How Can I Go Bankrupt If I Have No Money?


Category: Bankruptcy Q&A (86) comments

Question: How much does it cost to go bankrupt? And why? Seems to me if your going bankrupt it’s because you have no money.

Bankruptcy Does Cost, But What’s Your Alternative?

You are correct; it does cost money to go bankrupt, for two reasons.

First, there is a small cost to cover the administration of your bankruptcy. This includes filing fees and the a small amount to cover your trustees time, staff and office expenses.

Second, although trustees do not work for the government, we are required to follow government rules, and one of the rules concerns “surplus income”. Government guidelines around how much you pay during your bankruptcy are based on a principle that says that the more money you make, the more you are required to pay while you are bankrupt. Put another way, the more you make, the more you are required to contribute to your creditors. If your income is below a certain income threshold you will not be required to make any surplus income payments.

Your question does raise an interesting point: if you have no money, how can you go bankrupt? The answer depends on why you have no money.

If you have no money because all of your money is going to pay your credit cards, bank loans, payday loans and other debts, a bankruptcy will eliminate those payments. If you do not have any surplus income and you have no assets, the cost of your bankruptcy will be fairly low and will likely be much less than you are paying today to keep ahead of your creditors.

If you have no money because you are not working, a bankruptcy may not be necessary. For many people the purpose of bankruptcy is to eliminate debt so that creditors cannot garnishee wages. If you have no wages, you cannot have your wages garnisheed, so it may make sense to wait until you are working to go bankrupt. You will have the money then to pay for your bankruptcy, and you may require protection from your creditors.

The cost of bankruptcy depends on many factors, so we suggest you meet with a licensed bankruptcy trustee for a no charge initial consultation to review the costs in your specific case before you decide to file bankruptcy.

Category: Bankruptcy Q&A |

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  1. cindy dorrington

    I owe mastercard 5,800.00 dollars and my only income is disability pension and can not make payments ,what can I do? Please help thank you.

    Reply
    1. Comet

      Hello.

      I owe CaptialOne several thousands dollars but I’m on a disability pension. I’ve had my card for several years now and have made all my monthly payments on time. However things have recently taken a turn for the worse and I’ve found myself with massive debt. I still want to pay down the debt and keep my card but the interest rates are a burden. What should I do?

      Thank you for your time.

      Reply
      1. J. Douglas Hoyes

        If you are on a permanent disability pension, it is impossible for Capital One to garnishee your wages (since you are on a pension), so you could stop paying them (although that has negative implications for your credit rating, and may have other consequences). Filing bankruptcy is also an option, but there are costs associated with filing bankruptcy, so you should have a no charge discussion with a Licensed Insolvency Trustee before making a final decision.

        Reply
  2. J. Douglas Hoyes

    If you are on a disability pension, you have no wages to garnishee, so one option for you is to advise mastercard that you can no longer pay them, and then open a new bank account at a new bank so that they don’t keep taking their monthly payments. This does not eliminate your debt, and they will continue to call you, but if you cannot afford to make any payments, this may be your best option.

    A bankruptcy may also be an option, so you should contact a trustee to determine if a bankruptcy is a viable option in your situation.

    Reply
  3. Stacey

    I have a question for you regarding debt collection. I am hoping you can help, but I do believe it is unique.

    My husband and I moved here to Alabama from Toronto Canada in July of 2012. We have a debt collector that is calling us from Canada. We have ignored the calls, and I have set up a dummy email for him to send us requests for us to contact. He has confirmed my husbands employment, he called my husbands office stating that he needed to get information to my husband about a lawsuit against our property? He stated in an email he has confirmed my husbands employment and the fact that we own a home (true, but there is no equity).

    My question is this does he have to follow Alabama law, or Ontario Law. He has already violated on Ontario law, he is not supposed to contact us more than three times I a week, he contacted us once with a voice mail, once to my husbands office, once to my mother in law, and three separate emails.

    When we moved here we were making payments. Our last payment was April, 2013. We were just not able to keep up with them. We have housing payments, a car lease, utilities, and children to feed.

    We received a letter stating that MBNA has sold our debt to a collection agency

    I have read on line, that it would be very difficult for him to sue us out of county, but not impossible.

    Any advice would be appreciated I am much better with email, as I am hard of hearing, and have a hard time on the phone.

    Thanks in Advance

    Reply
  4. J. Douglas Hoyes

    You are correct; it is very difficult for a creditor in Canada to sue you and obtain judgement in another country. The creditor would have to hire a lawyer in Alabama, and convince the courts in Alabama that the debt is enforceable; that may cost more in legal fees than the debt is worth, and they would probably lose. Your strategy of replying by e-mail is probably the correct strategy.

    However, I am not a lawyer, and I have no expertise in U.S. law, so if you are worried you should consult an attorney in your jurisdiction for advice.

