July 6th, 2012 by Questions
My girlfriend had to claim bankruptcy as a result of large debts related to her former marriage. Even though we are both only separated from our former spouses, the Bankruptcy company insists that my wages and financial postion become part of the equation and are now looking to significantly increase her payments as a result. My claim is that I have nothing to do with this. We are living together but are barely hanging on. My Ex gets a good chunk every pay. Is this legally allowed or are they looking to recoup there costs at my expense? Cosidering we are both technically only separated…not divorced…can we be considered as Common Law (we have been living together for 2 years so far)? Thanks for your time and help
Posted from: Ontario
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July 06, 2012 at 11:20 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
You ask a good question as this is an issue that confuses many people.
What happens is when you file for bankruptcy the cost of the bankruptcy is determined by the surplus income calculation.
This calculation determines what the cost of a bankruptcy is going to be based on the bankrupt’s percentage of the household income. So to answer your question, yes, the trustee firm is following the legislative requirements to calculate the cost of your girlfriends bankruptcy. The interesting thing is that it makes no difference whether you define yourselves as common-law, separated, married or single. The cost of the bankruptcy is based upon the bankrupt’s percentage of the household income.
Now there is one way to work around this issue of the cost being based on your income. Should you refuse to disclose your income as part of her bankruptcy the legislation has said that the surplus calculation is still done, but your girlfriend can only use 50% of the amount allowable for 2 people.
I understand this is confusing, but have your girlfriend discuss this with her trustee, however, you should be advised that in some cases the monthly payment increases when the calculation is done this way. But it is impossible for me to predict whether it will or not without the actual numbers.