Bankruptcy discharge and Surplus Income

October 5th, 2006 by Questions

Are the circumstances that led to bankruptcy taken into account come discharge time should a creditor oppose? For instance, I had a really good credit and zero debt (after fully paying off large student loans and a car loan) prior to venturing into a business that destroyed me financially (130K in debt). The reason for failure is as much my fault (hard work but no business experience) as the misrepresentation and dishonesty of the franchisor that I’ve considered suing but opted against after consulting with a lawyer (50% chance of winning but cannot afford the legal costs).

I’ve already lost a substantial amount of income running the business and the franchisor and creditors are after me. My only option seems to be bankruptcy but since I make a good living at ~75K, I’m afraid that an early discharge (9 months) is unlikely. What would stop a judge from granting the creditors surplus income for 2, 3, or 4 years?

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One Response to “Bankruptcy discharge and Surplus Income”



, Barton Goth, GCO Inc. Bankruptcy Trustees said:

While the circumstances are considered, the extent to which this is done varies depending on the situation. However, based on your existing income I would not expect the court to be to terribly lenient. Your circumstances suggest that a proposal may be a better fit as it would result in less uncertainty in terms of length or cost. As you review the above link, you will see quickly that a consumer proposal is aimed at individuals with less than $75,000 debt, but there is a different type of proposal (called a Division I Proposal) which is very similar to the consumer proposal but aimed at those with more than $75,000 in debt.

For more details on this you should contact a licensed trustee in your area and have him review why this type of proposal may be a more appropriate solution.

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