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  • Spouse filing for bankruptcy

    Having just separated (which was a decision made by my wife alone), I have now been advised that she will be filing for bankruptcy. The 2 mortgages on it are in both our names and there is little equity in the house. Neither of us have much in the way of assets at this time, and I believe she is doing it to wipe out her student loans.

    I am out of town visiting relatives to recover from the shock of being told it is over and I'm in need of some quick advice / information.

    On my own I cannot come close to being able to afford the house. I am in the rare situation where she was the primary earner, even though both of us work FT. Can I simply surrender it, allowing it to be sold in the bankruptcy and hoping that the sale covers the mortgages (assuming that I would be responsible for 50% of any shortfall)? Or am I going to be forced into bankruptcy too?

    Thanks in advance for any much needed guidance and advice.

  • #2
    maybe talk to the bank where you have your mortgage and see what they suggest.

    Comment


    • #3
      I have great sympathy for your situation. The absolute first thing you should do is talk to a bankruptcy lawyer and explain your situation. They have a much greater intellect than a family court lawyer. You need to protect what assets you have left. This is not the USA where you can just give the keys to the bank and they take over the house. The banks will come after you for any shortfall. Bankruptcy has a stigma of being a bad thing but it is not necessarily so. It buys you time to get everything sorted out and can still live. They do not take all your assets but a bankruptcy trustee works with you and your creditors. Look them up on the internet immediately and they will advise you what your next steps should be.

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      • #4
        Whose name is on the title? If it is joint, then what happens is, the trustee now has a claim for her share.

        You would need to assert yourself with the trustee early. It's possible that the trustee may try to sieze the property for sale, even if just because of error or misunderstanding. It is best to communicate right away.

        Your share of the home is your share. If you are still living in the home, you can put the trustee's share "on hold" (may take a court order but it is not unusual) so that the share can be paid off without selling the home.

        If you live elsewhere, the courts may rather see that it is reasonable to require the home sold to pay the trustee. In which case, you would receive your share of the proceeds, or have the option of a buy-out.

        Comment


        • #5
          Do not "surrender" anything to anyone. No, her filing will not force you into Bankruptcy too. But it will affect you. How much so, will depend on the next moves you make to mitigate the damage.

          You need to speak to a *reputable* trustee firm (many aren't, imo) and if you consult w/a lawyer make sure it is one that works in the area of law: Bankruptcy and Insolvency. I will PM you a firm (Trustee) that is very qualified to help you with your questions. It's *free* and there's no obligation for you to speak with them.
          Last edited by hadenough; 03-23-2013, 11:29 AM.

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          • #6
            I would advise not saying one word to the Bank _ until he knows what he's going to do and has gathered info from a Trustee.

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            • #7
              Something for you to think about (and perhaps bring to your spouses attention if you both can be amicable at this time) is that under the Bankruptcy and Insolvency Act, student loans cannot be discharged until seven years have lasped since being a full/part time student. It can be discharged after five years if the bankrupt can show 'undue hardship' and this is done on a case basis.

              Whatever you do, do not do anything until you have consulted with a bankruptcy lawyer and a family law lawyer. And that includes discussing options with your spouse. You need to be aware of what your rights/obligations/options are under the law before making any decisions that can affect you.

              Welcome to the boards!

              Comment


              • #8
                try this site, they may have more ideas and suggested then here.

                Bankruptcy Discussion Forum - Canadian

                Comment


                • #9
                  Please note that Bankruptcy Trustees are NOT lawyers. Many of them are CGA's or CA's - and many of them aren't.

                  They take a 3 year course (probably on-line). Some, imo are totally unqualified and unscrupulous and will steal the eyes out of your head, given the opportunity.

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                  • #10
                    Thanks for the speedy replies. Both of our names are on the mortgages. Unfortunately I would think it is safe to say that things have become less than amicable, to put it mildly, which is not what I wanted. I did want the house to be sold as I'm sure she cannot afford it alone either. However, it was a bit of a surprise that she immediately went for the bankruptcy option. I'm fairly sure it is because that will make trouble for me.

                    I gather she has already discussed things with a trustee and probably has started the process. I'm wondering if the trustee has an obligation to contact me about the house? Like I said, I want it sold, but I don't want to get into a situation where I'm left holding the bag. My impression was that the trustee advised her to stop paying the mortgages and she would have 2 - 3 months before the bank seized it for foreclosure. To me, that is not dealing with the situation in a forthright manner.

                    Comment


                    • #11
                      I sent a PM to the OP with a contact that can help him. Sadly, I know far too much about this topic and have had to become a quasi-expert thanks to my ex completely f*cking me over with his bankruptcy.

                      It feels like having a gun held to one's head. OP is actually fortunate that there's little equity in the home. Big plus, under the circumstances.

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                      • #12
                        "My impression was that the trustee advised her to stop paying the mortgages and she would have 2 - 3 months before the bank seized it for foreclosure. To me, that is not dealing with the situation in a forthright manner."

                        Yup - SHADY. Please find out who the Trustee is if you don't yet know.

                        Do you and your wife have any joint credit cards, other loans, line of credit? If you are the primary card holder on joint cc's she will have zero liability. Cancel all cards immediately if you have any that are jointly held. OR: are you a secondary card holder?
                        Last edited by hadenough; 03-23-2013, 11:46 AM.

                        Comment


                        • #13
                          Originally posted by mom2three View Post
                          Something for you to think about (and perhaps bring to your spouses attention if you both can be amicable at this time) is that under the Bankruptcy and Insolvency Act, student loans cannot be discharged until seven years have lasped since being a full/part time student. It can be discharged after five years if the bankrupt can show 'undue hardship' and this is done on a case basis.

                          Welcome to the boards!
                          That is something we are aware of. For the sake of my kids, I'm a little concerned as to whether she has either given complete information or received correct advice. While it has been 7+ years since graduating college (ie: ceased to be a student), she has been taking distant education courses through a university to advance her career. It was previously explained to me that this would reset the 7 year clock. Or has that changed?

                          Comment


                          • #14
                            My understanding is that the clock starts when you are at the point where you must start repayment. If her ongoing classes were enough to maintain her student status and OSAP payments were still covered by the goverment - we don't think of it, but the goverment is covering the interest payments until we graduate - then 7 years wouldn't have elapsed.

                            Comment


                            • #15
                              Originally posted by hadenough View Post
                              Do you and your wife have any joint credit cards, other loans, line of credit? If you are the primary card holder on joint cc's she will have zero liability. Cancel all cards immediately if you have any that are jointly held. OR: are you a secondary card holder?
                              No other joint items. And the car and insurance were in her name only. The day after she gave me the news I set up a new individual account and immediately had my payroll deposit info changed.

                              Comment

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