account to pay any bills, purchase items he wanted, for outings, etc.. Because he was living at home, he had no bills/rent/expenses at the time. I challenged him to put half his earnings into the long-term savings account and the other half into his spending account. If he was able to budget/balance his second account without ever having to dip into his savings, then he could get a credit card a full year later but always have the funds in his second account to cover any amount owing.

In addition, rather than asking him to pay room and board, I asked him to pay the internet/cable bill. We switched it over to his name and that was where he first started to build a credit rating (without ever having to borrow). Over the last 4 years, his savings account has grown, he invests regularly in RRSPs and has also opened a tax-free savings account. All this before his first credit card (which he only ended up getting 3 years later and that was only to help him get extra airmiles, lol).

I don't know what Chris' financial situation is but, I can't help but want for him to learn that he can eventually have everything he needs without having to get credit and take that chance, however slim, to fall back into debt again. If a purchase isn't absolutely necessary, then he should avoid it at all costs. Delayed gratification when we can afford the things we want is so much more rewarding than instant gratification that we have to pay for later . Hope my words are of some help.

[theweaves_dad]

Ummm okay now what to say... Now Chris is totally lost!!! He just knows that he got a letter from his trustee that says that they had to do his income tax return for this year and that it said that any refund would go to the creditors and that if he owed anything, he would owe it to Revenue Canada.

That said, I don't see him owing. His pre-bankruptycy income was about $2000.00 for January to February 25th and then he got some UIC until about the end of March. After that, he only received money from car insurance which is all tax free.

Now I am thinking that I will do some more research on this preparing income tax subject, reading the posts here.

[snuffaluffagus]

What if Chris simply calls Revenue Canada and asks? I'm sure there is someone there to answer all his questions in regards to his income.

[MortgageQueen]

Ummm okay now what to say... Now Chris is totally lost!!! He just knows that he got a letter from his trustee that says that they had to do his income tax return for this year and that it said that any refund would go to the creditors and that if he owed anything, he would owe it to Revenue Canada.

That said, I don't see him owing. His pre-bankruptycy income was about $2000.00 for January to February 25th and then he got some UIC until about the end of March. After that, he only received money from car insurance which is all tax free.

Now I am thinking that I will do some more research on this preparing income tax subject, reading the posts here.

It sounds very fishy to me. I think he should just call his Trustee and ask him what's going on??

[Insane]

Ummm okay now what to say... Now Chris is totally lost!!! He just knows that he got a letter from his trustee that says that they had to do his income tax return for this year and that it said that any refund would go to the creditors and that if he owed anything, he would owe it to Revenue Canada.

That said, I don't see him owing. His pre-bankruptycy income was about $2000.00 for January to February 25th and then he got some UIC until about the end of March. After that, he only received money from car insurance which is all tax free.

Now I am thinking that I will do some more research on this preparing income tax subject, reading the posts here.

I misunderstood your income tax question. I thought he never filed 2010 when he declared bankruptcy in 2011. The prebankruptcy return is for the benefit of creditors. But since he owed it is included in the bankruptcy. Should he owe for the post bankruptcy, it is his responsability to pay as it is debt a cquired after he filed. The post return refund is for the trustee as well. I'm pretty sure his trustee is right here....any amount owing is his responsability, any refund is the trustees. But in all honesty, post the question on the "ask a trustee" section of the website I gave you. Then you'll know for sure.

http://www.cra-arc.gc.ca/tx/ndvdls/b.../menu-eng.html

http://www.slocombe-trustee.com/bank...nd-answers.htm

What happens to tax refunds?

During the year of bankruptcy, the trustee must prepare and file an income tax return from January 1st to the date of bankruptcy. This return is called a pre-bankruptcy tax return.
Normally the trustee also prepares a second tax return from the date of bankruptcy to the end of the year. This is called a post-bankruptcy tax return. If a refund is forthcoming from either of these returns, or for any years prior to bankruptcy, it will be forwarded to the trustee by Canada Revenue Agency. Income tax refunds, as well as any GST credits, form part of the estate assets.

[theweaves_dad]

Thank You Insane, I think you just answered that question!

I was on the other site that I posted earlier and found this:

http://afterbankruptcycanada.ca/2011...u-go-bankrupt/

This is actually a question that I put in to the site!!!! Now it explains why he is still getting bills from Rogers. Judging by what is said on there, he is still on the hook for the money since he got a bill this month saying they had added the cancellation penalty to his account as well.

Well better to pay it off and get it done before it gets even higher. Thank god I found this now because Chris just filed the bill away while awaiting the dispute with Equifax and TransUnion!

[Insane]

He should only owe Rogers for the cancellation fee then. You can always call your trustee and ask them what is your responsability to Rogers.

On another note, I hope Chris isn't expecting his GST, ect... credits anytime soon. Although they are his, I've heard the CRA puts bankruptcy returns at the end of the pile. I've heard it can be 2 years before they get around to looking at his stuff!!! Although he'll eventually get all the money, I wouldn't bank on it coming any time soon. Just what I've heard from others.

[Insane]

http://www2.canada.com/ottawacitizen...6-b5de340c3785