    Reply
  5. Jessica

    Hi
    I am almost graduating school and for the month of April considered to be part of OSAP. I have no job because I am a full time student and work long hours 3 days a week at an unpaid placement.
    I owe a few places money, but my biggest pain in the butt is Bell. They have collectors calling for them now.
    I owe around $3000 something because of interest. He has been calling since December 2013. I spoke to an agency in February and they said since I am working to tell him I am considering bankruptcy and I have no income.
    His response was to try and borrow money. I explained that I cannot. He said we won’t worry about the bankrupsy unless it actually happens and that since I had a job from June 2012-jan2013 I shouldn’t even be in debt.
    I only made about 46$-100$ by weekly. I mostly live off osap and that isn’t a lot.
    I won’t be able to afford bankruptcy till closer to sept.
    What should I do? I am almost 21 and feel way over my head.

    Reply
  6. J. Douglas Hoyes

    Jessica: At the present time the logical option would be to simply advise the bill collector that you are completing school and are not yet working, and therefore you are unable to pay. They will probably continue to phone you, but there only other option is to take you to court, sue you, and attempt to garnishee your wages. Since you have no wages, that’s not a worry at the present time.

    Once you are working you can consider your options, which may include making monthly payments to Bell, based on what you can afford, or saving up money and attempting to make a lump sum settlement with them. If you have further questions a credit counsellor or bankruptcy trustee will provide a no charge initial consultation to explain your options in more detail.

    Reply
  7. Chris

    Hi

    I have a decent job and my wife works too, our situation is that we simply have more debt than we can afford to pay. We’ve been living paycheck to paycheck for years and whenever we need to buy something extra like tires for our car, or any unexpected expense, we rely on our credit cards. As the cards got higher and higher in balance, our day to day living budget got smaller and smaller.

    Today, in order to pay all our loan and credit card debts monthly, we cannot afford to buy clothes, we don’t have any money to do anything, we are living like we are poor. We finally decided that we can’t go like this any longer and started using some of our money for things like clothes and other reasonable living expenses and have started to miss payments on credit cards and 1 of our loans.

    I don’t see that things will improve anytime in the near future and we will end up consumed by debt until we retire. I think bankruptcy may be the way to go for us, so we can start fresh, and not let something like this happen again.

    Chris

    Reply
  8. J. Douglas Hoyes

    Hi Chris. Yes, if you are unable to pay your debts, a bankruptcy may be an option. Since you are both working and have incomes, a consumer proposal is also an option. I suggest you click on the Contact a Trustee link at the top of this page and meet with a licensed trustee to fully evaluate your options.

    Reply
  9. Ann

    I am a single parent of a special needs child, I work part time and home school my child. A few years ago I was in a relationship and we purchased a house together, he put in the down payment. We had a prenuptial type agreement drawn up stating that should the relationship end that if the house was sold he would get his initial down payment back and anything left over would be divided evenly. Years later we separated and he wanted to maintain the home and I did not pursue forcing a sale at the time. A year later I learn he is ill and not able to work, he refused to sell the home, but was not making the mortgage payment. Eventually there was a foreclosure and at the end thousands owed to a mortgage insurance company. They have now garnished my wages, as my ex partner is on disability. I was maintaining all my debts as I didn’t really have much debt other then a small line of credit. I do not see a change in my income given my daughter requires much of my attentions. But with my already meager wages being garnished I can no longer service my line of credit. I am being forced into declaring bankruptcy. Is there any option in court to have compassionate relief of this debt?

    Reply
    1. J. Douglas Hoyes

      Hi Ann. In theory a court can make whatever decision they want, but in practical terms it is unlikely. If you were to apply to court to have the debt reduced or eliminated you may end up spending thousands in legal fees, and there is little chance you would be successful, since you are legally responsible for the debt. A bankruptcy may be a much quicker and less expensive option, particularly since your wages are being garnisheed so you want a quick resolution to the problem.

      Reply
  10. Carol

    I am on disability and have over $12,000 in credit card debt due to helping out family and friends who said they needed help but assured me they would start paying me back. That never happened and now I am in major debt. My income is limited and my rent takes up most of my income. I have fallen behind in making payments as I just don’t have the money and after contacting the creditors, they have refused to relieve the interest on the cards so as to allow me to catch up to payments and pay it off. I can barely afford my regular bills, and I am having difficulty affording to buy a decent amount of food each month and am living on very little. After all is said and done, I am left with less than $100 to survive on each month.
    I don’t know if I could even afford bancruptcy… and I am scared of losing more money than I can afford to…. so what are my options? I wanted to re-establish my credit because of my past, but in helping others I’ve doomed myself.
    What can I do?

    Reply
  11. J. Douglas Hoyes

    Hi Carol. My advice would be to decide what is most important to you: buying food, or paying your credit cards? Personally, if it was me, I would pick food.

    If you don’t buy a decent amount of good food your health will suffer. If you don’t pay the credit cards they may keep calling you, but beyond that not much will happen. That’s why I would pick food if I had limited resources. My strategy for you would be as follows:

    1. open a new bank account at a new bank, where you don’t owe any money.
    2. have your income deposited into the new account.
    3. next month, instead of sending a payment, send a short note to each credit card advising them that you are on a fixed income and can no longer afford to make payments.
    4. when they call, tell them you are on a fixed income and can’t make any payments, and hang up.
    5. it is unlikely that they will sue you, but if they do they can’t garnishee a disability pension, so I would not worry about that.
    6. if your family every pays you back you can consider making repayment arrangements at that time.

