Second Time Bankruptcy What Rules Apply
In Canada, about 15% of people that have filed for bankruptcy end up declaring bankruptcy a second time.; Since approximately 60,000 Canadians will be declaring bankruptcy this year that means 9,000 of them likely have done so before.
The number of people filing second bankruptcies is large enough that in 2009 the federal government brought into effect new to deal with repeat filers.
Chapter 13 Repayment Plans
If you file a Chapter 13, you can continue making your payments according to their terms, or add the payments into your payment plan. If you owe more than the car is worth, or if your interest rate is high, you can alter the terms by paying only what the car is worth and at a reasonable interest rate over the length of the plan, usually 35 years. This is called a cramdown, and it’s used every day to help people like you keep their cars despite filing bankruptcy.
Q2 Will The Trustee Immediately Sell My House
If you have significant nonexempt home equity you cant protect, the trustee will sell your property, following the usual real estate selling process. The trustee doesnt need to rush the sale because a quick sale would usually result in lesser value for your home, which is not going to benefit you.
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Does Bankruptcy Take Care Of Any Tax Money I Owe To The Canadian Revenue Agency
Many people assume that income tax debt is not dischargeable in bankruptcy. However, in a bankruptcy, your debt to the CRA is treated the same as any other unsecured debt, such as credit cards or lines of credit. After filing for bankruptcy, all interest and collection activity by the CRA will stop. Additionally, your trustee will communicate directly with the CRA on your behalf.
If Your Home Is In Negative Equity
If your home is in negative equity, then you may be able to keep it. It won’t be sold unless the value of your share is more than £1000, after any sale costs have been taken off.
At two years and three months after the bankruptcy order is made, the situation will be reviewed. If your interest in the property is still valued at less than £1000, it’s unlikely the home will be sold and it will transfer back to you.
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Can You File Bankruptcy And Keep Your Home And Car Introduction
We are often asked the question, can you file bankruptcy and keep your home and car? In my last Brandons Blog, I described the circumstances to answer the question can you keep your house if you file bankruptcy in Canada. Here is the link to the blog, IF I FILE FOR BANKRUPTCY ONTARIO WILL I LOSE MY HOME? . In this blog, I will tell you what happens to your automobile when you file bankruptcy.
Q1 How Does The Trustee Decide To Sell My House
The trustee may or may not sell your home depending on its equity value. If its less than the exemption amount, then the trustee must not sell your house. If you have significant equity left, the trustee will sell it.;
The goal of selling your property is to get funds that can be used to pay off your unsecured debts. If your home gets sold, the trustee must give you first the exemption amount before paying your debts to the creditors.
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Bankruptcy Exemptions In Newfoundland And Labrador
- Food and fuel required by you and your dependants for 12 months
- Clothing for you and your dependants up to $4,000
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $2,000
- No limit on medical and dental aids for you and your dependants
- Items of sentimental value up to $500
- All pets are exempt from bankruptcy
- Up to $10,000 of equity in your home
- Tools of your trade or business up to $10,000
- Certain income and pension plans
The Effects Of Bankruptcy On An Existing Mortgage
If you declare bankruptcy, there are established procedures of due process. You dont automatically lose your house. Nor is your loan accelerated to automatically become due if youve been current up to this point on your payments.
The following sections will go over how bankruptcy affects your current mortgage.
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How To Apply For Bankruptcy
Declaring bankruptcy in Canada requires the help of a;Licensed Insolvency Trustee;or their qualified staff. Only a Licensed Insolvency Trustee can help assist you with a bankruptcy claim because they are the only people licensed by the Canadian Superintendent of Bankruptcy to administer consumer proposals and bankruptcies.The government requires them to perform an assessment of your financial situation in order to determine if bankruptcy is the best option.
Generally, they will look at your assets, income and expenses, and debt level to make sure bankruptcy is a good option. At this meeting they explain all of your debt options. They will also make sure you are given a full explanation of the bankruptcy process so you can decide if you should declare bankruptcy.
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What Is Exemption Planning
Exemption planning is the practice of organizing your financial affairs in a way that maximizes your exemptions and allows you to protect the most amount of property in bankruptcy. Converting nonexempt property into exempt assets can be part of exemption planning. However, if you engage in excessive exemption planning, it can be considered bankruptcy fraud and result in criminal prosecution or an objection to your bankruptcy dischargethe order that erases qualifying debt.
