Bankruptcy Questions

March 26th, 2014 by Questions

Bankruptcy Questions: I make $850/week (approx $3,600 per month) at Vancouver’s best daycare centre. My total debts are $125,000. These include substantial tax debts to the Federal Government and a student loan with a balance of $26,432 that I took out to pay for training at an Early Childhood Education training school. My assets include a car worth $10,000 and a house in Vancouver that is registered jointly with my husband. Equity on the home is valued at about $150,000. I want to transfer the house into my husband’s name solely and then declare bankruptcy.

  1. Will all my debts be extinguished
  2. What will happen if I transfer title to the house?
  3. Is there any other property that I might be able to keep after his bankruptcy is over?
  4. What property is exempt from the Trustee generally?
  5. What will happen to my wage during the bankruptcy?

Posted from: British Columbia

Questions

One Response to “Bankruptcy Questions”


, Gareth Slocombe, Trustee | C.I.R.P | C.A said:

Your student loan debt can be extinguished through a bankruptcy if it has been at least 7 years since you last attended school.

The transfer of the house for little or no consideration is referred to as a “transfer at undervalue”. It would likely be challenged by your trustee and the transfer voided by the court. Canada Revenue Agency also has legislation which may allow them to pursue your husband as a result of the transfer since you were a “tax debtor” at that time.

In bankruptcy, you are allowed to keep a vehicle of up to $5,000 in value, principle residence equity of up to $9,000 ($12,000 in Vancouver/Victoria) and $4,000 for household furniture and effects.

During the bankruptcy, you are required to pay 50% of any “surplus income” to the Trustee and your bankruptcy would likely be extended from 9 months to 21 months because of this. The current threshold for surplus income is $2,497 for a family of two but the amount you pay will be adjusted for the portion of total household income attributed to your income only.
Some of the above issues are complex and you should meet with a trustee in your area to discuss them further.

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