    The key point is that you must look after yourself first, not the credit card companies who clearly are not interested in helping you out.

    Reply
  12. Carol

    Thank you for your answer, it was greatly appreciated.
    I was actually considering if a consumer proposal would be a better alternative for me, because I would rather not further risk my credit rating and I would possibly be able to afford small monthly payments. Would this be something that I could do?

    Reply
  13. J. Douglas Hoyes

    Hi Carol. Without knowing the specifics of your debt I can’t give you specific numbers, but in general most creditors want to get around a third of their debt or more back in a consumer proposal. So, if you owe $12,000, the minimum proposal that may work would be for $4,000 (although it could be more or less). The minimum cost of a bankruptcy for someone on disability is probably less than $2,000, so a proposal would be twice as costly for you. If the monthly cost is an issue you could start now by saving money (say $50 per month, or whatever you can afford), and then when you have some savings you could start the bankruptcy, and by applying your savings you could lower the monthly cost of the bankruptcy.

    Reply
  14. Dee

    My friend is on disability. His house was foreclosed on and it was sold at a loss. Now there is a collection agency trying to collect the amount of the loss from my friend. He cannot afford to repay them as his income is very limited and he has a dependent child to provide for as well. He has informed the collection agency of this however they continue to call him. They have also sent him forms requesting that he discloses all of his monthly bills, where and how much he spends his money. If he offers to pay them a small amount each month is there a minimum that they can refuse to accept as payment? Or if he tells them he cannot repay them because of his fixed income can they come after him at all?

    Reply
    1. J. Douglas Hoyes

      Hi Dee: Collection agencies make money by collecting, so as long as they think they have a chance to collect money they will keep calling. Since your friend no longer has any assets, and does not have wages to garnishee, there is essentially nothing they can do to him. He could simply inform them that he is on a disability income and can’t afford to pay, and hang up the phone. It may also be wise to open a new bank account at a new bank for further protection. If this is causing him stress he should contact a credit counsellor or bankruptcy trustee who can help ally his fears about further collection action.

      Reply
  15. G M.

    Quick question, hope you can help. If I file bankruptcy and only receive CTB and the Universal child tax credit as income and will soon be receiving CPP disability, does the disability payment I receive go towards the bankruptcy as income?
    Thank you!

    Reply
  16. Elizabeth

    Hi I’m hoping you can help me., I have a
    line of credit and I own about 7,000$ I was paying it out but I lost my job 3 mount ago and now I can’t pay, I don’t own car or house, I rent a room from. Friend that now she is letting me stay for free till I get a job., what will happen if I can’t pay?..

    Reply
  17. Susan

    My sister is on ODSP. I receive $475.00 per month from ODSP for her rent (she lives with me in my house) her income is $791.00 per month. Last year I co signed a line of credit for her for $10,000.00 and she owes Mastercard $21000.00. Her interest rate on the credit card is $360.00 per month. For the past year I have been paying $200.00 using my line of credit and she pays $300.00 using her line of credit. This is becoming unsustainable. I was wondering if going bankrupt is the only option for her. She has no RRSP and her car is almost 9 years old. I am wondering about the surplus income amount. I get CPP disability and a pension from my former employer. We both use the same bank, have mastercard from same bank and my mortgage and RRSP is the same bank. Because she lives with me, would my income be included to calculate the surplus income. Or should I just stop paying mastercard? Can they sue me or just make phone calls or send a collection agency to get money from her? I just can’t continue paying her bills. Please advise the best options thank you
    Susan

    Reply
    1. J. Douglas Hoyes

      Hi Susan. Your situation is complicated, so you should contact a trustee, who can determine whether or not you have surplus income. Since you have co-signed for your sister, if your sister goes bankrupt you would be liable for the full amount of the debt.

      Reply
  18. J. Douglas Hoyes

    Hi Elizabeth. You should discuss your options with a trustee. If you don’t pay your line of credit there’s not much the lender can do at this time. They can’t take your car or house, because you don’t own one. They can’t garnishee your wages until you are working. Once you are back to work you should speak to a trustee and consider your options. You may have enough income to resume payments at that time, or perhaps other options (like credit counselling, a proposal or bankruptcy) may be necessary.

    Reply
  19. frank

    I am nearly sixty years old and haven’t been able to find work for over 2 years. I am about $13,000 in credit card debt and don’t own anything worth selling. Living with the hope of finding employment, I have always payed more than the minimum monthly requirements but it has gotten to the point that the last of my savings are about to run out. What are my options? Thanks for the help.

    Reply
    1. J. Douglas Hoyes

      Hi Frank. Your options would be to:

      1. Keep paying what you can until you find work. If you fall behind, the creditors cannot garnishee your wages if you don’t have any, so you could just hold out until you are working.

      2. You could file a bankruptcy now, which eliminates the debt, but there is also a monthly cost involved, which may not be practical when your income is low.

      It’s a difficult decision, so I suggest you consult a trustee to determine the cost of bankruptcy in your situation, and then decide on the best course of action for you.

