March 28th, 2010 by Questions

Because of a $250,000 loss related to Nortel, my husband and I are on the verge of bankruptcy. There are currently three court judgements against me alone since I own our home solely. The Licensed Insolvency Trustee I have been in contact with says all three of these judgement creditors go back to ground zero and are treated the same as my other creditors who have not taken the steps to achieve judgements. My lawyer says they get preferential treatment with respect to the forced sale of my house and their debts get satisfied as much as possible from the proceeds. A secured second mortgagee will be in a position soon to initiate a power of sale. Which is correct?
satisfied as much as possible from the proceeds. A secured second mortgagee will be in a position soon to initiate a power of sale. Which is correct?
Also how often does an unsecured creditor apply to petition a debtor into bankruptcy? I understand that it`s not a common practice but it can be done. Also if this were to happen can I go to the trustee I`ve already been in contact with to file for bankruptcy then or does the action of an unsecured creditor with a judgement against me preclude this.
Any help would be greatly appreciated.

Posted from: Ontario


One Response to “Confusion”

, A licensed trustee said:

I want to apologize, but I am going to use your question to point out somethign that I think is fairly obvious, but happens all the time…

It is a good idea to ask as many questions as you can think of before you file for bankruptcy (or get involved in any legal procedure), but if you ask too many different people, or people with different level sof expertise and experience, it quite often just confuses the hell out of you… To resolve the problem you end up asking someone else, in this case a free website, and that can just make matters worse…

You need to decide who you are going to deal with and trust and then relay on thier answers. Otherwise you’re going to running around like a chicken with its head cut off.

So, your lawyer was correct if you don’t file for bankruptcy. Until you file for bankruptcy the judgment creditors have enhanced rights over all of our other unsecured debts.

The trustee you spoke to is correct as soon as you file for bankruptcy. Once you file the judgment creditors lose their enhanced rights and fall back into the pool with every one of your other unsecured debts.

The second mortgage on your house may inititate Power of Sale if you are in default, but seoncd’s don’t usually do so becuase they have to guarantee the first will be paid in full. If you file for bankruptcy before the house is sold then the judgment creditors are not entitled to the payments your lawyer told you about. If you still haven’t filed bankruptcy by then thhey are.

As far as being petititioned into bankruptcy, it almost never happens. The creditors have more/better rights under the law before you become bankrupt so you are more likley to be sued and then ajudgment enforced than to be petitioned into bankruptcy.

Decide who you can trust and want to work with and get the ball rolling…

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