Archives for April, 2007

This question was emailed to me earlier this week from a person who was worried about going to court. She was trying to decide if a second bankruptcy was right for her and had heard that she would have to go to court in order for her to receive her discharge, which would result in her debts being forgiven.

Basically, this is how it works – if you have never been bankrupt before, then you are eligible for an automatic discharge from your debts in 9 months plus 1 day, provided you complete your duties and no creditor opposes your discharge. The 9-month period is the minimum time the court sets to be in bankruptcy before you can be discharged from your debts.

With a second bankruptcy, you are no longer eligible for a discharge in 9 months and therefore there is no automatic discharge after the 9 months plus 1 day. Generally, you will need to go to court to get your discharge.  Your discharge hearing requires a court date and depending on how busy the court is will determine how long you will have to wait to get your discharge.  During the time leading up to your court date, you remain bankrupt and have to continue your duties. For people going to Toronto court to get their discharge the wait can be about 15 to 21 months from the time you file for bankruptcy.

The reason that you need to attend in court is because the court wants to ask you questions about your bankruptcies so that they can decide which type of discharge you should get.

Some of the questions the court will ask you include the following:
- What were the causes of your first bankruptcy?
- What was the type of debt discharged in your first bankruptcy? Was it credit cards, bank loans, money mart loans, etc?
- How is your current bankruptcy different from your first bankruptcy?
- How have you fixed your problems so that you won’t be filing for bankruptcy again?

Typically for a second time bankrupt, if you have completed your duties and the court is satisfied, you will receive a suspended order of discharge, where there is an extra 6 months added onto your bankruptcy.  During this time, you won’t have to do your duties any more, meaning you won’t need to pay any more surplus income and you won’t have to submit monthly budgets.  It is just extra time added before you are discharged.

A second bankruptcy is obviously not an ideal situation, but it could give you the fresh start you need. Contact me at 310-PLAN for more information about all your options, or email me any questions you might have. Don’t hesitate to deal with your situation so you can enjoy your healthy financial future.

If you get into financial trouble, there are many options open to you and there are lots of bankruptcy laws available to give you the help you need. But what happens when you get into financial trouble for a second time? What happens if you need a second bankruptcy?

A woman that I spoke with last week was asking this very same question. She had just gone through a divorce and was having trouble making payments on her overwhelming debt. Because she was used to a two-income household, being pared down to one was hitting her hard. Circumstances four years ago had forced her and her husband to file for bankruptcy, and it looked like she would have to file for a second time.

Fortunately, if you find yourself in trouble for a second time, like the woman above, you can file for bankruptcy again. The first thing you have to make sure of, though, is that your first bankruptcy is over. Have you had your debts discharged? Is your first bankruptcy file closed? If it isn’t closed and remains open, you are not eligible for a second bankruptcy until your first bankruptcy is completed.

You also need to understand that there are big differences between a first and second bankruptcy.

The biggest one is that in a first bankruptcy you are eligible for what is called an automatic discharge, where after 9 months your debts are automatically forgiven and you are no longer bankrupt. In a second bankruptcy, though, you are not eligible for an automatic discharge, but instead you need to appear in court in order for a judge to decide when you will be done being bankrupt and your debts can be forgiven.

There are many factors that the court takes into consideration when deciding how long you should be bankrupt for. Things like how long it has been since your last bankruptcy, what the nature of your first bankruptcy was, and what caused the second bankruptcy will all be taken into account.

Another big difference is the amount of time that the bankruptcy will be on your credit record. Instead of the traditional 6 years from the date of discharge, as quoted by Equifax Canada, your second bankruptcy will remain on your credit report for 14 years from the date of discharge.

If you find yourself in financial trouble for a second time, you might want to consider filing a consumer proposal, which isn’t as hard on your credit report and won’t leave a mark that is as long-lasting as a second bankruptcy.

