Bankruptcy

[Insane]

http://www.bankruptcycanada.com/blog...eased-in-2007/

The charges were filed under various sections of the Bankruptcy and Insolvency Act covering offences such as fraudulent disposition of property before filing for bankruptcy, fraudulent transfer of property, obtaining credit by means of false representation, and failure to disclose and assign all the bankrupt’s property to the trustee. Charges were also filed under sections of the Criminal Code covering such crimes as fraud, scams, criminal conspiracy and obtaining credit under false pretences.

[lecale]

...

[Insane]

If you're nearing bankruptcy your debt load/credit rating is indubitably such that your own mom won't give you credit, let alone the bank.

You are too funny!

[tjthemanto]

Here's an article from today's ( Jan 10 - 2011 ) Toronto Star .

Thought that you might find it useful .

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What happens if you declare bankruptcy

http://www.moneyville.ca/article/918...ankruptcy?bn=1





Getting back on track:


By Michael Lewis | Mon Jan 10 2011

• 
  

When Valerie Freeman entered the commerce degree program at Ryerson University, she couldn't help but notice the credit card come-ons that seemed to be everywhere — in the student halls, pubs, even residences.
An optimistic 19-year-old, she took up the offers and was approved on the strength of her future income. Freeman, freshly armed with plastic, indulged in outings at the nearby Eaton Centre for stress-relief shopping.
It turned into more and more; she bought clothing, shoes, gifts, a laptop, “You name it, I charged it,” Freeman told the Star.
She rang up $12,000 in consumer debt before she'd completed her second year of studies. “The stores were just so close by and it was so convenient. It didn't feel like I was spending real money,” Freeman says.
She managed to arrange a debt consolidation line of credit at a bank — and ran that to its limit with a few more shopping trips. More than $42,000 in the red, she was in full-blown panic mode.
“I couldn't go to my parents. I spent the money and I needed to be an adult and get myself out by myself.”
Freeman contacted debt counseling agency Credit Canada, which negotiated a payment scheme with the credit card vendors. She pays $955 a month toward her debt and plans to increase the amount, thanks to a new job and a raise.
She managed to avoid bankruptcy and the black mark she think a “consumer proposal” (see below) would have left on her credit rating. She graduated in 2002 and says she will be debt-free by March 2012.
But for many others the tough choices may be just around the corner.
With the number of insolvencies — which include both bankruptcies and the less-drastic consumer proposal — was 22.5 per cent higher in October than the pre-recession levels recorded in 2007-2008, James Callon, superintendent of bankruptcy, took an unusual step Friday. He warned Canadians they may be an interest rate hike, or “a major life event” away from the harsh realities of insolvency.
So, what are the warning signs of impending financial crisis, and what are the options for survival?

