Crowdfunding after bankcruptcy or consumer proposal
August 3rd, 2012 by Questions
I am currently unemployed and have some debt. I am also working on a book that i will launch with the help of crowdfunding websites such as indie gogo an alternative to kickstarter.
If i am not able to pay my debts beforehand. And decided to file for bankcupcy or consumer personal. Will all of the donations i received from crowd funding to start up my book publishing will go to the trustee fir bankruptcy, consumer personal.
Posted from: Ontario
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August 03, 2012 at 5:44 am, A licensed trustee said:
If you file a consumer proposal, the funding is “safe”, but you may have a diffciult time finding a trustee that will accept your proposal without a regular source of income. If you cannot demonstrate how you will fund the proposal you may not be allowed to file one…
If you file for bankruptcy I see two possible courses for your trustee to take. The first is they may treat this funding as “income” that is subject to the surplus income rules. This is the better option for you. If your totla ioncome from all sources is below the government standrads then this treatment won’t cost you any extra.
The alternative will be to treat the funding as a “windffall”. Windfalls are seized 100% during yor bankruptcy for the benefit of your unsecured creditors. The test is simple – are you required to disclose the income for income tax? Are you required to repay any portion of the funding once you sell you book?
There may be one more “complication” – your book represents an asset (something that you own) and it could be argued that any income form the book should really go to your creditors. I think you should discuss all of this with your trustee BEFORE you decide to file…