Questions regarding leased equipment, garnishing clients, credit use prior to bk

  • 5 Replies
  • 2526 Views
*

SillySally

  • Guest
Im going to be filling bankruptcy and I have a few questions that I would very much appreciate some help answering. Thank you in advance!

  • I found out that I need to have a net income below $2062 to qualify for the expedited bankruptcy of 9 months with minimum payment. I'm pretty sure my net income has been below this, but how exactly do they calculate it? Is that after tax only, or does net mean after my rent/utilities/etc payments have been made?
  • I learned that I can not use my credit cards or any credit I intend on bankrupting. Given that I just learned about this information, how long must I not use is in order to qualify? I don't plan on doing any shopping sprees with my remaining credit. I just want to know how long to wait?
  • If I have work equipment that is on lease, how do I find out whether or not it qualifies as under bankruptcy. What do I look for in the contract to determine it?
  • If I have ongoing work with a client, can I transfer the remaining work to another company and let them bill the remainder of the work? Or will Can Reveneu go after that money?
  • I read that if I dont pay my GST/HST return in time, the gov can freeze my bank accounts and even inquire with my clients about money. Is that true? If they approached my clients and gave any hint that I was bankrupting, that would ruin my relationship with that client and undo potential business and my livelyhood. That scares me. Anyway to prevent that?
  • I read somewhere that if you visit a trustee for some questions, that they can then share this information with other trustees. If they knew I saw a trustee today, for example, and then went and filed bankruptcy in a few months from today, could my earlier visit somehow affect my chances negatively?

I have so many questions, but those are the top ones right now. Thank you very much guys. I"m just a nervous wreck because of this. Your feedback will help me.

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
1.   I found out that I need to have a net income below $2062 to qualify for the expedited bankruptcy of 9 months with minimum payment. I'm pretty sure my net income has been below this, but how exactly do they calculate it? Is that after tax only, or does net mean after my rent/utilities/etc payments have been made?

The net income calculation is net of taxes.  Child/spousal support, certain health care costs, fines and work-related expenses (in certain cases) may also be considered by the trustee.

2.   I learned that I can not use my credit cards or any credit I intend on bankrupting. Given that I just learned about this information, how long must I not use is in order to qualify? I don't plan on doing any shopping sprees with my remaining credit. I just want to know how long to wait?

As long as your spending habits donít substantially change i.e. lots of purchases or cash advances, etc., there isnít likely to be much of a concern. You may need to explain what/why you purchased items.

3.   If I have work equipment that is on lease, how do I find out whether or not it qualifies as under bankruptcy. What do I look for in the contract to determine it?

It depends on what question you are asking. Generally, you can return leased goods to the lessor and any shortfall would be included in the bankruptcy. If Iím not understanding the question, please let me know.

4.   If I have ongoing work with a client, can I transfer the remaining work to another company and let them bill the remainder of the work? Or will Can Reveneu go after that money?

I would do more research, but here are my thoughts: The CRA doesnít know about who you contracts are with. As long as the GST/HST deductions are remitted by someone, I donít think they care about who does the work. From a bankruptcy point of view, a trustee might ask why you transferred the work. If you get paid to transfer the work Ė as in you sell the contract Ė the trustee would have a claim on the money.

5.   I read that if I dont pay my GST/HST return in time, the gov can freeze my bank accounts and even inquire with my clients about money. Is that true? If they approached my clients and gave any hint that I was bankrupting, that would ruin my relationship with that client and undo potential business and my livelyhood. That scares me. Anyway to prevent that?

A tax professional may be better equipped to handle this question, but yes, the CRA can freeze your bank accounts AND seize money from it for unpaid GST/HST, but they will try to work something with you first. I remember vaguely hearing about CRA being able to talk to clients to ensure they get paid on an ongoing basis, but I donít remember much. The short answer is that you need to talk to the CRA to figure something out, because theyíve got a lot of power.

6.   I read somewhere that if you visit a trustee for some questions, that they can then share this information with other trustees. If they knew I saw a trustee today, for example, and then went and filed bankruptcy in a few months from today, could my earlier visit somehow affect my chances negatively?

From what I understand, this usually only happens in rare cases if a trustee suspects that fraud may occur and a person tells a different story to a different trustee. As long as you are open and upfront in all of your dealings, this shouldnít be an issue.

*

SillySally

  • Guest
Thanks NotATrust-E. I have a few follow up questions below:

1.   I found out that I need to have a net income below $2062 to qualify for the expedited bankruptcy of 9 months with minimum payment. I'm pretty sure my net income has been below this, but how exactly do they calculate it? Is that after tax only, or does net mean after my rent/utilities/etc payments have been made?

The net income calculation is net of taxes.  Child/spousal support, certain health care costs, fines and work-related expenses (in certain cases) may also be considered by the trustee.

Thank you.

Quote
2.   I learned that I can not use my credit cards or any credit I intend on bankrupting. Given that I just learned about this information, how long must I not use is in order to qualify? I don't plan on doing any shopping sprees with my remaining credit. I just want to know how long to wait?

As long as your spending habits donít substantially change i.e. lots of purchases or cash advances, etc., there isnít likely to be much of a concern. You may need to explain what/why you purchased items.

Ok good. At least I can still buy groceries. But what about christmas gifts? I'm guessing no.

Quote
3.   If I have work equipment that is on lease, how do I find out whether or not it qualifies as under bankruptcy. What do I look for in the contract to determine it?