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If You’re Overwhelmed By Your Debts Bankruptcy Is Just One Option
If you have large debts that you cant repay, are behind in your mortgage payments and in danger of foreclosure, are being harassed by bill collectorsor all of the abovedeclaring bankruptcy might be your answer. Or it might not be.
Bankruptcy can, in some cases, reduce or eliminate your debts, save your home and keep those bill collectors at bay, but it also has serious consequences, including long-term damage to your . That, in turn, can hamper your ability to borrow in the future, raise the rates you pay for insurance, and even make it difficult to get a job.
Criminal/penal Caseosb No: 41
Having already accumulated debts of $2,000, a man incurred additional debts prior to losing his job. He continued to take on debts, knowing that he could not pay his creditors. He applied to increase his credit limits, which he very quickly reached. Ten months later, he had about 30;credit cards or lines of credit, and debts exceeding $196,000. He declared bankruptcy, attributing his financial problems to the fact that he was unemployed.
Summary of offences of the bankruptFootnote 2
- Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.
The bankrupt pleaded guilty to one count of fraud covering all of his offences. He was sentenced to 18;months, to be served in the community, with a number of conditions.
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How Do I Know How Much Equity I Have
You can calculate your homes equity by taking the value of your house, and subtracting the amount you owe on your mortgage and the currently owed property taxes from this value.
House value amount owed on mortgage currently owed property tax = Equity
In most personal bankruptcies, the home must be sold so that this equity value can go to your creditors.
Proof Of Claim Bankruptcy Canada: The Robo
Between 2012 and 2015, tens of thousands of proofs of claim were filed in bankruptcy files throughout the USA for DSNB. These proofs of claim were incorrectly signed, under the penalty of perjury, by employees of an outside vendor who had not reviewed the respective file and proof of claim and/or lacked knowledge of the contents of the proof of claim.
In some cases, the electronic credentials of the vendors staff were used to file proofs of claim without being reviewed by that or any other person. These improper practices were identified when Citibank took over the servicing of the accounts in late 2015 from the third parties. Citi self-reported the errors to the USTP.
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Criminal/penal Case Court/osbnos: 31
A husband sold the family home to his wife. The wife immediately remortgaged that home. After four months, she stopped making mortgage payments on it. Soon after that, the family moved to a new home that they bought in their daughters name. The daughter made a $228,000 down payment on the home using money her father gave her. When the wife filed for bankruptcy, she reported her previous house as an asset. In addition to the mortgage debt on that previous house, she owed $169,000 in other debts. The husband filed for bankruptcy 10 months after the wife, declaring debts of $270,000. The husband said that he had given the house to his wife as part of their separation agreement, along with $100,000. Then the husband changed his account of the events and said that he had sold the house to someone else and given $100,000 of the proceeds to his wife as part of a separation agreement. An investigation concluded that the down payment on the second home likely came from the wifes purchase and remortgaging of the first home in an attempt to shield that money from bankruptcy proceedings. The investigation also found that both spouses accumulated most of their debt in the seven months before they filed for bankruptcy. Each had obtained more than $130,000 in cash advances, as well as bought goods on credit.
Summary of offences of the bankruptsFootnote 2
How Long Will Selling The Home Take
Trustees will typically sell the home in a timely fashion. Generally, an individual remains bankrupt for 3 years. Trustees are required by law to sell a home within 6 years after an individuals bankuptcy ends. This allows 9 years to arrange the sale. If the trustee does not sell the home within this period, ownership of the home could be returned to the individual.
The 6 year rule only applies if the trustee is aware the home exists. If a home is not disclosed in the bankruptcy documents, the trustee will have 20 years to take possession and sell the home.
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Are Debts Affecting Your Ability To Keep Up With Your Mortgage
Ask yourself this question: If I could deal with all of my other debts, would paying my mortgage be easier? We help people answer that question every day.
Its your home, so you always pay your mortgage, but you are falling behind on your credit cards and other bills, and you worry that you may soon also fall behind on your mortgage payments. You worry that you may lose your home.
You can file bankruptcy even if there is equity in your; home. If you owe more money to your creditors than the value of what you own you are considered insolvent. If you are insolvent you are eligible to file for bankruptcy or proposal in Canada.
With up-to-date mortgage payments filing for bankruptcy does not mean you will automatically lose your house. In fact, by eliminating other debts that are making it difficult to keep up with your mortgage payments.
