Personal Finance

Canadians gaming the bankruptcy system

  • Last Updated:
  • Dec 12th, 2019 10:16 pm
47 replies
Deal Addict
Mar 13, 2012
1304 posts
1285 upvotes
Surrey
very nice: Repeat bankrupts include real-estate agents, roofers, restaurateurs, tax lawyers and drywallers.

wondering how they file for repeating bankruptcy, they already owe money at the beginning, debts already write off, no credit cards etc, how can they do it many times
[OP]
Penalty Box
Feb 22, 2016
4745 posts
4316 upvotes
jaksdj22 wrote: very nice: Repeat bankrupts include real-estate agents, roofers, restaurateurs, tax lawyers and drywallers.

wondering how they file for repeating bankruptcy, they already owe money at the beginning, debts already write off, no credit cards etc, how can they do it many times
No shock roofers/drywallers (or contractors in general) would be in this club. Get paid to do a job, don't do the job, get sued, lose in court... then file bankruptcy to avoid paying. All those stories you see on CTV Consumer Alert for such scams... those homeowners will never see their money.

I can't see how somebody can be freshly discharged from bankruptcy (so their credit report is just ****ed) and can easily apply for and get approved for credit that they can quickly max out then file again. What bank is stupidly giving somebody with a credit report full of charge-offs, unsecured credit? If AMEX is that stupid, damn, give me a Platinum or Gold card with no spending limit, I'll use that card to buy a nice stockpile of gold bars, file bankrupt. I'm set :-)
Deal Addict
Mar 13, 2012
1304 posts
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Surrey
EastGTARedFlagger wrote: No shock roofers/drywallers (or contractors in general) would be in this club. Get paid to do a job, don't do the job, get sued, lose in court... then file bankruptcy to avoid paying. All those stories you see on CTV Consumer Alert for such scams... those homeowners will never see their money.

I can't see how somebody can be freshly discharged from bankruptcy (so their credit report is just ****ed) and can easily apply for and get approved for credit that they can quickly max out then file again. What bank is stupidly giving somebody with a credit report full of charge-offs, unsecured credit? If AMEX is that stupid, damn, give me a Platinum or Gold card with no spending limit, I'll use that card to buy a nice stockpile of gold bars, file bankrupt. I'm set :-)
How they can get approve for new credit card when their credit report already low , can’t even get a new contracts on phones
Deal Expert
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Jul 5, 2004
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Now someone correct me if I'm wrong, but when you declare bankruptcy, don't you lose all assets? Vehicles, home, etc. would all be taken and sold would they not? Getting out of debt for free sounds good, but not if you can never own anything.

And how would it work if you and your spouse owned property together? Does it still get sold?
Deal Addict
Dec 4, 2016
1873 posts
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Well, rich dad poor dad apparently suggested that you shouldn't be afraid to declare multiple personal bankruptcies, in order to get rich with real estate. Seems like people are just following such advice.
Deal Addict
Apr 22, 2014
2967 posts
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, ON
just like in some countries, people go to death row when they caught them with drugs. The result is very low drug crimes.
Deal Fanatic
Dec 5, 2006
9261 posts
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Markham
"A Nova Scotia man filing his fifth bankruptcy had amassed more than $20,000 in credit card debt, even though two of his earlier bankruptcies remained on his credit report. A businessman from Collingwood, Ontario, had 10 cards in his wallet and owed more than $64,000 when he filed his third bankruptcy in 2014.
"
Deal Addict
Mar 13, 2012
1304 posts
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Surrey
smartie wrote: "A Nova Scotia man filing his fifth bankruptcy had amassed more than $20,000 in credit card debt, even though two of his earlier bankruptcies remained on his credit report. A businessman from Collingwood, Ontario, had 10 cards in his wallet and owed more than $64,000 when he filed his third bankruptcy in 2014.
"
This is cool. wondering is it worth for $64000
Deal Addict
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Jul 29, 2013
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Shaner wrote: Now someone correct me if I'm wrong, but when you declare bankruptcy, don't you lose all assets? Vehicles, home, etc. would all be taken and sold would they not? Getting out of debt for free sounds good, but not if you can never own anything.

And how would it work if you and your spouse owned property together? Does it still get sold?
Just put all money,property etc. in the spouses name and the courts can not get to it.
Sr. Member
Feb 18, 2019
507 posts
659 upvotes
Shaner wrote: Now someone correct me if I'm wrong, but when you declare bankruptcy, don't you lose all assets? Vehicles, home, etc. would all be taken and sold would they not? Getting out of debt for free sounds good, but not if you can never own anything. Nobody is going to come in and have a garage sale of your personal items.