It depends on what question you are asking. Generally, you can return leased goods to the lessor and any shortfall would be included in the bankruptcy. If Iím not understanding the question, please let me know.

The equipment on lease is specifically for the occasional contract work I do (that is, of course, if Im lucky to get the occasional gig in this market). If I have to return/relinquish this equipment, I would basically be putting myself in a situation where I couldn't make money anymore. How exactly would I find out if the leased equipment qualifies as secured or unsecured debt? Can I claim it as part of the bankruptcy is what I'm getting at? If not, can I use my existing credit card (that I will be bankrupting) to pay off the remainder of the lease? Again, the equipment is very important to my livelihood and I can't do without it.

Quote
4.   If I have ongoing work with a client, can I transfer the remaining work to another company and let them bill the remainder of the work? Or will Can Reveneu go after that money?

I would do more research, but here are my thoughts: The CRA doesnít know about who you contracts are with. As long as the GST/HST deductions are remitted by someone, I donít think they care about who does the work. From a bankruptcy point of view, a trustee might ask why you transferred the work. If you get paid to transfer the work Ė as in you sell the contract Ė the trustee would have a claim on the money.

Thank you.

Quote
5.   I read that if I dont pay my GST/HST return in time, the gov can freeze my bank accounts and even inquire with my clients about money. Is that true? If they approached my clients and gave any hint that I was bankrupting, that would ruin my relationship with that client and undo potential business and my livelyhood. That scares me. Anyway to prevent that?

A tax professional may be better equipped to handle this question, but yes, the CRA can freeze your bank accounts AND seize money from it for unpaid GST/HST, but they will try to work something with you first. I remember vaguely hearing about CRA being able to talk to clients to ensure they get paid on an ongoing basis, but I donít remember much. The short answer is that you need to talk to the CRA to figure something out, because theyíve got a lot of power.

So in the case where I gave my contract to another person, can CRA still pursue the client despite that client no longer being mine?

As for talking to CRA, I'm worried. I've received various letters of them requesting payment for GST etc and I don't know what to tell them. Do I call them and tell them I'm researching bankruptcy options? Would that help me in this process or would it just accelerate their offensive/collections strategy? I want to do the right thing, but I also want to be able to sleep at night without worrying... lately it's been eating away at me and I can't take it anymore. Im under extreme stress at this point and just want to get this bankruptcy process going, but from the horror stories Im reading of other people being screwed by bankruptcy trustees, Im stalling and hesitating. Help!! :(  :'(

Quote
6.   I read somewhere that if you visit a trustee for some questions, that they can then share this information with other trustees. If they knew I saw a trustee today, for example, and then went and filed bankruptcy in a few months from today, could my earlier visit somehow affect my chances negatively?

From what I understand, this usually only happens in rare cases if a trustee suspects that fraud may occur and a person tells a different story to a different trustee. As long as you are open and upfront in all of your dealings, this shouldnít be an issue.


What kind of fraud? I visited prior trustees and have done some things against their recommendations (kept using my credit card, for example). I don't want something like that to screw me so I thought I should just go to a new one and not tell them that I've seen others in the past.

At the end of the day, this is causing me serious and extreme stress and i can't take it anymore. I deeply appreciate your response and any unbiased suggestions as I am reluctant to trust any of the trustees Im going to be meeting and basically feel I have to be sure about my moves in advance. Thank you sincerely.

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
Ok good. At least I can still buy groceries. But what about Christmas gifts? I'm guessing no.
I can't realistically see a trustee giving you too hard a time over this.

The equipment on lease is specifically for the occasional contract work I do (that is, of course, if Im lucky to get the occasional gig in this market). If I have to return/relinquish this equipment, I would basically be putting myself in a situation where I couldn't make money anymore. How exactly would I find out if the leased equipment qualifies as secured or unsecured debt? Can I claim it as part of the bankruptcy is what I'm getting at? If not, can I use my existing credit card (that I will be bankrupting) to pay off the remainder of the lease? Again, the equipment is very important to my livelihood and I can't do without it.

It's difficult to describe here, but... Either you continue to pay the lease or you return the equipment. If you owe them any money, you can include that in the bankruptcy.

So in the case where I gave my contract to another person, can CRA still pursue the client despite that client no longer being mine?
As for talking to CRA,...(


I can't really help you with this, as I don't want to give the wrong advice.

What kind of fraud? I visited prior trustees and have done some things against their recommendations (kept using my credit card, for example). I don't want something like that to screw me so I thought I should just go to a new one and not tell them that I've seen others in the past.
This is pretty rare and usually has to do with lying on a credit card application. As long as you're upfront with everyone, you likely don't have to worry.

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
So If I still owe them say $4000 and have paid off around $2000 over the past 8 months, I can add the $4000 to the bankruptcy? Isn't there something about a secured vs unsecured debt that I need to be mindful of?

You can either continue to pay the lease and keep the equipment OR return it, if I'm understanding the situation correctly. It would be possible to use your credit card to pay it off, but a trustee/credit card company might be concerned that you used unsecured credit to make a large purchase of an exempt asset immediately before bankruptcy.  You will want to be up front and honest with your trustee because they are required to investigate your affairs - and it would not be a good thing if they discover something that you haven't told them. 

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
I reread all of the post. If this is a lease, then it is secured by the asset and therefore a secured debt, in my understanding. For the purposes of this conversation, the camera would be similar (enough) to a vehicle for this website to provide you with some information: bankruptcy-canada.ca/keep-leased-car-after-bankruptcy

 

Sitemap 1 2 3 4 5