How are deposits treated in bankruptcy?

October 4th, 2006 by Questions

I\’ll be getting married soon, and have made several deposits over the last year for catering, venue, etc.. Just wondering how these will be treated if I declare bankruptcy in Ontario before my wedding. Similarly, I have purchased a refundable plane ticket for a trip to visit family at Christmas; how would that be treated in bankruptcy?

Thanks

Questions

One Response to “How are deposits treated in bankruptcy?”



October 05, 2006 at 8:58 am, A licensed trustee said:

Let me ask you a couple of questions:

1) can you cancel the contracts and your deposits will be returned?

If you can, then your trustee may very well be obliged to do so. In most cases the deposit is not refundable so I suspect you don’t need to worry – call your suppliers and ask them to make certain. In regards to the plane ticket, if it is refundable, you should expect it to be cashed in. I doubt your creditors would find it reasonable that you can afford a vacation (even to visit family) when you’re defaulting on your debts.

2)Where did the money for the deposits come from?

Even if you paid cash, the money you used for the deposits could have been used to pay down your debt. It will not leave a very pleasant taste in your creditors mouths…

3) How do you intend to pay for these things after you file?

So, you’ve made deposits – when the bill comes in how are you going to deal with them? If you’ve set money aside your trustee will most likely be obliged to sieze those funds for your creditors.

4) Is your spouse to be familiar with your financial situation?

If you haven’t had a discussion about your finances, I suggest you should. Starting amarriage by hiding this sort of thing doesn’t make for a very good beginning.

You can probably tell from my questions and comments that I am concerned about what you have done so far and what you are planning. I think you (and your fiance) should sit down with a financial professional to sort things out.

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