Whatever the situation, though, you should talk to a licensed trustee as soon as possible so that you can take control of your situation. You can contact me for a free consultation by calling 310-PLAN, or you can email me any questions you might have about bankruptcy and other options available to you. Together we can make a tailor-made solution for whatever situation you are in. Let’s get started today.

When I meet with people about filing for bankruptcy, a lot of them are worried about the thought of having to go to court. The truth is, it is usually not necessary for a first-time bankrupt to go to court for a bankruptcy.
I met with a man last week who had this worry. He was just recovering from an illness that prevented him from working. He had returned to work but was making less money than before, and was having trouble keeping up with the payments on his bills and his credit cards, on which he owed $25,000.

When I spoke with him he was considering bankruptcy, but he was hesitant because he didn’t want to have to go to court. He just wanted his debts to be taken care of so he could get his fresh start.

I explained to him how bankruptcy works, what his rights and responsibilities are, and reassured him that as a first-time bankrupt, he would not have to go to court unless something prevented his trustee from giving him an automatic discharge at the end of his bankruptcy, which would mean he would no longer be bankrupt and all of his debts would be forgiven.

I told him that if he had never been bankrupt before, federal law has set a minimum period of 9 months plus one day to be in bankruptcy. During the 9-month period, he would have certain duties and responsibilities to complete in order to get his discharge, such as submitting monthly income and expenses statements, attending two counselling sessions, and providing his trustee with any tax information necessary to file all of his tax returns up to the date of his bankruptcy. After this time, he would be, as a first-time bankrupt, eligible for an automatic discharge from his debts, resulting in his fresh start.

If he had to go to court, it would mean that there was something preventing his trustee from giving him his automatic discharge, and he would have to be discharged through a hearing. Some of the reasons that would result in him going to court would be as follows:

- If he had been bankrupt before, because as a second time bankrupt he is not eligible for an automatic discharge in 9 months plus one day;
- If one of his creditors opposed his discharge from bankruptcy, which would be because of a specific reason;
- If he didn’t complete the duties required of him during the 9-month period during which he was bankrupt.

Once I explained to him that he probably wouldn’t have to go to court to declare bankruptcy, he felt better about his options and the possibility of a bright financial future.

If you have any questions about going to court for your bankruptcy, contact me at 310-PLAN for a free consultation. You can also email me any questions you might have about bankruptcy or other options. Also, check out my next blog entry where I’ll talk about going to court because of a second bankruptcy.

I have been bankrupt for 3 months now and have been completing my duties. I need to buy something online, but it requires a credit card. Can I get one while I’m still bankrupt?

This question came to me in an email last week, and is a question that I get a lot – can I get a credit card while I’m bankrupt?

The short answer is no – while you are bankrupt you can’t get a credit card.

If your bankruptcy has not been discharged, or completed, then as a general rule credit card companies will not issue you a credit card. Even with secured cards, they won’t give you a credit card unless your bankruptcy has been discharged. They will, however, issue a secured credit card to someone who has filed a consumer proposal.

You might be wondering, how will the credit card companies ever know, though? There are two ways they can find out – by checking your credit report and by you telling them.

While you are bankrupt, a note on your credit report states as much, which will alert the credit card companies and they won’t give you a card.

And by law, you are not allowed to borrow any more than $500 without telling the lender that you are bankrupt. To not tell the credit card companies that you are still bankrupt is committing fraud and is against the law.

But that leaves the person who emailed me in a bit of a tight spot – they said they need to use a credit card for this particular transaction.

My advice is this – if you absolutely need a credit card, ask a friend or relative to get you a supplementary card on their account. In this way, you can get around the fact that you are bankrupt.

But the bottom line is this – you will not have a credit card while you are bankrupt.

For more information about your bankruptcy or any other debt solutions, contact me for a free consultation at 310-PLAN. You can also email me, like the person above did, any questions you might have. Your peace of mind and bright financial future could be just around the corner – it’s up to you now.