• The hallmarks of consumer insolvency — defined legally as having assets insufficient to cover debts — include delinquent loans, unpaid property and income taxes and harassment from collection agencies. Often, serious difficulties are triggered by job loss, serious illness or divorce.
• Canadians can avoid impending bankruptcy a number of ways. They can plead their case with creditors and negotiate a private arrangement. More formally, they can file a consumer proposal. That's a legal process under the federal Bankruptcy and Insolvency Act that has serious implications since the individual may be forced into bankruptcy if the proposal is rejected by creditors.
• If a proposal is denied and bankruptcy is unavoidable the process begins with the good news: the filing brings legal proceedings and creditors' attempts to collect debts to a halt.
• The next step in bankruptcy is for assets to be assigned to the trustee in bankruptcy for distribution among creditors.
• Mandatory counseling on managing financial affair follows.
• If requirements are met, an automatic discharge from bankruptcy can be ordered in nine months for first-time bankrupts who do not report income that is defined as surplus.
• You're discharged from the repayment of all eligible debts.
“I just think it's very important right now for consumers to be educated on managing debt and avoiding major troubles,” said Laurie Campbell, executive director of Credit Canada, a Toronto-based not-for-profit agency that offers no-charge consultation and assessment.
Bankruptcy is a profound step, a complex legal process that leaves a black mark on the consumer's credit report for up to 10 years, but one that can also provide a fresh start.
It will wipe out eligible liabilities — credit card balances, personal loans, certain tax obligations and payday advances. Debts not removed through bankruptcy include some student loans, child and spousal support, fines and most court-ordered restitution payments.
The bankruptcy process begins when an insolvent individual retains a licensed trustee, as required by statute, and provides an under-oath disclosure of liabilities and assets, including all assets disposed of in the year leading up to the filing.
Debtors in bankruptcy are required to surrender credit cards and release copies of pay stubs and proof of other income to the trustee, who calculates any so-called surplus income that must be earmarked for debt repayment.
Bankruptcy rules allow individuals enough money to live, but require that at least half of the surplus income, any take home amount in 2009 above a threshold of $1,870 per month for a single person, be disbursed to creditors.
If an insolvent person has surplus income of more than $200 per month, the consumer will remain in bankruptcy for a minimum of 21 months, or 36 months if previously bankrupt. Also, if there are tax debts above $200,000 that account for more than 75 per cent of total debt, an automatic discharge is not in the cards. A court hearing will be required to end the bankruptcy.
Bankruptcy trustee Robert Shier, of Stern Cohen Shier Inc. in Toronto, said its crucial that amount of income that will be deemed surplus be accurately estimated up front the so that there are no surprise arrears owing when the process is complete.
He also said a discharge is not automatic, particularly if the debtor fails to demonstrate that they have learned from their financial mistakes. In such cases, the bankruptcy court can impose conditions that must be met before a discharge. The court can absolutely refuse a discharge, but rarely does so.
The Bankruptcy and Insolvency Act also mandates at least two credit counseling sessions for applicants.
After filing for bankruptcy, the debtor's property is assigned to the trustee, who sells any assets and divides proceeds among creditors. Normally, lenders can withdraw money directly from the bank account of an individual in the bankruptcy process.
Rules allow two bankrupt persons in a close financial relationship to have their cases dealt with as one file, although bankruptcy does not normally affect a spouse unless they have co-signed a loan. The trustee will help the debtor complete forms, including property assignment and financial disclosure documents that must be signed and filed with the bankruptcy court's official receiver, who may also require an examination under oath.
If the applicant follows the rules, a meeting with creditors is generally not necessary. Employment is unaffected except, for example, in cases where the debtor needs to be bonded for work.
Bankruptcy involves administrative costs, including court fees, mailing costs, and government-set fees for filing. Any GST credits or tax refunds will be lost. In most cases, only creditors and those involved in the process will know about the bankruptcy filing. There is a filing fee to be paid to the Superintendent of Bankruptcy. The minimum charge for a trustee in bankruptcy's service is $1,800.
Credit counseling agencies typically charge 10 per cent of the applicant's debt to negotiate a reduced payment program, with the fee added to the payments.
Debtors in a bind who want to avoid the seizure of assets that bankruptcy requires have options. These include a debt consolidation loan or a consumer proposal, The latter option has gained in popularity since changes to the bankruptcy act in September 2009 gave consumer more flexibility in filing proposals.
In a proposal, a licensed trustee files a request with creditors to extend payment periods, reduce amounts and eliminate interest. The consumer is typically eligible to reapply for credit two or three years after the debt is paid, although consumers complain that debts can linger on credit reports long after they should have been expunged.
Debt counselors say proposals make sense when the insolvent individual is prepared to pay a premium for quick resolution, when the process of being discharged from debts is likely to be contentious, and if the debtor aims to continue in business or maintain a professional accreditation.
Proposals are also the best bet if the insolvent person wants to retain assets such as a property or pending inheritance, and when there has been a previous bankruptcy.
Holding onto a home in bankruptcy requires that the debtor pay all of the equity to the trustee before the bankruptcy is complete. Bankrupt persons in Ontario can retain personal possessions, motor vehicles, furnishings, trade tools and farm property up to specific limits, while most pension plans, some life insurance policies and certain RRSPs are also exempt from seizure.
Debtors must owe less than $250,000 excluding a mortgage on a principal residence to qualify for a proposal arrangement, which must still be accepted by creditors. If creditors refuse and mediation fails, bankruptcy may be the only option.

[Insane]

Thanks!

[Insane]

Met with an administrator today. I think a proposal is more appealing for me. It was an extremely helpful meeting. I highly recommend anyone go see one to discuss options. She told us as well, that due to a technicality if we file bankruptcy we may end up with the car free and clear (rather than making payments) if the car wasn't registered by the bank. It's a gamble though, but the onus is on the bank to register it as a security and they may not have.

[bhammy]

I've always been one to pay off my debts but sometimes it makes me wonder.I will give you my story and let you decide.About 4-5 years ago i was sharing a place wth my brother both doing very well in our jobs.Then when the economy started to crash we both ended up losing our jobs.Surprising to say the least when you have 10 years in with a company and think you are secure.I was unemployed for only a month but took a job at way less than previous.My brother was out of work for six months,on UI.Needless to say after trying to keep up with student loans,car payments,credit cards,rent,etc i was way behind,same with my brother.I ended up going to get a consuladation loan and again getting behind on it but i did end up paying it off in full but six months behind.My brother declared bankruptcy,paid payments of 300.00 for 14 months and done.Now 2 years later my brother has 2 credit cards,drivng a new truck,and just got a mortgage at 3% for 285,000 condo?I apply for a credit card an get flat out rejected,drive a 15 year old truck ad when i had to get my mortgage i end up paying 8% at the same bank a my brother.I make a good 1/3 more than my brother but end up with screwed credit because i paid my debts.When i talked o the lady at the bank it didn't seem to make any difference to them that i paid evryone off and owed nothing,because i was late my credit is screwed.So who ended up better off in this situation.I'm starting to think i could've been 30,000 ahead and on my way to recovery instead of struggling for another 3 years until these lates are off my record.