      Reply
  20. Samantha

    Hi, I am in debt for over $60000 most of that is student loans from 2004-2006. I was never able to get a job in the field that I went to school for and ended up working min wage jobs and was never able to pay back ( i did make payments when i could, which wasn’t very often). A few years ago i started living with my now common-law spouse and to be honest never thought about the loans. I am now not currently working and am getting stressed out about the debt, they call all the time (to the point I’m making my self ill). My spouse will not help me pay my loans as he has his own to deal with and to be fair he should have to. Someone had suggested that I look into bankruptcy as an option. How would this work if he and I were to come to an agreement for the payment of the monthly fee?

    Reply
    1. J. Douglas Hoyes

      Hi Samantha. This is a question to ask a trustee in your area. Here’s the link to http://bankruptcy-canada.com/trustee/ .

      Because you have been out of school for more than seven years, your student loans are eligible to be automatically discharged in a bankruptcy. If this is a first bankruptcy and your income is low, the cost of the bankruptcy would not be a large amount. Your spouse could help you with the monthly payment to the trustee if required.

      Reply
  21. Jen

    I recently started receiving ODSP and was on OW for about 2.5 years before that. I have about $45,000 debt on 2 credit cards and a line of credit. I’m wondering if I should just get a new bank account at another bank and forget about the debt? It feels kind of underhanded to me. Do I write letters to the banks I owe saying I’m on ODSP and can’t pay? Do I claim bankruptcy?
    Thanks for any help you can give me.

    Reply
    1. J. Douglas Hoyes

      Hi Jen. You are correct, there are two obvious choices in your situation.

      First, you could open a new bank account at a new bank, and advise your creditors that you are on ODSP and are unable to pay your debts. They could still sue you, but since you have no wages to garnishee or any assets, there is nothing for them to get. You are being honest with them, so it’s not “underhanded”. You are not hiding from them.

      The other option is to claim bankruptcy, which officially eliminates the debts, but there is a cost. If you have a limited income the cost may not be worth it. You could contact a trustee to determine the cost, and then you can decide if the cost is worth it.

      Reply
  22. Jay

    I am on a B.C. Disability pension for severe mental health issues.
    I have received a letter from a collection company for a credit card debt. I cannot pay so what is the best way to deal with this. I don’t know how they even got my address as I have to live with my mother. I believe this bill is at leSt five or six yrs old and has more than doubled due to interest.

    Reply
    1. J. Douglas Hoyes

      Hi Jay. If the debt is six years old it is highly unlikely that they will take you to court, and even if they do you have no income they can garnishee, so there is probably nothing legally they can do. You could simply advise them that you are on disability and have no money to pay them. Eventually they will realize that they won’t earn a commission from you, and they will stop calling.

      You could also go bankrupt, but there is a cost, so if that’s something you want to consider you should contact a trustee to review your options and make an informed decision. If a family member is willing to help you with the cost it may be worthwhile, but if this is your only debt the starting point should be to communicate with the collection agency; they will probably then leave you alone.

      Reply
  23. Laurie

    I have been to see a trustee and she felt that bankruptcy was the way to go for me. However since then I have run out of E.I. and remain unable to find a job. My house sold and left me with nothing – lawyers and the real estate agent took everything. I have a joint savings account with my sister but most of the money in that account belongs to her. Will she lose that money if I move forward with bankruptcy. Though at this time with zero income I cannot afford to pay for a bankruptcy.

    Reply
    1. J. Douglas Hoyes

      Hi Laurie. If the money in the joint account belongs to your sister, the safest approach for your sister is to take her money and put it in her bank account, so that there is no confusion.

      As for bankruptcy, your analysis is correct. The purpose of bankruptcy is to protect you from your creditors so your assets are not seized, and so that your wages are not garnisheed. Since you have no assets and have no wages, there is no compelling reason for you to require protection from your creditors at this time. In most cases the most opportune time to file bankruptcy is after you have started your new job, because you will have funds to pay for the bankruptcy, but you will also have wages that may require protection from the creditors. Your trustee can explain these options in more detail (or if they are not explaining it adequately, it would be wise to speak to a different trustee).

      Reply
  24. Susie P

    My husband and I owned a house. I was a stay at home mom (2 kids) and never worked in 13yrs yet I was on the mortgage. Well, he cheated and left and after a few months stopped helping me pay the bills. The house went into foreclosure and eventually sold after a year on the market for a loss. I just got a letter saying I owe $55,000. I work and make just enough to support my kids, I have no child support nor alimony. He has since moved out of province ( still in Canada) and has infants now. I do not have any assets either. So basically nothing for the bank to take. Should I file for bankruptcy? My credit is already shot from him leaving me with the bills etc. I just received the letter from the lawyers representing the bank. I plan on telling them where he lives..as they sent his letter to my rental house. We are still married as I can’t afford a lawyer yet. But seperated for over 2yrs now. I am not sure what to do. Thanks

    Reply
  25. Laurie

    Hi I am on cpp disability and pwd provincial disability. I know that they cannot garnish my disability but they can take money I owe out of my bank account and their is nothing anyone can do to stop it. I owe money to capital one $300, and 460 to the money mart, and about $360 to telus.. I only get $ 886 because of $20 being taken for a damage deposit and my rent is $750 I have ms and mental health problems

