Recovery??

A lady saved money and was able to regain her financial freedom…https://globalnews-ca.cdn.ampproject.org/c/s/globalnews.ca/news/3975675/credit-card-debt-tips/amp/

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Consumers are often the least important parties in a corporate insolvency. Gift cards are always a potential problem as the consumer has already made the payment, but the receiver has no requirement to honor them. Consider this before making a purchase.

http://www.cbc.ca/news/canada/saskatchewan/you-have-to-be-a-vigilant-consumer-gift-cards-worthless-when-stores-go-out-of-business-1.4457210

Student Loans

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One of questions I get the most is what will happen to my student loans in bankruptcy. In fact, I get this from professionals, students, and lots of other interested people. The basic premise of student loans is that they are not discharged or released under a bankruptcy or a proposal, unless it has been more then 7 years at the time of filing, from the date of the last time you were in school (graduation, end of classes, etc.). If it is less then 7 years but more then 5, we can apply to the Court to release the debts as part of the proposal or bankruptcy.

The factors involved range from whether it was a private or public loan, to what the circumstances surrounding the loan are, and what your own personal circumstances are.

It’s important to talk to a lawyer about this, as often times people in the industry don’t always understand what is released and what is not. If you are unsure, or you have any student loan debt, please feel free to call me. I’m happy to discuss the case with you, and let you know if it is worth pursuing.

 

Discharge after how long…

Re Tanchak (2014), 2014 SKQB 151

Mr.Tanchak applied to be discharged from bankruptcy in 2005. He was opposed by his Trustee. He declared assets of $2,800.00 and unsecured debt of $34,717.50. Nine years later, he applied to be discharged again. When he declared, he omitted to declare to the trustee that previous to declaring bankruptcy, only days before, he had entered into an agreement to sell his shares in a company and direct the proceeds to his father. No creditor or the trustee pursued the father, but the Trustee submitted that the integrity of the system was challenged by this. The registar agreed with the Trustee, and identified that the bankrupt had failed in his duty to disclose all property disposed of, and to account for any losses of assets. The court ruled that because of this, the court didn’t have the authority to grant an absolute discharge even though it had been 9 years. The court agreed that he would be discharged by paying $3,600 in monthly payments of $150.

 

Barter (Re) 2014 BCSC 528

In a recent decision of the Bankruptcy court of British Columbia, Registrar Master Young made a ruling regarding the title of a bankrupt’s property, and the non-exempt portion of the equity that a Trustee is entitled to realize on.

Under Section 71 of the BIA, the property of a bankrupt vests in the Trustee upon a declaration of bankruptcy. Further, Section 74 entitles a Trustee to register title or caution on this property, to claim interest.

I register these cautions and trustee’s interests for Trustee’s, and it is best to do them as soon as possible.

In this case, the Trustee did not register on title immediately, because he believed that there was no realizable equity in the home. He chose not to spend the money from the estate.

Yet, when the bankrupt’s wife was forced to declare bankruptcy as well, and chose a different trustee, that trustee chose to register an interest. She was then offered to buy the equity in the home that belonged to her, for $2,000. She did, and when the husband was made aware of this, he contacted his trustee.

The entire time, the husband had been trying to sell the home. He received an offer around the same time as his wife had bought her share of the equity. When he contacted the Trustee to ask about his wife, he told the Trustee about the offer. The trustee told him he could not sell the property, as it was not his to sell. He offered to sell the property/equity to the bankrupt, for $2,000.00 as well. The bankrupt bought it, and then proceeded to counter offer the sale, which was turned down. The house was ultimately sold for a shortfall on the mortgage.

The bankrupt then asked for his discharge, and asked for the $2,000.00 back from the Trustee.

The court ruled that the Trustee’s conduct fell below the standard, and that the Trustee had to return the funds. The trustee should have explained what the bankrupt was buying.  That there was potential for no return, and all of this should have been explained at the beginning of the bankruptcy.

The bankrupt was then granted an absolute discharge.

Income Tax Discharges…

 
Many people believe that a person can go bankrupt, and all their debts will disappear..this is simply not necessarily the case, especially if you owe significant tax debts, without any regard for the tax system..

In the bankruptcy of Gordon Charles McRudden [McRudden (Re) 2014 BCSC 217] the Bankrupt owed upwards of $900,000 to the Canada Revenue Agency, and more then 1.1 million dollars overall…
The bankrupt was involved in litigation from a patient who claimed he assaulted. He was sued, and rang up hundreds of thousands of dollars in litigation. Further, he then had GST and Income Tax deductions which he didn’t pay. In 2007, he disposed of his assets, and transferred 600 thousand to his sister. In 2008 he went bankrupt.
He lives in a home assessed at 3 million, and paid no tax or rent, his sister pays him $2,000.00 a month no tax. He also had child support arrears of 300,000.
The CRA objected. This was a first time bankruptcy.
The Trustee asked for a conditional discharge of full repay of taxes, or a refusal. The bankrupt asked for a full discharge.
The registrar reviewed everything, reviewed case law. He stated that not paying tax debt not honest or unfortunate, and that deterrence is the overriding consideration.

He ordered that surplus payments from Feb 1 2007 – Dec 31, 2008 to be paid. He had to pay the estate $69,500.00, supply income and expense statements, and to pay any further income tax and excise tax payments that were left.

Pre-Bankruptcy Court Decisions…

 

 

In a recent Ontario Superior Court case, the court confirmed a 1961 superior court decision that a court can not make a declaration as to the survival if a debt, pre-bankruptcy, even if the debt will survive from a person based on a exception under the BIA.

In Bridgemohan v. 2218667 Ontario Ltd 2014 ONSC the court confirm the decision of itself in Kemper Re (1961), 2 C.B.R. (NS) 130 (ONT SC).

The facts are not of particular importance: only that a fraud occurred involving a Contruction Lien Act claim, and the Defendants were found liable.

However, the Plaintiffs sought a declaration from the court that Section 69.3(1) of the BIA didn’t apply, and therefore by extension, the debt would not be discharged by bankruptcy.

The judge denied this request. He stated that this was not a bankruptcy court, and he wouldn’t and shouldn’t make this declaration.

Therefore, if a creditor is trying to pursue this line of action, or a debtor is trying to avoid it, they must go to bankruptcy court.

Please feel free to call me to deal with any problems along these lines.