Cameron-Okolita Inc. provides a question and answer forum where a bankruptcy question can be answered by a local expert. Our Alberta Bankruptcy Trustees review the Blog daily and select questions of a general interest nature for a response and for publication and review by our readers.
Question
Posted March 26, 2015
I am a single mother who took out a Student Loan to take a hairdressing course about five years ago. I worked in a few salons, but after paying for my chair rent, supplies, and sharing half of my receipts with the salons, I realized I can make more if I work in a grocery store as a cashier. That’s where I am now, and I am receiving collection calls and they threaten to seize my wages and have phoned my employer. After I pay my bills, I have no money left over to put anything toward my Student Loans. What can I do? Is bankruptcy an option?
Answer
Student Loans less than seven years old will survive a bankruptcy and must be paid even if you go bankrupt. We noticed that you have indicated that you have no money left after you pay your bills. If these bills include significant other debts, which are dis-chargeable or forgiven in a bankruptcy, a bankruptcy may still be beneficial for you, even if you have to pay your Student Loans. If you have and can eliminate enough other debt by filing a bankruptcy, you may then have some money available for your Student Loan.
Question
Posted February 12, 2015
My husband and I recently moved to Alberta. After moving here, the U.S. parent company of my husband’s company went bankrupt and they shut the pipe manufacturing plant down where my husband worked. We charged all our moving expenses on our credit cards, and now have no income to pay these cards and the other debts we have. The only assets we have are a leased car, our furniture, a small pension and RESP‘s for our kids. What assets can we keep if we go bankrupt?
Answer
A number of assets you own are exempt from seizure in a bankruptcy. In Alberta, a bankrupt is eligible to keep a car worth up to $5,000.00, or if you owe money against it, equity therein up to $5,000.00. Equity is the value of the car less what you owe against it. If the car is leased, it is likely that you will have very little equity, if any, and you can keep the car as long as you make the payments.
In Alberta bankrupt individuals are allowed to keep furniture up to a liquidation value of $4,000.00, or $8,000.00 per couple. The relevant value would be its auction value, not the price you paid, or the replacement cost. Pensions are exempt from seizure and remain so, as long as you don’t cash them in or convert them to cash while bankrupt.
We do have some bad news however. The Courts have determined that RESP‘s are property of a bankrupt available to the creditors in a bankruptcy. Funds held for children by a parent and which can be cashed by the parent are the parent’s funds, not the children’s. If one cashes the RESP‘s prior to bankruptcy, in contemplation of a bankruptcy, you will be required to reimburse your bankruptcy estate before you will receive your discharge from bankruptcy.
Question
Posted January 14, 2015
I have been trying to avoid bankruptcy for a few years now. My sisters, my brother, and I inherited a small home from our mother, 75 miles from Edmonton. My brother lives in it and pays rent, which we split five ways. If I go bankrupt, what will happen to the house?
Answer
Based on the split, it appears that you have a one-fifth interest in the home, and that it is not your principal residence. If you go bankrupt, your Bankruptcy Trustee will have to deal with or liquidate your interest, converting it into cash for distribution to the creditors in your bankruptcy. It is likely that your Bankruptcy Trustee will have to lien the property to secure payment for your bankruptcy estate.
Our Alberta Bankruptcy Trustees would prefer to sell the one-fifth interest to your siblings, rather than force a sale and division of proceeds.
It is difficult to say exactly what will happen in a bankruptcy. It will depend on how much the house is worth, whether one or all of your siblings have the funds to purchase your interest, and whether they even want to.
If your siblings don’t want to sell the house and split the proceeds, or one or more of them don’t want to buy your interest, and do not cooperate with the Bankruptcy Trustee, it is very likely that resolution will be rather costly and messy, and could affect your discharge from bankruptcy. The Bankruptcy Trustee will be entitled to your share of the rent while the issue is being resolved. You may want to speak to your siblings before you file bankruptcy.
Question
Posted December 4, 2014
I am thinking about bankruptcy, and have a car financed with Chrysler Credit. I still owe $19,000.00 on the car, but I an not sure what will happen if I go bankrupt. Can I keep my car?
Answer
Generally speaking, car loans financed by the credit arm of a car company are secured debts and the loan must be paid even if you go bankrupt. This presumes, of course, that you want to keep the car. In Alberta, a bankrupt or debtor is allowed to keep a car if its value or the equity therein does not exceed $5,000.00. Equity is determined by taking the value of your car and subtracting what you owe. If that number exceeds $5,000.00, the portion above $5,000.00, if any, must be paid into your bankruptcy estate in order to retain the car.
Bankruptcy Alberta and its sponsoring Bankruptcy Trustees usually allow their bankrupt clients to pay the excess equity through monthly installments. If you car is worth less than what you owe and you go bankrupt, you may want to consider surrendering the car to Chrysler Credit. This, of course, depends on whether another car is, or can be, available to you.
