question re: settlement changes due to surplus income

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mrsjones

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question re: settlement changes due to surplus income
« on: October 02, 2014, 12:40:06 PM »
hello, i filed for bankruptcy in 2013 for $9k owed to creditors. ridiculously small amount however it was the choice i made as i could not meet payments. the bankruptcy trustee and i agreed upon 350/mos for 21 mos for a total of $7,350. i was to be discharged on oct 11th, however, i fell behind on payments and was to enter mediation to remit the remaining amount owing to my trustee. upon receiving my recent budget papers, my trustees office called me to advise that since my income increased in aug 2013 to present, the total amount owing is now $14k. i was shocked. i was told: you will not be discharged, you owe us the remaining difference, the agreement you signed with the trustee back in 2013 has a clause in it covering surplus income. so my question is this: is it normal for a person to file on 9k debt, sign an agreement, then have the amount owing exceed the original debt and this is legal and binding? i said to the trustee administrator, that had anyone at any point in my consultation advise me that i would possibly end up owing more to the trustee than i did to my creditors, that i would have either done a consumer proposal or settled with my creditors myself. i am now seeking advice on what legal rights i have. i would welcome any opinions as i am literally shocked. thank you for your time.

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NotATrust-E

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Re: question re: settlement changes due to surplus income
« Reply #1 on: October 03, 2014, 07:37:36 PM »
It's very unusual for something like this to happen, unless someone gets an unexpected windfall. Having said that, paying surplus income isn't something that the trustee created - it's is a part of the Bankruptcy Act. As a general rule, you won't pay more than $1.05 on the dollar AFTER the trustee gets his cut.

I strongly, strongly suggest you speak to the trustee about filing a proposal. Here's what can happen:

An individudal can file a consumer proposal while bankrupt. You can promise your creditors 100 cents on the dollar, if you want. If the trustee wishes to do so, he can transfer the funds from the bankruptcy administration to the proposal - so you would get credit for what you've already paid.  Once you file a consumer proposal while bankrupt, your bankruptcy is anulled - it never happened. You'll have a proposal on your record, but not a bankruptcy. If the trustee won't go along with it, talk to the Office of the Superintendent of Bankruptcy to see what your options are.

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mrsjones

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Re: question re: settlement changes due to surplus income
« Reply #2 on: October 03, 2014, 09:39:38 PM »
I strongly, strongly suggest you speak to the trustee about filing a proposal. Here's what can happen:

An individudal can file a consumer proposal while bankrupt. You can promise your creditors 100 cents on the dollar, if you want. If the trustee wishes to do so, he can transfer the funds from the bankruptcy administration to the proposal - so you would get credit for what you've already paid.  Once you file a consumer proposal while bankrupt, your bankruptcy is anulled - it never happened. You'll have a proposal on your record, but not a bankruptcy. If the trustee won't go along with it, talk to the Office of the Superintendent of Bankruptcy to see what your options are.

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Thank you so much. I can't say what a relief it is to know I do have options. I am to have a hearing with the registrar and am also consulting a lawyer. I will approach the trustee directly re your suggestion as well. Thank you again.

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kurtwallace

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Re: question re: settlement changes due to surplus income
« Reply #3 on: January 23, 2015, 07:49:25 AM »
Even I feel the same, taking an experts advice would help you in all the ways. The lawyers can talk with trustee administrator in legal terms and you will be out of your problem.



 

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