[fourfurryfeet]

Wow, I am actually sad that I didn't see this thread earlier!

I am seriously considering bankruptcy since I think if it has to be done, now is a good time since I am young and can bounce back without taking a bunch of people with me. Ie; husband, kids, etc.

I have lots of school loans, credit cards that they practically threw at me the day I started college and just a couple bad marks because it took me so long to pay a few bills. So I am really not going bankrupt for very much but it will be worth it to me!

Does anyone know how much my monthly payment would be since I am ODSP? I make below the poverty line to start with what more could they want LOL!

[bhammy]

I am not saying i recommend bankruptcy for everyone but sometimes it makes you wonder.I would definitely recommend talking to an expert first.Thing like keeping your car,house,etc can be complicated issues.Not sure how all that works.I know in my brothers case he kept his vehicle,possesions.We rented at the time so no house to worry about.I guess you really have to know the rules as with anything.I personally know of one family member making well over 350,000 a year who declared bankruptcy and kept her fancy house,cars,etc.She is high up in the legal world so i'm sure she knows how to play the game.My other strike against me is that for the past 3 years i have been self employed.Although i have a good solid business and am making more money than ever before in my life the lenders see self employed and run for the hills.Really encourges a guy to work hard and try to get ahead don't it?

[khipson]

fourfurryfeet - You can't bankrupt on most student loans anyway, so you're just looking at credit cards. If you bankrupt for "not very much" it looks far worse for you than someone who is financially buried. That's direct from a trustee.

From what you said in your post, and what I learned through the process, in your case I'd guess they would rate you as having made bad financial decisions and/or been irresponsible with credit. (They rate you according to what brought you to your financial position.) When it's something like a financial crisis, an emergency, a business failure - they look at it a little differently than someone who took on too much debt, spent too much money and wants to get out of it. Not to sound harsh, but I really don't think you're in a position to be looking at bankruptcy. What you need to do is cut up your credit cards and pay them off - either talk to your bank about a consolidation loan or just work at it. The 'debt snowball' approach is a great strategy for credit cards. Your student loans? If they're too much to handle right now, call your lender and negotiate. My payments were too high for me at one point so I called and they extended the loan to ten years to lower the payment until I could afford it to be higher again.

[lecale]

...

[kanewtz]

So sad reading this thread.

Do some of you people not have family that would be willing to "lend" you some money to help you get back on your feet and then you can pay them back?

I would never dream of filing bankruptcy, but I do understand that sometimes you need to do what you need to do.

Perhaps it might be beneficial to site down and create an Excel SS of what you spend and what you make. You can track every little thing and see where you are wasting money?

I hope everything works out for everyone, as I know it will. Good things happen to good people

[tjthemanto]

.

[tjthemanto]

If you are collecting the maximum allowance, for government loans you would be on the hook for $104 per month, plus the fee to your trustee (around $150) leaving you with a disposable income around $324/mo.

For your other debts, you may want to seek legal help: they would be termed "loans" and therefore reportable income, and therefore you would be subject to deductions of your ODSP support for each month you added to your credit card balance. There are exceptions, but this is one weird situation because you have to declare all credit cards, loans, debts, etc. when you apply for ODSP and you certainly can't get a "real" credit card after you're on on ODSP. So ODSP may not be too happy with you. If you are assessed to have an overpayment, you will have to pay it back at a rate of $52-$104/mo.

If you exit the system to work before settling your school and ODSP related debts, you can quickly pay off this debt through your government refunds (tax, gst, etc.) and required monthly (or negotiated) debt service payments. You can earn up to $25k through work before you lose your drug benefits, but an amount equal to 50% of your earnings will be clawed back from your benefit cheque (max amt ODSP = $12.5k/yr so if you earn more than $13.75/hr you will recieve neither income support nor drug benefits from ODSP.)

How do you survive on $ 324/month ? ...I didn;t know that they could even come after your ODSP ..I thought payments like ODSP & other gov. payments like Ontario Works etc can't be touched by creditors like credit cards etc

[ryry]

May we all win Lotto Max this week, amen.

I second this - good luck to all!

I have a lot of students loans too! I gave up credit cards 4 years ago, and use paypal if I need to, I try to pay for everything with cash/cheque/debit - we are a family of 4 and DH still has credit cards - I cut all mine up Since Christmas I have used his credit 4 times DS - winter coat - paid, Sick hamster $90 unpaid, Gymboree $100 - unpaid and DH bought the kids DVD players for Christmas and I need to pay half - $40 unpaid -
I hate the feeling of being in Debt $230 on credit card I don't know where this $ will come from and I am trying to save to tak ethe kids to Disney. In MArch my 1 loan payment is done, I should flip it into another loan - but I am going to save it for Disney. I will still owe $25000 and I have been out of school for 10 years with a job. I am so tierd of it, I know how you feel, I keep thinking I will forever be digging my way out

Thanks to SC's I am using coupons and saving $ there so I am able to do things with my family, my next goal is to save the $ I save using coupons, maybe February is a good month to start this