    Reply
    1. Ted Michalos

      If/when your spouse files for bankruptcy one of the things his trustee will have to determine is whether or not there is any equity in your home and who owns the home. You said only his name is on the mortgage – is his the only name on the deed too? If it is then he is entitled to 100% of the equity in the home. If both your names are on the deed then he is entitled to 50% of the equity. The house doesn’t have to be sold, but an amount equal to his share of the equity must be paid into his bankruptcy. As long as he can do that, the house is safe. If he can’t do that then his trustee will ask you if you want to “buy” his share of the house. If you can’t then the house. There are options, but make sure you have a plan in place to deal with the house BEFORE your spouse files. Tell him to look at filing a consumer proposal too…

      Reply
  26. elizabeth wilson

    I have lived with my common law spouse for slightly more than 14 years. We own a house that has been for sale, for almost 6 months now. Our sole source of income is his CPP disability pension, which is supplemented by ODSP. Prior to our relationship, I was in receipt of ODSP, for a serious medial condition@ fibromyalgia. The issues I are dealing with now, is the Credit card debt, which is now over $18,000. When we purchased this house, in 2007, debt free, we both contributed an equal amount to the down payment. My spouse’s mother , a woman who is retired, and in her 80’s is the co-signer for our mortgage. I have become quite ill, probably from the amount of stress that is going on, and also due to the fact that even if the house sells, which seems doubtful, at this time, we will not have enough money to discharge the mortgage, and also to pay any more towards this Credit card . When my father died, I did make a significant payment to the Credit Card debt, (2 years ago). My spouse will not discuss this matter with either his mother, a bankruptcy trustee, or any representative of the credit card company. I would like to know, what my options , if any are. Thank you very much.

    Reply
    1. Ted Michalos

      Something a lot of people don’t realize is that you and your spouse are not required to “act together” when dealing with your debts. based on the situation as you have described it 9and I am sorry for all the stress you are experiencing) I think you should contact a trustee directly yourself. The worst thing that happens is you will have a better understanding of your rights – the best thing that might happen is you put together a plan to sort out your finances and move on with your life (hey, your spouse might even decide to listen once they see how well things work out for you). Good luck – don’t face this alone…

      Reply
  27. DARRYL

    Hello, I’m not sure if you have come across this scenario before. I owe about 175000 in debts and cant pay them. I applied for a consumer proposal that was accepted but it failed because I couldn’t return to work when planed. I’m on LTD presently. I’m looking at bankruptcy now as my only option. My concern is that when I was doing research on this, I learned that I will be highly unlikely to receive a an absolute discharge but almost certain a conditional bankruptcy. I am moving overseas after I file for bankruptcy and will make my payments required as I will be working over there. However, in a conditional discharge, it appears that I need to attend a bankruptcy court for this. Can I hire a bankruptcy lawyer to represent me at this or should I fly home to deal with this.

    Reply
    1. J. Douglas Hoyes

      Darryl: it is unclear from the facts you have given why you expect to get a conditional discharge. That would be a question to ask your trustee or a bankruptcy lawyer. If you go bankrupt, a creditor can oppose your discharge, and if that happens you would be required to appear in bankruptcy court.

      Reply
  28. Jim

    I am in my third bankruptcy.
    I don’t want to be in it anymore as the guilt is killing me.
    What happens if I stop making my payments?
    Thx

    Reply
    1. J. Douglas Hoyes

      Jim: You are eligible to be automatically discharged in a first or second bankruptcy if there are no objections. In a third bankruptcy a court hearing is required. If you don’t complete your obligations, including making your payments, it is likely that the court will not grant your discharge. If you have concerns, you should discuss them with your trustee.

      Reply
    2. J. Douglas Hoyes

      Jim: You are eligible to be automatically discharged in a first or second bankruptcy if there are no objections. In a third bankruptcy a court hearing is required. If you don’t complete your obligations, including making your payments, it is likely that the court will not grant your discharge. If you have concerns, you should discuss them with your trustee.

      Reply
  29. Stephanie

    Hi, I receive ODSP and have got in to serious debt over the past couple of years with many payday loans which I continue to pay and 2 credit cards all to try to survive each month. Then I got a personal loan to try to make things easier by using it to pay off my other loans but that was the worst thing I could have done because the company ended up deciding where the money would go to pay off my credit cards and such, so I was unable to pay the other loans with that money and ended up using my monthly income again, and my personal loan is double payback for what I owe. I am really considering bankruptcy and was wondering do I have to report to ODSP if I were to file.
    Thank you

    Reply
  30. Vic

    Hello, i have credit card and line of credit in default for over 7 years. Total amount around 40K. I never declared a bankruptcy. At first i got calls from collection agencies, they all stop after 2 years. One of the banks sued me. I have no garnishable income and no assests to seize.
    Question 1. If i dont declare bankruptcy at all will my debts eventually be written off with time?
    Question 2. If i file fo bankruptcy will the lawsuit go away?

