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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #1  
Old 05-16-2014, 05:52 PM
Shrav Shrav is offline
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Default Bankruptcy timing question

Hello all

My girlfriend (divorced now from her ex) while separated signed over rights to the matrimonial property to her ex for a fixed sum to be paid to her once he fixed up the house and sold it.

He then claimed bankruptcy.

When the divorce was finalized the papers still reference their notarized agreement.

My question is: Would his bankruptcy essentially cover the agreement and it is unrecoverable for her or because he signed the final divorce papers that acknowledged the agreement that would that mean him signing after his bankruptcy the agreement is still valid?

I apologize if that question is muddled but I'm trying to find out if she has any chance of seeing her money.

Thanks in advance

Glenn
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Old 05-16-2014, 06:56 PM
Serene Serene is offline
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Glenn, I'm so sorry this happened.

I see a couple problems: she signed over the matrimonial home whereas she should have kept the home in her name and jointly sold it to take her share of proceeds.

There is something missing from your post: if he was to pay her upon the sale of the home - why didn't he? What were the exact terms as outlined in the agreement? I'm doubting he sold/closed on house and went bankrupt in same day....
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Old 05-16-2014, 07:41 PM
Berner_Faith Berner_Faith is offline
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Unless he went bankrupt before the house sold. It is hard to say what the outcome of this may be. Because she signed over the house and didn't equalize at that time, his house is his to do what he wishes with it. If he went bankrupt and thus lost the house that way, I don't know how a Judge would view this. How much of a payour are we talking? If you have a signed agreement/order, I wonder if you can contact the trustee and become a payee of the bankruptcy?
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Old 05-16-2014, 07:56 PM
Shrav Shrav is offline
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Quote:
Originally Posted by Serene View Post
Glenn, I'm so sorry this happened.

I see a couple problems: she signed over the matrimonial home whereas she should have kept the home in her name and jointly sold it to take her share of proceeds.

There is something missing from your post: if he was to pay her upon the sale of the home - why didn't he? What were the exact terms as outlined in the agreement? I'm doubting he sold/closed on house and went bankrupt in same day....
I haven't seen the agreement (currently I live in Alberta and she in Quebec. Very long story!) but from what she has told me it essentially stated that she would be paid a lump sum once he sold it. If he made a greater profit than anticipated she was forgoing that. She was just giving up her share for the agreed payout.

Once he went bankrupt, because it was still jointly in their names, the creditors came after her. She also went into bankruptcy because she couldn't cover the costs of the house and her own place (plus raising the 2 children). From what I understand their wasn't any equity in the house. Thats why he had great plans on upgrading it and selling it at a profit.

So its not like he profited from the whole ordeal.
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Old 05-16-2014, 08:07 PM
Shrav Shrav is offline
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Quote:
Originally Posted by Berner_Faith View Post
Unless he went bankrupt before the house sold. It is hard to say what the outcome of this may be. Because she signed over the house and didn't equalize at that time, his house is his to do what he wishes with it. If he went bankrupt and thus lost the house that way, I don't know how a Judge would view this. How much of a payour are we talking? If you have a signed agreement/order, I wonder if you can contact the trustee and become a payee of the bankruptcy?
The agreement was for $50,000.
She was never contacted by the trustee when he declared bankruptcy. I would think she should have been as she would have been a major creditor and that should have been reported to the trustee.

The other issue at hand is the time frame. They have been divorced about 5 years now. Is their a time frame that IF the contract is still valid because he signed the divorce papers AFTER his bankruptcy (and the agreement was part of divorce and referenced in what he signed) that she has to act to request payment or because of the time that has passed she is out of luck anyways (statuette of limitations on a debt).
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Old 05-16-2014, 08:07 PM
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mcdreamy mcdreamy is offline
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You'll need to give more information for a more accurate response. Why don't you ask your girlfriend to sign up to the site so she can provide first hand information? Someone here probably has the right answers, if the correct information is given.
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Old 05-16-2014, 08:10 PM
Shrav Shrav is offline
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Originally Posted by mcdreamy View Post
You'll need to give more information for a more accurate response. Why don't you ask your girlfriend to sign up to the site so she can provide first hand information? Someone here probably has the right answers, if the correct information is given.
That is great idea. She is away for the long weekend but I'll talk to her on Monday and suggest she does.

I really appreciate all the help and quick responses that I have received since signing up here
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Old 05-18-2014, 09:17 AM
smileandwalkaway smileandwalkaway is offline
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My name was never on the matrimonial house (student loans would have disqualified us from obtaining a mortgage). Ex stayed in the home, I left with the kids. I wanted him to sell he wanted to keep it but never paid me out. He declared bankruptcy. He told me of his plan to declare weeks before the bank was set to take the house. Over the same time period I accidentally found out that he had put the home on the market (his real estate agent called me for info because he couldn't get a hold of the ex). Coincidently a buyer was found days before the bank would take possession. My lawyer advised to forget the issue of ex trying to sell the house without my knowledge and allow the sale because that was the only way I could hope to see any money from the house. Had I objected, the house and any equity in it would be absorbed in his bankruptcy.

Once I knew of his plan to declare bankruptcy I focused my attention to ensure my name and credit did not get implicated. It was his debt acquired post separation that led to his situation and I had no knowledge of anything. I also submitted a very detailed report to his trustee outlining the money he owed me. I was his biggest creditor but unfortunately received less than pennies on the dollar of what he owed. Biggest achievement was that my credit remained untouched by his financial choices.
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Old 05-18-2014, 10:44 PM
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Shrav - read the Bankruptcy and Insolvency Act of Canada (BIA. In particular read subsections 69 and 121. Exception to subsection 69.4 is that property of a bankruptcy that has vested in the trustee; or (b) amounts that are payable to the estate of the bankrupt under section 68 are precluded.

You can often get information by calling Industry Canada, Office of the Superintendent of Bankruptcy Canada. You can ask to have a Bankruptcy Analyst call you back and/or get an email address and send your questions directly to them. The OSB will respond in writing or email.

DO NOT believe everything a bankruptcy trustee tells you. They are often incorrect. Also keep in mind that in 2009 there were significant changes to the BIA which may be of relevance to you.
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Old 05-20-2014, 02:04 PM
OrleansLawyer OrleansLawyer is offline
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Quote:
DO NOT believe everything a bankruptcy trustee tells you. They are often incorrect.
Family lawyers are not always versed in how bankruptcy law intersects with family law. The two fields do not meld easily, in light of competing interests protected by legislation.

Seeing lawyers - both a family lawyer and bankruptcy lawyer - would be the most prudent course she can take. With $50,000 at stake it would be foolish of her to try to muddle through this with information from the internet.
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