equity in the home, province of Ontario

June 19th, 2005 by Questions

I just sent an email regarding surplus income and the Child Tax Benefit. My husband is automatically bankrupt due to an unaccepted consumer proposal. I am not involved in the bankruptcy at all. He has no personal debts but the house we live in is jointly owned. They want his portion of the equity. The bank is allowing us to remain in the house, they are secured with the mortgage. When we built this house, we were not married and I put up the total equity of $50,000. I can prove it. I have a bank book in my name and personal cheque copies indicating payments for various work on the house for that amount $50,000. Can I claim that the equity is all mine with the proof or is it jointly owned therefore his portion or a part of it as determined by the trustee, is payable to the estate? Please help.
I feel that the trustee, in this very special case, has not told my husband everything about become bankrupt. We followed all instructions, put out a consumer proposal which was refused by the franchiser and 4 months later we get a call that the bankruptcy is being backdated to Mar 1, 2005, the day after the proposal and all the rules have changed because, noe he is bankrupt, ie… income tax refund from 2004 seized and any prior adjustments etc… I knew that they took 2005s but everything else is a surprise. It\’s like the trustee assumed that me husband new the law. It just seems that the gloves have come off. I do not trust the trustee and since I am not involved what can I do to protect myself and my 4 children.
Stay at home mom in trouble.


One Response to “equity in the home, province of Ontario”

, A licensed trustee said:

I am going to attempt to answer some of your questions, but the best advice anyone can give you is to talk to a lawyer. Trustees are not lawyers (most trustees are in fact accountants)and therefore we cannot offer opinions on the law.

That being said I sense the fear and frustration in your comments so I will try and clarify some of what has happened.

Let’s start with your husband’s proposal. The only way he could be deemed to be automatically bankrupt is if he filed something called a Division I Proposal to Creditors. This means that he has over $75,000 in debts (excluding the mortgage on your house). When your husband filed he may have been asked to sign a form confirming that he understood that if the proposal was not accepted by his creditors he would be bankrupt. This is not a required form, but most trustees use it to ensure that people understand the risks involved with filing this type of proposal.

If your husband filed a consumer proposal (total debts under $75,000) then he was not automatically bankrupt when the proposal was turned down. Your husband would have to voluntarily sign bankruptcy papers.

Regardless of how it happened, if your husband is bankrupt then the trustee is required by law to try and turn the assets that your husband owns (or partially owns) into money for his creditors.

That includes investments, tax refunds for any years before the year of bankruptcy, it may even include things like cars and houses depending on where in Canada you live.

The equity in your house will definitely be something you want to “fight” for – without offering an opinion on the law, there is enough case history to instruct your lawyer on the arguments that can be made for your interest in the family home.

Again, I suggest the best thing you can do for yourself and your children is to consult a lawyer.

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