And how would it work if you and your spouse owned property together? Does it still get sold?
Only assets over a certain value are included. I don't know the specifics, but like a car under 5K-6K or something, you get to keep... Clothes, basic necessities, tools you need for work, furniture, etc. is not taken. If your lifestyle is renting + drive a cheap car, they won't really be taking much of anything.

That said, I don't understand how they could repeatedly get so much credit again and again after multiple bankruptcies.
Newbie
Feb 4, 2014
60 posts
42 upvotes
Montréal
anotherbargainhunter wrote: just like in some countries, people go to death row when they caught them with drugs. The result is very low drug crimes.
....and lots of dead people!!! Let’s not become extremists lol
Newbie
Feb 4, 2014
60 posts
42 upvotes
Montréal
Crooked contractors have another trick: no need to declare bankruptcy, they just close their company and start a new one. You can’t recoup any owed money since the company doesn’t exist anymore even if the owner started a new company and still uses the same scheme to scam people...
Deal Fanatic
Apr 16, 2007
7960 posts
3246 upvotes
Financial District B…
DonkeyDoo wrote: That said, I don't understand how they could repeatedly get so much credit again and again after multiple bankruptcies.
For individuals like these guys if you could see their credit bureau files it would no doubt have like 3 pages long all filled with inquiries from denials.

In reality it's really the sub-prime lenders fault that approved loans for these guys.
For the first guy, 4 bk's in 10 years, that means he was deceitful in his disclosure to all his creditors about his prior bankruptcies and/or the lenders involved didnt properly pull credit files.

And this is another reason why all bankruptcies should be posted under Public Records(even after all trades purge) on their credit files instead of us having to do a BK search.

A quote from the article:
A Nova Scotia man filing his fifth bankruptcy had amassed more than $20,000 in credit card debt, even though two of his earlier bankruptcies remained on his credit report. A businessman from Collingwood, Ontario, had 10 cards in his wallet and owed more than $64,000 when he filed his third bankruptcy in 2014.

Those credit card companies may only recover a portion of what they're owed.



What's really interesting is:
More than half of the roughly 9,360 Canadians who filed their third bankruptcy between 2011 and 2018 lived in Quebec. For fourth-time bankruptcies, Quebec's portion climbs to 74 per cent.

And of the 88 Canadians who declared bankruptcy for a fifth time, almost all of them — 90 percent — lived in Quebec.





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Last edited by mikeymike1 on Dec 9th, 2019 7:13 pm, edited 3 times in total.
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Mar 9, 2012
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Kitchener
EastGTARedFlagger wrote: No shock roofers/drywallers (or contractors in general) would be in this club. Get paid to do a job, don't do the job, get sued, lose in court... then file bankruptcy to avoid paying.
Judgements survive bankruptcy, as do things like child support and alimony. Technically that group of people are not creditors, therefore they can never be part of a bankruptcy.
Why can't we all just get along?
Deal Addict
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Dec 13, 2016
3696 posts
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Shaner wrote: Now someone correct me if I'm wrong, but when you declare bankruptcy, don't you lose all assets? Vehicles, home, etc. would all be taken and sold would they not? Getting out of debt for free sounds good, but not if you can never own anything.

And how would it work if you and your spouse owned property together? Does it still get sold?
They can never take your home - primary residence. Even the mighty CRA does not have that power.

This is why it's always the best idea to own 1 property.
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Mar 9, 2012
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Kitchener
Shaner wrote: Now someone correct me if I'm wrong, but when you declare bankruptcy, don't you lose all assets? Vehicles, home, etc. would all be taken and sold would they not? Getting out of debt for free sounds good, but not if you can never own anything.

And how would it work if you and your spouse owned property together? Does it still get sold?
You don't always lose all assets. As for a house, a bankruptcy trustee would make you max out your mortgage (refinance) in order to pay off creditors. If that doesn't work, then yes, the primary home can be sold off to pay off debts - but likely that money would all go to the mortgage holder. Your vehicle you can keep up to a certain value, I believe it's $5,000. Likely you have a loan on your vehicle, and net value of less than $5,000, so you could actually keep the car loan off of a bankruptcy.
Why can't we all just get along?

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