Question
Posted November 17, 2014
I am a real estate agent. With the downturn in the economy, my sales and commission cheques have been getting smaller. In order to make ends meet, I have not been paying my desk and advertising fees, and my agent paid the renewal on my license. I don’t expect it to turn around soon, and my brother has suggested I go bankrupt or file for bankruptcy. Can I keep my real estate license if I go bankrupt? And what happens to the amounts I owe my Agent?
Answer
We are not aware of any prohibition against being a realtor while bankrupt, and we have other realtors who are bankrupt with us. In order to assure yourself of this, you may want to speak to your local Real Estate Board before considering a bankruptcy assignment.
The debt you owe to your employer, in the normal course, is not a debt which survives a discharge from bankruptcy or that needs to be paid if you go bankrupt. If your Agent owes you a commission cheque, and you go bankrupt, they will have a right of set off for the amount you owe them. If, after any outstanding commission is applied, you still owe them money, the bankruptcy may make it difficult for you to maintain your relationship with them. Most realtors who go bankrupt and owe their Agents money, relocate their license and work for a different Agent.
Question
Posted October 20, 2014
I have been self-employed for the last three years, and have not made any tax payments on my income and have not filed my tax returns. Revenue Canada has seized my bank account and has sent a notice for me to file my returns. I have made around $100,000.00 in each of the last three years and I know I owe a lot of money. Can I go bankrupt for Revenue Canada?
Answer
Generally speaking, yes. Personal Income Taxes, unless they are related to fraud or falsified tax returns, are dis-chargeable in a bankruptcy. If you are a repeat bankrupt, and your previous bankruptcy or bankruptcies were tax-related, Revenue Canada may object to your discharge and ask the Court for you to make some restitution or payments before you are discharged from bankruptcy. There are exceptions and it largely depends on the specifics of your situation. Most people who go bankrupt do not have to pay their personal tax debts, if they file and pay their taxes from the date of bankruptcy forward, and are tax compliant while bankrupt.
Question
Posted October 1, 2014
The recession has hit the company I work for hard, and the overtime I have come to count on to keep my head above water is gone. I was bankrupt in 1996. I believe I need to go bankrupt again, and I am worried about what will happen to me if I do. Can you let me know what a second bankruptcy involves?
Answer
The most significant difference is the length of time you have to be in bankruptcy. In the case of first time bankrupt, the minimum time frame is 9 months; in the case of a second time bankrupt, the minimum period of bankruptcy is 24 months. If you make significant income, you may have to pay a portion of that income into your bankruptcy estate each month. If that is the case, your bankruptcy could extend to 36 months. It is difficult to explain everything you need to know about bankruptcy without having more information about your situation. Our Alberta Bankruptcy Trustee offer free, no-obligation, initial consultations.
Question
Posted August 23, 2014
I went bankrupt in August, 2008, and received my September GST cheque. My Bankruptcy Trustee has contacted me and has indicated that I must reimburse my bankruptcy estate for funds he says I have received inappropriately. The cheque was payable to me, not my Bankruptcy Trustee. Do I have to pay it back?
Answer
Generally speaking, GST credits and related refunds that are payable to a bankrupt vest with or become property of your bankruptcy estate, and your Bankruptcy Trustee must collect the GST for the benefit of your creditors. There is a limit, however, and that limit is set out in Rule 59 of the Bankruptcy and Insolvency Act. There are slight variations between provinces and estates, but the threshold in the case of a first time bankrupt in Alberta approximates $1,750. If total receipts in your bankruptcy estate exceed the limit, you will be entitled to a refund of any extra GST when your bankruptcy estate is closed. Once the limit has been exceeded, some Bankruptcy Trustees will write Revenue Canada and tell them to send all future GST cheques to their bankrupt, rather than making them wait for a refund. Our Alberta Bankruptcy Trustees do exactly that, and as a result, our clients receive the GST refunds they become entitled to sooner than estate closure.
Question
Posted June 4, 2014
I filed bankruptcy a couple of months ago. I am still receiving bills and credit card statements, and today I received a call from a collector who said he has no notice of my bankruptcy. What should I do?
Answer
Unfortunately, this is a common occurrence. The problem rests with the creditor(s). Creditors have set up bankruptcy departments in their companies or are relying on bankruptcy agents to complete and file bankruptcy proofs of claim forms for them. The bankruptcy departments in these companies, or Agents who are filling in the bankruptcy claim forms are not letting their collectors or accounts receivable departments know who has gone bankrupt. It can take some time for creditors to make this happen, and that is normal.
Some of our clients have reported that they continue to receive statements for more than six months after they filed their bankruptcy and although annoying, they eventually stopped.
If a collector calls you, don’t be afraid to advise him/her that you have gone bankrupt or filed for bankruptcy, and that they should not call you again. They should be directing their questions to your Bankruptcy Trustee. You can give them your Bankruptcy Trustee’s phone number and request that they call your Trustee themselves, to verify your bankruptcy assignment.
