We answer general personal bankruptcy and personal proposal questions on our Ask a Bankruptcy Trustee Blog. When we get a question that a number of people ask and/or a question we think will be of general interest we feature it on its own blog and give a more detailed explanation.
One of the questions we are frequently asked is how people can protect their assets from seizure in a bankruptcy; how a relative can be paid and not anyone else and other similar questions.
How to conduct yourself before filing bankruptcy or a proposal
Many people know they must file bankruptcy or a proposal but keep putting it off hoping for a change in circumstance or a miracle. If you find yourself in this situation it is important you conduct yourself properly concerning whom you pay and how you deal with your assets.
If you fail to do this you may put yourself in a position where you have your bankruptcy discharge postponed or denied and face severe fines by the court.
Many people ask how they can protect their assets from being seized and sold in a bankruptcy or if it is acceptable to pay a relative, for example, instead of a big credit card company.
The simple answer is you cannot protect assets from seizure or give preferred payments to relatives or anyone while on the verge of bankruptcy. Some people even consider “running up” their debt just before bankruptcy since it will be written off anyway. A word of advice: Don’t! Trustees in bankruptcy have extraordinary powers to recover preference payments and assets “sold” at below market value. Trustees in bankruptcy also have the duty to report such activities to the court where severe penalties are possible.
Some “don’ts”:
• Don’t make significant purchases on credit prior to bankruptcy or a proposal;
• Don’t make significant payments or payments to creditors out of the ordinary course of your payment history. Many people want to pay a relative, for example, ahead of a credit card company. Don’t do this. The law doesn’t distinguish between types of creditors and severe court penalties can be imposed;
• Don’t cash in RRSP’s or stocks on the eve of bankruptcy or a proposal;
• Don’t “sell” or transfer assets to a friend or family member;
• Don’t purposefully neglect to list some of your creditors. All debt must be listed.
Your attitude
The best way to look at an impending bankruptcy or proposal is that it is the law of the land and your right to get a fresh financial start by erasing most, if not all your debt while retaining certain assets specified by your province or territory of residence.
Accept this without guilt and without “beating yourself up”. At the same time don’t cheat. Play by the rules and your fresh financial start will come about smoothly, without stress and investigation and without guilt!
I have a tax debt from 1988 and 1989 that was about $14,000 AND has now grown to $65,000 with penalities and interest. I have never acknowledged this debt and CCRA never tried to collect until 2003.
The CCRA collector contacted me, trying to have me acknowledge the debt, which I have not, eventually he advised that the debt was Stat Barred based on a recent court decision in 2004.
Months later, he visited and explained that the statue of limitations has changed, and they are sending demand on third parties to everyone they can think of.
Am I Stat Barred ?
If I am not, is there any way to pay the principal they claim is owed, and have them write off penalities and interest ?
What are my rights ?
Can you refer me to any web site that adresses this issue ?
Glenn: This is a $65,000 problem which makes it worthwhile for you to consult an insolvency lawyer.
Going bankrupt is hard. We know what it’s like. Now we’re trying hard to use it to make money online with our Adsense websites. Only time will tell.
I am considering a single proposal in the near future and a significant portion of my debts are jointly owned by my spouse and me. I realize my spouse is responsible for those debts, but we have some equity in our jointly owned home, that we are considering refinancing to pay the debts that won’t be covered in the proposal. Is this legal and/or allowed, if the financial institution is allowing the refinancing?
I have been in bankruptcy for the second time. I have had a nasty divorce and my ex-wife has not cooperated. I was sucessful in buying a home only to have it foreclose 7 years later. My discharge is most likely in Sept 2007.
I want to know if I will be able to buy a condo being on record for 14 years.
I am separated from my husband. He will not pay any support and is living in our house. Can he fill for Bankruptsy so he won’t have to give me my share of our mortgage free house, pension, child support and rrsp’s. Can he do this. We had very little dept when we separated. Also he has inheritance of approx 60,000+. He will be laid off starting in the near future but will still collect 85-95% of his wage.
I’m about to file for bankrupty, due to the economic downturn I have negative equity in my home. Will the bank let me keep my mortgage, or will they recall the loan if they find out? (currently 3 pmnts in arrears but able to clear this if I know it will let me keep my home) (single person, no exes,children etc.)
I was told I can only keep my home if I have 40% equity. Is there anything I can do to keep my home should I file personal bankruptcy and have more than 40% equity? Could I take out a mortgage? What could I do with that money?
I’m filing for bankruptcy and my husband is not on any of my credit cards and I was told he would not be responsible. But the girl I was talking to said that on the monthly statements I would need to give his income and write down all the expences. If he isn’t responsible why is his income involved?
I’m on maternity leave and have a 7 month old son to take care of. I don’t get much from EI, so RRSPs are for emergency purposes, such as baby’s needs, living needs and rent if in the event there are no funds left to use but RRSPs. Being in overdraft every month, every EI payment is no good when on maternity leave.
How will cashing out RRSPs and closing the account affect filing for bankruptcy a couple of weeks after?
I have a question about a collection agency if they are allowed to go into your credit burea with out your permission?
I owed banks and taxes up to 100,000 cad and have left the country for 3 years. It’s time for me to renew my passport from abroad. Will my bank creditors and tax canada track me down thru my address and force me into bankruptcy?Can i still be granted a passport if i file bankruptcy abroad?
I am currently on disability through the provincial Government and my common-law wife should be receiving E.I. shortly for sickness but we will need to file for bankruptcy. We were wondering what the cost would be per month in order to do this?
I am currently on permanent disability with the provincial Government and my common-law wife should be receiving E.I. shortly but we will need to file for bankruptcy soon. We we wondering what the costs would be per month to do this as we are not able to afford very much at this time.
Me and my common law husband are looking into bankruptcy. He makes 2300 after taxes per month and I am currently on EI making 1088 per month. I am a student so I am not working. My EI runs out in March. If we file bankruptcy now with my EI will we pay more or should we try to hold off until I have no income?
Thank you
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i have $9000 in cash in the bank ,which belong to my brother in Europe .if i withdraw that money before i go bankrupt,the trustee
may think that i have try to hide that money.i really don’t know what to do.is anyone have any idea?
regards
thanks
jp