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divorce settlement timing and whether the bankruptcy trustee claims it? the Licensed Insolvency Trustee?

I am to get a small divorce settlement from my husband based on my share of our small house equity (he will borrow to buy me out). I am also thinking of declaring bankruptcy because I owe a much bigger credit card debt.
Will I be able to keep my small divorce settlement in any case or will it automatically go to the trustee if I declare bankruptcy before I get the settlement?
Or can I keep the settlement if I get it after declaring bankruptcy?

Posted from: New Brunswick

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One Response to “divorce settlement timing and whether the bankruptcy trustee claims it? the Licensed Insolvency Trustee?”

A licensed trustee said...

The technical answer is that your divorce settlement is an asset which may be seized for the benefit of your creditors if you file for divorce. From a practical standpoint, it literally depends on the size of the settlement. If it is large enough, say 1/3 of your total unsecured debt, you might want to consider a consumer proposal instead of filing for bankruptcy. Alternatively, if the settlement is quite small, then it may not be factored in to any bankruptcy you may be considering.

My best advice is to discuss this with a trustee (or lawyer) BEFORE you make any decisions or sign off on any settlement.