money gift during bankruptcy
May 22nd, 2009 by Questions
If the individual who received a sizeable money gift from his mother during bankruptcy 6 years ago is now discharged, can the money still be seized by the Trustee?
What happens if the bankrupt recipient immediately signs over the cheque to a common-law spouse with a note saying it is a gift and non-repayable? Is the common-law spouse required to give the money back? Or is the recipient on the hook for the amount? Or is it too late for it to be seized?
We`re talking about $40,000.
Posted from: Ontario
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May 23, 2009 at 10:33 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
If a $40,000 gift was received during bankruptcy this should have been disclosed to the trustee and would have either been considered as income subject to the Surplus Income provisionsand a portion of it would have been paid into the bankruptcy estate or it would have been considered after acquired property and the whole amount would have been forfeited to the bankruptcy estate.
Failure to disclose this to the trustee is considered is a very serious issue, it is fraudulent, and if discovered the discharge would be over-turned and the money seized or the individual in question would have to repay the amount. At the same time he would have committed a serious offense under the Bankruptcy and Insolvency Act and now obtaining a discharge and being cleared from the debts may be extremely difficult to do.
Now there is really no way around this, signing the cheque over to a common law spouse doesn’t change the fact that it was received, in fact it compounds the problem as a fraudulent transfer has now taken place which is a second offense under the Bankruptcy and Insolvency Act and now complicates matters further.