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In Canada, Bankruptcy Discharges May Negatively Affect Debtors
Just like in the United States, Canada debtors look to bankruptcy as a last resort to fiscal ruin. Certain types of property are protected from seizure, while collection agencies are no longer permitted to attempt debt collection.
Yet unlike in the United States, the fresh start so desperately desired by debtors who are up to their eyeballs in debt is quite frequently marred by the negative consequences. In Canada, bankruptcy discharge to some is equal to a loss of the ability to earn a livelihood.
Prevented from exercising certain professional options, those who in the past may have made a living as an elected official, will no longer be able to do so. In the same vein, those who may have operated in a trustee position are barred from engaging in this activity.
In some cases the bankruptcy discharges are conditional and some of the conditions may need to be met prior to the discharge while others are taking effect upon the discharge and thus will carry over into the debtor’s life after bankruptcy. Additionally, several contracts that the individual may have with service providers of varying kinds will be subject to review and many times a service provider will cancel a contract and thus force the newly discharged debtor to contract for a similar service elsewhere and quite possibly at higher rates.
Although this is not decreasing the number of Canada bankruptcy filings, it does in some ways deter those who fear professional reprisal if they seek out the fresh start their situation merits.
Most people may believe that following bankruptcy, their financial life is over and unless they can pay cash, they cannot own a car. Obtaining credit for a car loan following a bankruptcy is going to be more expensive than if they have perfect credit, but for most people it is possible.
Before any credit company will consider any type of loan after bankruptcy, the case must be discharged through the court. It usually takes about six months following the court date for all the debts to be discharged and until then most creditors will not accept an application for a loan of any type. After the bankruptcy has been discharged, the debtor has no outstanding debt and while still considered a high credit risk, some sub-prime lenders may be willing to take a chance with an after bankruptcy car loan, knowing the individual cannot file for another seven years.
The interest rate for a car loan after bankruptcy will usually be at the top of the legal limit and a few companies may slip in a few extra fees to add even more to the cost of the loan. For some people just coming out of bankruptcy, the type of car and the price they pay is rarely open to negotiation as some sellers take advantage of their desperation.
If it is possible for them to hold off on the car purchase, after bankruptcy car loans may be more available if they have established even six months worth of credit history that shows they are trying to turn their credit life around.
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How can I get a judgment that should have been barred against my property removed?
Shortly after we filed for divorce, my ex filed for chapter 7 bankruptcy. Just before filing for bankruptcy she received a small claims notice that she was being sued by a collection agency for a $500.00 unpaid hospital bill. Her Notice to Creditors from the bankruptcy trustee went out well in advance of the small claims court date to both the hospital and collection agency and she assumed this would stop the action from proceeding because that is what the information from the trustee indicated. It appears though that a default judgment was entered against her and now there is a Judgment against the deed to my house which is causing issues with me trying to refinance. She quit-claimed the house to me after the divorce. What can I do to get the judgment removed? While I would like it taken care of quickly, I can wait on the refinance and if the law firm attempting to collect this debt broke a law, I would like to make sure they are held accountable.
If the debt was discharged in the bankruptcy and you have the papers to prove it, go to small claims court and file suit against the collection agency for violation of the FDCPA (Fair Debt Collection Practices Act). It’s $1000 per violation if you win, so as long as you have the paperwork to prove your case, you’ll not only be money ahead, but you can also file a motion to have the lien removed against your home and the judgment vacated. Read the small claims manual for the state where you reside. Your ex wife may actually be the one who has to file suit as the judgment arose from her debt.
However, if the debt was not listed as one of the debts discharged in her bankruptcy filing, you or she will have to pay it to have the lien released. Also judgments can accrue interest, so what you owe may actually be more than $500.
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