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Being Sued

Should my daughter file for bankrupcy? She lives in Alta. but a bank in Manitoba is suing her. She is separated and her husband was suppose to pay the mortgage on the house but neglected to do so. The collection agency took over and finally sold the house. Now the bank want their money.

3 Responses to “Being Sued”

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Barton Goth, GCO Inc. Bankruptcy Trustees said...

Generally speaking yes, although this depends on the type of lawsuit you are facing.
For instance, if the lawsuit is essentially a creditor who his attempting to obtain a judgement and you haven’t acted in a fraudulent manner or misrepresented yourself in any way, then a bankruptcy or a consumer proposal will erase the judgement. If instead of a judgement your creditor applies for a Restition Order then a there is nothing in the Bankruptcy and Insolvency Act that will help. Restitution Orders are used when a person has damaged/destroyed another person’s property (for instance you burn down your neighbors garage) and the act can only really impact lawsuits that are being used to not used to reclaim bad debts.

For more information I suggest you contact a licensed trustee. Make sure that when you meet with a the trustee you bring all the documents you have that relate to the lawsuit in question, this way he will be better able to provide you the necessary direction.

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Barton Goth, GCO Inc. Bankruptcy Trustees said...

You have hit on a few issues that I will try to clarify:
1. If you a Division I Proposal is refused by creditors, or you default on any of the provisions of the proposal you are automatically forced into a bankruptcy.
2. Regardless of whether a Division I Proposal, a Consumer Proposal, or a bankruptcy is filed, any creditor can apply to court for permission that the debt survive. While there are certain categories of debt that this is commonly done for (i.e. fraud, misrepresentation, maintenance, alimony, criminal fines / penalties…) in most circumstances this is very rare.
This is partially why it is important to review things with a licensed trustee. If you review all the specifics of your situation they will be able to help you formulate things in a manner that reduces any difficulties and outline any of the risk that may exist.

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A licensed trustee said...

Unfortunately, we can’t tell you whether or not your daughter should file for bankruptcy – that a decision she has to make herself.

What I suggest is that she contact a trustee in Alberta so that she can discuss her options. Depending on how much she owes and her current situation, perhaps bankruptcy can be avoided.