    Thank you in advance

    Reply
    1. J. Douglas Hoyes

      Hi Vic. The debts never go away. However, if you have no income that can be garnisheed, and if you have no assets, then there is no way for the credit card company to collect on the debt, so the fact that it continues to exist may be moot.

      If they already sued you and have a judgement, as noted above, there’s no much they can do with it if you have no assets or income. Yes, if you declare bankruptcy the lawsuit and the judgement would be discharged in the bankruptcy.

      Reply
  31. Patti

    Hi, I am on PWD disability and have over 30K in credit card debt and now ICBC wants 10K to pay out a claim or pay 6 times more a month. I do not have any assets. Car is not mine but I insure it to drive. I am unable to work and have not in over 20 years and never will work again. I have told the debtors that there is absolutely no way of repaying even 1 cent as I only get $906 per month. Once I pay rent and bills and insurance (which I can’t get now), there is nothing left for food. This has been going on for years with phone calls 5 or 6 times a week demanding money. I can not take them calling anymore. My question is, is there somewhere to go to file bankruptcy and they not charge you? My credit is already shot big time, so I don’t care about bankruptcy wrecking it more. I just want it all to go away. I’m to the point, I just want to die.

    Reply
    1. J. Douglas Hoyes

      Hi Patti. If you have no wages, the simplest option may be to open a new bank account at a new bank, and get a new phone number so they are not calling you. If the phone calls are the biggest issue, a new phone number may be the simplest and quickest solution. Most people declare bankruptcy to prevent their wages from being garnisheed, but since you have no wages that’s not an issue in your case. You can contact a trustee and they can advise you on your options, including various payment options.

      Reply
  32. Lois

    I have a serious gambling addiction and have gambled all my money and owe $30,000 in credit card debt. I’m on Canada pension plan and old age security adding up to $1190 a month and I work for McDonald’s getting about $800 a month. I’ve actually considered suicide. I have quit gambling but can’t afford my payments thus paying one credit card with another which can’t go on forever. I’ve read all about bankruptcy and it looks like some creditors can refuse which scares me and I don’t know if I can afford banksupsy. Can they garnish my McDonald’s wages? Then how can I afford to eat. I’d like to keep my place. My starts and mortgage payment add up to $1000 a month. I need help and advice. I hope you can advise me a little before I apply. Thank you

    Reply
  33. Michael

    My parents used my name and social insurance number to hide some of their income in 2005 and again used my name for their small business. I got surprised with a 30% wage garnishment for their 2005 abuse that ultimately cost me my job, due to the years since 2005 CRA says they can’t investigate and I’m stuck with the debt. Just yesterday I discovered they also accumulated a large tax debt in my name through their business. As it stands now I have zero income and $14,000 in tax debt due to my parents abuse. I have no hope of getting the money back from them and cannot afford to live, is bankruptcy an option and really my only option? I have no assets or income at this point.

    Reply
  34. Khpelwak

    Hi dear sir, I am on Ontario odsp. And owe 89,000$ cridet card debt. My first question is that I got a call from collection and I told them I am on odsp. Would the collection agency inform odsp for my debts and would it affect my odsp.
    Second question, if I file bankruptcy, still would it affect my odsp. I mean if the odsp find out, will they stop my payments.
    I am very scared and I really don’t know what to do and it has made my health worst. I have many types of anxiety. Plz advice me what to do.

    Reply
    1. J. Douglas Hoyes

      Hi Khpelwak. Due to privacy rules, ODSP will only talk to you about your file, not anyone else, so even if the collection agency did call them, they wouldn’t talk to them. Owing money does not impact your ODSP, since eligibility for ODSP is based on your income and medical condition.

      Filing bankruptcy does not directly impact your ODSP, because again it is based on your income, not your debts.

      You could file bankruptcy, but there is a cost to filing bankruptcy, often in the range of $200 per month for 9 months. Bankruptcy is a way to prevent your wages from being garnisheed, but since you have no wages, and since ODSP cannot garnishee your wages, a bankruptcy may not be necessary in your case. An Ontario bankruptcy trustee can explain your options in more detail.

      Reply
  35. Troy B.

    Hi I just got separated. My wife left me with like 70 thousand dollars of debt.25 thousand in credit cards.20 thousand on a personal bank loan and 25 thousand dollar credit line. I am on EI but it will run out very soon and I will have no income. It’s a very stressful thing. Can I declare bankrupcy if I don’t have a job right now. Thanks

    Reply
    1. J. Douglas Hoyes

      Hi Troy. Yes, you can declare bankruptcy even if you don’t have a job. However, since one of the main purposes of bankruptcy is to protect you from having your wages garnisheed, you may find it is in your best interests to wait until you are working so that you have something to protect. A licensed insolvency trustee can provide you with more information.

      Reply
  36. Dave

    Hi Sir,

    I am in $33000 debt with credit cards and line of credit. It includes osap loan of $11315. I am using repayment assistance for osap and currently don’t pay any thing because I have no wages. I have no job but was keeping all my payments for 2 years. But I can’t afford to pay them any more. I have no home, no car, no assests or any thing. I have no wages even. I am thinking of applying social assistance. Please tell me my options. I am in very bad health condition and consider working is not an option. Please advise. If I don’t make any payments, will anything bad happen ? Shall I inform all my creditors that I am not able to pay any more monthly payments ? Shall I inform them or not ? Shall I file bankrupcy ? I can’t afford to pay for bank rupcy even. I have 0 money on me. Please give a thoughtful answer. Kind Regards.

