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co-owned property

What happens in a common-law separation when there is a co-owned property and one person declares bankrupcy

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One Response to “co-owned property”

Barton Goth GCO Bankruptcy Trustees said...

This largely depends on who is living in the property. Anyway you look at it 1/2 of the equity in the property releates to both partners (assuming both names show up on title). Now if the spouse who is declaring bankruptcy is currently residing in the property they may be entitled to a provincial exemption (discuss this with a local trustee and they will be able to explain the limits of the exemption and how they operate in your province). If entitled to the exemption the equity that must be realized by the trustee will be reduced by the exemption, if not, then the trustee must realize on the entire 50% share of the bankrupt. This can be done in a variety of ways (i.e. force sale, sell interest to non-bankrupt party…) but the equity must be realized on at fair market value and the proceeds distributed among the creditors as perscribed by the Bankruptcy and Insolvency Act.