`Winfall` Greater Than Total Bankrupt Debt
Let`s say I have $72,000 of unsecured debt that causes me to go bankrupt. Over the course of the 21 months I`m making surplus income payments of about $1700.
To make it interesting, let`s say in month 18 I get a winfall (I win $500,000 in the lottery). What happens to that 500K? Is it all taken or is it just that whatever hasn`t been paid to my creditors by way of surplus income payments is taken and then I get to keep the remainder?
Posted from: Ontario
Got nothing better to do with your time eh?
In the event of a windfall that is large enough to pay off all of a person’s debts we tell them to make a motion to the Court requesting that the bankruptcy be anulled. It is a simple procedure and if the creditors have been paid in full it is generally granted.
Alternatively, if they remain bankrupt, any funds collected by a trustee that are not required to pay the bankruptcy fees or repay the creditors are returned to a bankrupt at the end of the process.
In cases where the windfall isn’t sufficient to repay the debt in full, but it repays a significant portion, we often suggest the bankrupts offer their creditors a proposal – basically they ask the creditors to accept the windfall as a settlement and again the bankruptcy is annulled.