Gift or Loan and Bankruptcy

May 1st, 2014 by Questions

I have a question regarding a man that helped me out financially and was a gift, he is now trying to say it was a loan and is now going after me in small claims court for quite a large amount of money. Can I declare bankruptcy on a situation such as this?

Posted from: Saskatchewan

Questions

One Response to “Gift or Loan and Bankruptcy”


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

Answer:
You can file for bankruptcy if you are an ”insolvent person” as defined by the Bankruptcy and Insolvency Act. In general, you must owe at least $1,000, have no net assets and be unable to meet your financial obligations as they generally come due. The issue for you may be whether or not the claim was in fact a gift or an actual loan. If this is your only debt you may wish to see how the small claims court rules in order to determine if you need to file for bankruptcy at all. If it is ruled to be a loan, then a bankruptcy will extinguish the debt as long as it was not a debt arising out of fraud.

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