What happens when you file bankruptcy?

[crazyfound]

Also, can they force you to file bankrupcty instead of allowing creditors to chase you for the money (do you have to pay them?).

Do they come to your place with a moving truck and take everything and sell it off to pay your debt?

Are there any books on this?

[st7860]

Also, can they force you to file bankrupcty instead of allowing creditors to chase you for the money (do you have to pay them?).

Do they come to your place with a moving truck and take everything and sell it off to pay your debt?

Are there any books on this?

in BC, you can keep somewhere around $2,000 of cash, and miscellenous other things such as Tools of Your Trade, a small amount for a car, etc.

It'll cost you about $1200 to go bankrupt, as thats the cost of a trustee.

For a FIRST time bankrupcty, its highly likely that after 10 months you'll be automatically discharged, and a further 6 years after that, your credit report will be 100% blank.

Its illegal to transfer ownership of property a short time before your declare bankrupcty, but of course its not illegal to buy a house or property in other people's names if you do it properly and you trust the person enough to not sell it and leave you with nothing.

http://www.sands-trustee.com/question.htm
WHAT IS BANKRUPTCY?

Bankruptcy is a legal proceeding that is available to a person to cope with a financial crisis. One of the main purposes of bankruptcy legislation is to afford the opportunity to a person, who is hopelessly burdened with debt, to free himself of the debt and start fresh - "a new lease on life." To go into bankruptcy it is necessary for a person to be insolvent. To be insolvent means to -:

Owe at least $1,000;
Not be able to meet your debts as they are due to be paid.

WILL MY CREDITORS STOP HARASSING ME?

Yes, they will! By law, all actions against a bankrupt must cease once the documents are filed. This does not apply to secured creditors such as banks holding, for example, a lien on a car.






WHO WILL KNOW?

In a bankruptcy, where there are significant assets, a notice is placed in the "legals" section of the newspaper notifying creditors of the date of the meeting of creditors. If there are minimal assets, the creditors are notified by mail only - there is no advertisement in the "legals" section of the newspaper. Any legal filing of a bankruptcy is a public document which the general public has access to. From this documentation, the Credit Bureau is notified and the bankruptcy is recorded and will remain on your credit record for 6 years. This does not mean that you cannot obtain credit during this time. Any granting of credit is the responsibility of the creditor to approve.


HOW MUCH AM I ALLOWED TO KEEP?

The property exempt from seizure, in British Columbia, when a person goes into bankruptcy are as follows:
Equity in a home in Greater Vancouver and Victoria
= $12,000. In the rest of the province = $9,000

Equity in Household items = $4,000

Equity in a Vehicle = $5,000. The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders).

Equity in work tools = $10,000

Equity in essential clothing and medical aids is unlimited.

WHAT DON'T I KEEP?

In a bankruptcy, assets in excess of your allowed personal exemption such as, real estate, automobiles and boats that are the property of the bankrupt as at the date of bankruptcy and anything that the bankrupt acquires during the bankruptcy vests in the trustee for the benefit of the creditors of the bankrupt. This would include inheritances received or to which the bankrupt might become entitled, by the death of someone during the time of the bankruptcy. It also includes such things as lottery winnings and anything that the bankrupt might accumulate, such as assets bought with any surplus income.
Tax refunds outstanding, as at the date of the bankruptcy, also vest in the trustee for the benefit of the creditors. Income Tax law requires a bankrupt to file two tax returns for the year of the bankruptcy. The first (pre bankruptcy tax return) covers the period January 1st through to the date of bankruptcy. The second (post bankruptcy tax return) covers the period starting with the date of the bankruptcy and ending December 31st. Pre bankruptcy tax rebates vest in the trustee for the benefit of the creditors.

You will be asked to volunteer any refunds, receivable from your post bankruptcy return, to the trustee for distribution to the creditors. While you are not legally obliged to give up these funds, the trustee or creditors may apply for a Court Order in this respect or it may be reported to the Court at the time of your discharge.


HOW DO I GO INTO BANKRUPTCY?

