Debt, Bankruptcy, & Consumer Proposals

Discussion Categories => Considering Bankruptcy => Topic started by: jmsmacleod on March 29, 2015, 09:04:21 PM

Title: To Pay or Not to Pay
Post by: jmsmacleod on March 29, 2015, 09:04:21 PM
Good evening,

I've already decided to file bankruptcy after meeting with a trustee but won't do so until this August when my student loans can be included.

My question is should I continue to make minimum payments on my debt until that time or stop now if I know I'm filing anyway? 
I can handle the daily creditor calls and if that's the only consequence I'm okay with that.

Title: Re: To Pay or Not to Pay
Post by: NotATrust-E on March 29, 2015, 09:40:18 PM
If your debt is only to large institutional creditors such as banks, you probably won't see much benefit to continuing to pay the minimum payments in most cases. One potential concern would be company getting a judgment and garnishment order against you, but that takes time. If you have multiple accounts with a financial institution, i.e. a RBC chequing account and an RBC Visa, the bank may take the money from your chequing account to pay off your Visa. I would suggest opening up a new account at a different bank and changing all direct deposits/debits to that account in advance of filing.

If you've got a debt to a smaller company that you want to have an ongoing relationship with, such as a dentist, etc., you can make payments as long as you don't give an 'undue preference' within 3 months of filing. This is especially true with paying off family/friends, and that period extends to 12 months before filing.

Are your student loans through Canada Student Loans? If so, the CRA can sometimes come after you at the discharge stage. You may wish to continue making some payments to them. I haven't figured out when they choose to persue people and when they don't, so I can't really give you any specific advice.
Title: Re: To Pay or Not to Pay
Post by: jmsmacleod on March 30, 2015, 05:50:19 PM
Thanks so much for the reply!  Your thoughts are exactly mine and just wanted some reassurance.

The debts are to large banks (Royal and Scotia). As for student loans, I qualify for repayment assistance until August (the month I will declare). The payments are $0.00 so also not a concern.

I've already opened a new account at a new bank and I don't use my old one so that too is not a concern.

Thanks again!