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Will we lose everything?

Over the past year we have had numerous bad luck disasters… health problems for my husbend, loss of hours at work (which ruined my maternity leave), then loss of my husbends job (which bought in 90% of our funds, childs health problems along with myself, etc etc etc…
within the past 6 months we have no way to pay the bills and keep food, electric and heat… we have a new baby that over the past month I discovered there is no way to feed her without begging for money from family.

i guess what i need an answer for is what is going to happen to the stuff we have (i know some things will be taken away but what about things we need?

example: we need one vehicle for me to get to work. if they need to take the car that is fine because i cannot legally drive my little girl in it anyway. the only issue is taht when we got our truck we were told they needed a downpayment paid before the end of december and i am trying to get the money together but will they take our truck if we file bankruptcy and i cannot come up with that money in time?

and what about if we owe money to our family, right now we are sitting about about 20,000 debt to our parents. if we file bankruptcy will that be considered so that we can pay them back? when i spoke to someone yesterday he said the best thing would be bankruptcy not a proposal.

also what happens to our furniture, baby furniture, will we be allowed to spend money on clothes for her, will be be allowed to have money to buy her christmas gift?

sorry maybe i have to many questions

Posted from: Alberta

One Response to “Will we lose everything?”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

Let’s deal with the assets first. In the province of Alberta you are permitted certain exemptions, meaning as long as you haven’t pledged these assets as collateral you would not loose them if a bankruptcy were to be filed.

So in Alberta, the exemptions that are permitted are as follows:

1.Food: 12 months’ supply.
2.Clothing: up to $4,000.
3.Household furniture and appliances: up to $4,000
4.One motor vehicle; up to $5,000
5.Health aids: no dollar limit.
6.Tools of your trade: up to $10,000.
7.Principal residence: up to $40,000, reduced to your share if you are a co-owner.

So you can see, there is quite a bit of room and often people don’t loose much. Now assets are pledged as collatoral against any loans, then to keep these pledged items you must continue to make the payments on these secured loans.

One of the next items you identified were the loans to family members. Legally speaking these fall into the same class of creditors as all of your other loans, so if you filed bankruptcy you legally cannot make any payments to your family while in bankruptcy. If you did this would violate the principles that the Bankruptcy and Insolvency Legislation are based upon as it would result in specific creditors getting unfair or prejidicial treatment. So no, in a bankruptcy or a proposal you would not be able to make any payments on those loans.

In terms of which is beter the filing of a bankruptcy or a consumer proposal, as a general rule it is better to avoid a bankruptcy so if possible a proposal would be the preferable route. However, just because it is preferable doesn’t mean it is possbile as this will depend on more specific informaiton than we can explore via this blog. What you need to do to determine this is to local trustee, they will be able to sit down with you and help you to determine what is possible given the specifics of yoru situation.