There are two ways a person can become a bankrupt. The first and more common way is to have the person make an assignment in bankruptcy (voluntarily go into bankruptcy). The second, and rarely used way, is for creditors to ask the Court to make an Order that a person is bankrupt. In both these cases a Trustee in Bankruptcy is required to administer the bankruptcy

[pitz]

"Its illegal to transfer ownership of property a short time before your declare bankrupcty, but of course its not illegal to buy a house or property in other people's names if you do it properly and you trust the person enough to not sell it and leave you with nothing."

Wrong. The highlighted example would be an example of a fraudulent conveyance, a bankruptcy offense.

If the trustee, creditor, or appointed inspector finds that you have conveyed money to purchase items in 'other people's names', trust me, you will be in a lot of trouble.

Also, various kinds of debt cannot be discharged in bankruptcy (for instance, certain student loans, personal injury judgements, some judicial fines, etc.), and it is not uncommon that a bankrupt will be required to make on-going contributions to the estate, even from future income.

Bankruptcy can mean a lot of things professionally. Forget about ever working for a bank, and becoming bonded might be difficult. Many professions suspend/disbar bankrupts.

The key thing about bankruptcy is that it strives to provide an equal pro-rata distribution of your residual assets against proven debt obligations. For instance, the creditors of a bankrupt with $50,000 of unpledged assets, and $100,000 of unsecured debt would see a recovery of 50 cents for every dollar of debt owed.

There is another form of 'bankruptcy' known as a 'Consumer Proposal'. In the United States, this is known as "Chapter 11" bankruptcy (referring to the chapter of the US Bankruptcy Code), in Canada, this is known as the CCAA. Basically, with the aid of a trustee, you sit down with your creditors and hammer out an orderly arrangement for payment of debts outside of the bankruptcy process. In exchange, creditors often will consent to changes in payment terms, interest rates, etc. For instance, a credit card that charges 30% interest might accept 10% interest and write off a large part of the accumulated interest charges, in exchange for certain covenants and garnishments requiring they get paid.

[crazyfound]

I've heard of creditors chasing their wads of cash that the person owes them for years, and many people ignore them and go on with their day. Can you do this very long before these people decide to make you go bankrupt? It probably takes a while for them to do this because they want their money?

Is it harder to get hydro, telephone, etc accounts after bankruptcy?

Do you still owe the money after bankruptcy? I read part of the stuff above and it says, "by law they contact you.", which seems to mean, bankruptcy is useless (especially for $1,200.00) when you still owe the money, unless they make you bankrupt.

[st7860]

"Its illegal to transfer ownership of property a short time before your declare bankrupcty, but of course its not illegal to buy a house or property in other people's names if you do it properly and you trust the person enough to not sell it and leave you with nothing."

Wrong. The highlighted example would be an example of a fraudulent conveyance, a bankruptcy offense.

If the trustee, creditor, or appointed inspector finds that you have conveyed money to purchase items in 'other people's names', trust me, you will be in a lot of trouble..

I'm not talking about a down payment with YOUR OWN Money.

What if someone pays a down payment for you and you use your normal monthly salary to carry the mortgage payments and make interest payments on the down payment. Since the down payment is not your money, why would that be illegal?

[crazyfound]

"Any legal filing of a bankruptcy is a public document which the general public has access to."

Where does one go to get someones bankruptcy information? I'm assuming it costs some cash... $50?

[pitz]

I'm not talking about a down payment with YOUR OWN Money.

What if someone pays a down payment for you and you use your normal monthly salary to carry the mortgage payments and make interest payments on the down payment. Since the down payment is not your money, why would that be illegal?

I'm not a lawyer, but that sounds like it is a case of creditor preference.

Creditors might not view such an arrangement too kindly. If someone is conveying you money, and you immediately turn around and put that money into an exemptable shelter (pardon the pun), directly or indirectly, shortly before filing for bankruptcy (instead of paying off your debts), such arrangements are routinely challenged by creditors as fraudulent conveyances.

Its really no different than contributing every last dime available to a bankruptcy-exempt RRSP or life insurance policy just before filing for bankruptcy. In most cases, those contributions are required to be disgorged.

[Hubster]

Personal Bankruptcy Canada (http://www.bankruptcy-canada.ca/)


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GL