Proof Of Claim Bankruptcy Canada: Are Claims Being Made Against You Or Your Company
Are you or your company experiencing financial difficulties? If yes, call the Ira Smith Team. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are in the door.
The earlier you contact us, the more options we will have to implement. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.
Youre simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity.
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Can A Home Equity Line Be Discharged In Bankruptcy
A home equity line of credit is different than a home equity loan. Many hear the term home equity and erroneously believe that one is another term for the other. A home equity loan is a fixed loan for a specific and unchanging amount of money. A home equity;line,;on the other hand, is a line of credit that may have a maximum draw, but the money is borrowed on an as-needed basis.
In other words, if you are purchasing a $500,000 home, a;HELOC;creditor may be willing to advance you up to $500,000 but you arent necessarily required to borrow the entire amount at one time as you would with a home equity loan.;HELOCs;can also be used for other purposes other than repaying mortgage costs. This line of credit is secured as a lien on your home.
Whereas once,;HELOCs;were used almost exclusively for second mortgages, it is becoming increasingly common to find them being used for first mortgages. Sometimes;HELOC;is used to refinance first mortgages.
HELOCs;have numerous advantages. For those needing to make major home improvements or make serious repairs to a property,;HELOCs;allow them to draw as much as they need without overdrawing on an expenditure you may not know the cost of upfront. You can use them to pay credit cards or other monthly expenses.
Bankruptcy Exemptions Help You Keep Your House Automobile Pension And Retirement Funds Personal Belongings And More
By Cara O’Neill, Attorney
You’re concerned that you could lose property in bankruptcyand you’re right. But you can eliminate surprises with careful planning. Start by learning how exemption laws protect assets in bankruptcy. Here are the basics:
- Your state decides which property you can save.
- You’ll lose unprotected property in Chapter 7 and pay to keep it in Chapter 13.
- Timing rules tell you the state’s exemption laws you’ll use.
You’ll find more details below. To check for common issues in your bankruptcy case, try the ten-question bankruptcy quizit flags areas you’ll want to look into further.
Protecting Property With Bankruptcy Exemptions
No one loses everything they own in bankruptcy. You’ll likely be able to keep some equity in a home, furnishings, an inexpensive car, and your retirement account. However, the specifics vary between states.
Every state has a set of exemption laws, but some states allow you to choose between your state exemptions and federal bankruptcy exemptions. And California is unique in that it has two sets of state exemptions from which a debtor can choose.
If you have a choice of exemption systems, you’ll select the one that best protects your property. You can’t mix and match between two exemption schemes, but if you choose the state exemptions, you can also use the federal nonbankruptcy exemptions.
If Someone Will Buy Your Share
You may be able to stop your home from being sold if your partner, spouse, relative or friend will agree to buy your share of it. This share is called your beneficial interest. It is the amount of money you would get if you sold your home after anything secured on it, for example mortgages or loans, have been taken off. It is different to the legal title to the property, which is held by whoever owns it.
If you’re the sole owner, your beneficial interest is normally the whole value of the property, minus anything secured on it.
If you own the property jointly, the amount of your beneficial interest is normally this amount shared equally between you and the other owners.
It’s important to remember that you can’t just sign over your share of your home to someone else to avoid it being sold. This is a bankruptcy offence. If the official receiver finds out you’ve done this, you could have a bankruptcy restrictions order made against you, be fined, or even sent to prison. If you want to sell your share, you need to do it at market value.
Protecting Your Home In Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, you keep your property and repay your debts over time. Because you keep your property in Chapter 13, you won’t automatically lose your home. But keeping a home in Chapter 13 can be costly.
If you are current on your mortgage payments, and you can cover all of your equity with bankruptcy exemptions, you’ll be fine. However, here’s where it can get expensivea filer must pay the value of any nonexempt equity to creditors through the plan. So you’ll need to show that you have sufficient income to pay your monthly house payment, your nonexempt equity, and all other required debt payments over the course of the three- to five-year Chapter 13 repayment plan.
If you are behind on mortgage payments or facing foreclosure, Chapter 13 allows you to make up the arrearage through your repayment plan. For this reason, Chapter 13 is often the right choice for people at risk of losing their homes. But again, you’ll have to show that you have enough income to make your regular monthly payment and pay the arrearages and all other required amountsincluding nonexempt equity reimbursementover the course of the plan. Learn about calculating a repayment plan and the steps involved in Chapter 13.