Unreasonable purchase before bankruptcy
My wife and I have just sat down and reviewed our finances. Until now, we dealt with everything personally. I would pay my debts from my money, and she would pay her debts from hers. It was stupid of us, but we assumed we would help each other out if we ever ran into financial problems.
The problem is we just took a very expensive vacation four months ago. It cost over $6000. We didn’t realize how bad our financial situation was until now when we asked each other for help in paying our debts. This vacation was, of course, an unreasonable transaction given the fact that we now need to declare bankruptcy.
Can we exclude this debt from our bankruptcy? Will the trustee coordinate this for us and allow us to pay it seperately? We know it is past the 3 month period for a trustee’s review of such a transaction, and we are legally not required to repay it if we declare, but we still feel badly about it since it looks like fraud, even though that really was not our intent.
When you file a bankruptcy or a consumer proposal you are not able to selectively include certain debts. The reason for this is that the Bankruptcy and Insolvency Act requires all creditor be treated in an equally and fair manner. In light of this you can be upfront about this particular transaction with your trustee, identify this “unreasonable transaction†in advance and provide funds for the full $6,000 into the trustee. The trustee will in turn ensure that these funds are divided equally among all of the creditors and you will then be eligible to be cleared from the entire balance of your unsecured debts and your creditors will not be able to oppose this.
For more information on why this is necessary and how it will prevent any creditor opposition contact a licensed trustee and they will be able to explain the reasoning behind this.