    Reply
    1. J. Douglas Hoyes

      Hi Dave. If you have no assets to seize, and no wages to garnishee, you could stop making payments and the creditors would be unable to garnishee your wages or seize assets. So, for you, opening a new bank account at a new bank and doing nothing may be a viable option. You could simply tell your creditors that you have no income. They may call you a few times, but once they realize there is nothing to collect it is likely that they will curtail their collection activity.

      Reply
  37. garth b.

    as i have found out the poor who will never work again have no chance to go bankrupt. i fell at work in 2009 and now must live on ODSP , but revenue canada still takes every cent it can kinda makes my life on disability hard.bad system..told i would need to pay $240 a month for 9 months , but after rent ,hydro i dont have that much letf..

    Reply
    1. J. Douglas Hoyes

      Hi Garth. I would suggest you contact a number of trustees in your area and see if there is a trustee who can do your bankruptcy for less than $240 per month, or who may have other options for you to consider.

      Reply
  38. LifeInFinancialPrison

    I live in Quebec, am a full-time student, single mother of a 3 yrs old, living in subsidized housing, with no assets and my source of income is student loans.
    I have been carrying crippling debts for 15 years.
    Recently, a family members that I co-signed for left me with a near $3000 cell phone bill.
    My debts amounts to over $20k.
    Can I continue going to school and receiving student loan if I go bankrupt?
    Are there any reduced fees for low income individuals for the bankruptcy?
    Most of the debts are now in collections, most of them i didn’t know they existed until recently. I really want to do a bankruptcy (so that I can rebuild my credit once and for all), but I am concern over the affordability while I am a student.

    Reply
    1. J. Douglas Hoyes

      It is possible to go bankrupt and continue in school, and continue receiving student loans. In most cases the student loan lender will want a letter from the trustee acknowledging that the new student loans will not be part of the bankruptcy. As for the cost of a bankruptcy, and whether or not it is the correct option for you, you should consult a licensed insolvency trustee to review your options.

      Reply
  39. Richard P.

    Hello, I am about $50000 in debt because of illness I suffered in the past
    Currently I am employed full time as a residential property manager and in lieu of pay, I receive a unit rent free along with the utilities paid for and tv, phone and internet paid for. I do not receive a paycheck. I do get paid occasionally separately if I do something outside my job description such as painting a unit, but that is a spratic thing. My daughter basically supplies us with our groceries and transportation as I don’t own a vehicle and with our medications. At best I may receive $500 per month extra for painting. Can I go bankrupt in this situation? I really am not interested in consumer proposal. Your thoughts and I’m put on this would be greatly appreciated. Thank you…

    Reply
  40. Regis H.

    I owe roughly 16k on my td visa and no assets or job. I was thinking of going back to school while being on a student loan. Basically, I’m not planning on working for minimum the next three years so that I can focus on school. I want to know what are my odds of getting sued by td visa?

    Reply
    1. J. Douglas Hoyes

      Hi Regis. If you have no income, and TD knows you have no income, the odds of them suing you are very low. Even if they do sue you, you have no income to garnishee. So, you could go back to school, and only deal with TD if they sue you, or when you graduate if necessary.

      Reply
  41. Sonia

    Hi
    My husband and I are filling for a proposal since We cannot afford our debts. I’ve been out of work for 1 year and half and am on long term dissability which is non taxable so I do not claim it while doing my income taxes. My question is do I have to give that amount for the surplus calculation?

    Thank you

    Sonia

    Reply
  42. Leila

    Hello,
    I recently received a Facebook message with a claim against me for an outstanding mortgage debt of 244,000. I had owned the property with my ex and 3 years ago transferred the land title to him and his parents. I did not know this did not release me from the mortgage until I received the claim that I am being sued for it. I have lived in Australia for the past 7 years and have no plans to move back to Alberta canada where I am being sued. What will happen if I file for bankruptcy in Canada? Will it effect my chances of applying for home loans and citizen ship in Australia? If there’s a law suit claim for a mortgage will the bank still try to sell the property to lessen the debt?

    Reply
    1. J. Douglas Hoyes

      Hi Leila. If you have no plans to return to Canada, the creditor cannot garnishee your wages in Canada, so there is likely nothing significant that will result from the lawsuit.

      Most people file bankruptcy because they want to prevent their wages from being garnisheed or to protect their assets. Since you have no wages or assets in Canada, and you have no plans to live in Canada, there is probably no point in filing bankruptcy. To file bankruptcy you would have to return to Canada to file.

      A mortgage company is required to first sell the property before they pursue you for the difference, so yes, if the property has not yet been sold, that would be the first step, so it is unlikely that you would owe anything near the full amount of the mortgage. In fact, once the property is sold, it is possible that there will be nothing owing.

      Reply
  43. Kerry

    I have $30K in debt (it was much higher at one point), and while I was working, I was able to pay it easily. Unfortunately, I lost my job at the end of 2014 and was able to easily continue paying on the debt through unemployment. Unfortunately I am still unemployed going on 20 months, and haven’t been able to make a payment in months, and have exhausted all savings and have no ‘hard’ assets. One of the collectors doesn’t believe I’m unemployed and keeps threatening to do a job query on me (I’ve told him to go ahead but he still tells me he’s going to do it).

    What are my options?

    Reply
    1. J. Douglas Hoyes

      Hi Kerry. If you have no wages to garnishee, you could continue to do nothing until you are working again. I agree with your approach with the collection agent: if they want to do a “job query”, whatever that is, go ahead!

      Once you are working again you may be able to make payment arrangements. If not, and if they are able to garnishee your wages, a consumer proposal or bankruptcy may be an option at that time.

      Reply
  44. Victor

    I am declaring bankruptcy next week. I was advised by the trustee to open a new bank account which I did. Will any money I put into the account be seized when the bankruptcy goes through? I am afraid I will be left with nothing.

    Reply
    1. J. Douglas Hoyes

      No, that’s the reason for opening a new bank account at a new bank where you have no debts. It’s a new account, so none of your old creditors know where it is, so they can’t seize money from a bank account that they don’t know exists.

      Reply
  45. Joseph K.

    Joseph here.
    I am a retired man 68 years old. I receive OAS and CPP and GIS, coming to $1400/month. I have credit card debt I cannot pay back over 50k.
    Can they seize my retirement money from the bank?
    I am being told they can from people I know.

    thank you for your time.

    Reply
    1. J. Douglas Hoyes

      Hi Joseph. If your credit card is with Bank ABC, and you bank with Bank ABC, and you don’t pay your credit card, and your OAS and CPP are deposited into your bank account at Bank ABC, then yes, they could theoretically take the money from your account. If that is the case, it would be prudent to open a new bank account at a new bank where you don’t owe any money. A bankruptcy is also an option, but may not be necessary. A licensed insolvency trustee can provide further specific guidance.

      Reply
  46. Anne

    I have $23,000. in credit card debit and $10,000 credit line. I have been out of work for over a year and have been cashing in RRSP’s to live. I don’t own a home or a car, I’ve been staying with relatives. I’m down to $16,000. in RRSP and am getting worried. I’m 59 years old and I don’t want to be destitute and homeless. I don’t know what to do. I’m worried the bank will seize my RRSP’s to pay my line of credit. Continuing to make minimum payments isn’t going to get anything paid off and draining my limited funds. If I declare bankruptcy I’ll lose the last bit of money I have and will be destitute. Is there any way out of this mess.

    Reply
    1. J. Douglas Hoyes

      Hi Anne. You should immediately contact a licensed insolvency trustee for a no charge initial consultation. As long as you have not contributed to your RRSPs in over a year, you would not lose your RRSP if you filed bankruptcy. So, for you, if may be prudent to consider a bankruptcy now, so that you can preserve your RRSP. Your trustee may have other advice, which is why an in-person meeting with a trustee is essential to determine your options.

      Reply
  47. arthur

    I’m in my 50’s and have made a lot of bad decisions in my life. I’m trying to make good on all my debts but I can’t make ends meet. I consolidated my credit card, line of credit and overdraft for $36000 still owing for 6.5years. I have a vehicle loan for $50000 6years still remaining(can’t sell it for that amount). My rent, utilities and expenses are $1500p/month. I’m paying total $3500p/month for everything. My take home is $3600p/month. I owe $19000 in taxes for 215 tax year, and will add probably another $7000 for 2016 taxes and I can’t make those currently $300 installment payments. My rent is being paid late with penalties, but still being paid. I have no assets or savings. I work 65-70hrs p/week. Any advise would be greatly appreciated.
    Thank you in advance

    Reply
    1. J. Douglas Hoyes

      I would strongly advise you to book a no charge initial consultation with a Licensed Insolvency Trustee: https://bankruptcy-canada.com/contact-a-trustee/

      Based on your income and debt level, a consumer proposal may be an excellent option, but you will want a Licensed Insolvency Trustee to review your situation in detail to give you a specific answer, and you will want the opportunity to ask all of your questions so you are comfortable making a decision.

      Reply
  48. Deb

    I have cc debt for two cards in the amount of 25,000 and line of credit for 33,000
    I have been out of work since Nov 2015 I am almost 62 yrs old and have had no luck in securing a job. I have been living off of EI and my savings. I have not a lot more in savings and quickly using it up. I do not have any assests as I lost everything in fire except for clothes on my back. I have car but still owe quite a bit on it. EI has one more pymt and then nothing but little savings left. Wondering if my option would be to declare bankruptcy and will they take the rest of my savings and also a locked RSP for around 17,000 at the bank where my credit card and line of credit is. Im considering also retiring which would not be a lot per month. Any advise

    Reply
    1. J. Douglas Hoyes

      These are good questions to discuss with a Licensed Insolvency Trustee.

      You do not lose a locked in RSP if you go bankrupt, even if it is with a bank where you owe money, so a bankruptcy may be an option. If you are planning to retire there may also be other options, which your trustee can discuss with you.

      Reply

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