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To declare bankruptcy or not? Between rock & hard place!


Guest Amethyst
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Guest Amethyst

Here's my situation :

Ex walked out on the marriage back in April, secured himself an apartment and has chosen to severe all contact. I filed for divorce and had a trial hearing in Sept in order to determine spousal support amount he is required to pay. Actual trial date is set for June and since I will be filing for indefinite support, the monthly amount will decrease. I have not been working for the past 3.5 years due to medical reasons and will be unable to work again in the future. I have a 3 page letter from my doctor of 8 years which summarizes my medical history and her support of my situation and inability to be gainfully employed. Ex was aware of my medical background when we hooked up and was initially supportive of my situation. As well, I have already filed once for Canadian Disability Pension Plan and was initially denied. I will be appealing the decision within the next couple of weeks but it is no guarantee I will see any money from them in the future.

The ex requested I vacate the matrimonial at the onset of separation as at the time he stated that he wanted to move back into it. Since I would not be able to upkeep mortgage payments indefinitely with the amount of spousal support amount I was receiving nor would I be able to qualify for a new mortgage in my name alone should I want the home, I didn't object but did request a reasonable time frame to find affordable accommodations.

Then at the pre-trial hearing in September, the ex requested the home be listed for sale and the court decided that while I was in possession of the home, I would get to choose the closing date if an offer was made prior to me securing a rental place for myself. As it turned out, before any offers were made, I found a place of my own and so as per court order, ex was then responsible to maintain the home financially and choose a closing date if an offer came through.

Since my vacating the home in November, the home has remained vacant while the real estate agent looks for prospective buyers.

A couple of weeks ago the ex filed for bankruptcy and along with a personal loan and credit cards in his name only, he had the house included which was the only thing we had jointly signed!

Now I have a real estate agent anxious as all get out (probably worried how she will be renumerated) and me stressed out. Since the home is vacant, the bank registered the home with a property management company since the ex had power cut off. Can't blame the bank there as they want to protect their investment. Last thing I'd want is frozen pipe damage.

Now if the house sells, I am only entitled to 50% of the profits and the remaining half would be delegated towards his creditors. Ugh! The maximum amount of equity in the home is 10k. The property value has decreased since time of listing because he has removed a pellet stove from the living room and apparently told the real estate agent that while the appliances are still in the home, they are "sold". Sold to his trustee ... could that be possible???? The appliances were a condition of the sale of the home when it was listed on the market!

After speaking with the bank's lawyer appointed to our case, I asked him if I will inevitably have to file for bankruptcy since my name is attached to the deed of the home. (Incidently, I have two major credit cards that I've owned for 20 years without any defaults however I have only been maintaining the minimum payment due each month.) Since the ex has walked away from his obligations to the home thanks to bankruptcy, I am now soley responsible for the mortgage payments each month until the home is sold. Obviously, I cannot affort to pay it! The only other option is to request the ex's trustee company to sign over their half of the deed of the home to the bank and then I can do the same. The bank will then take on the chore of selling the home for the principle owing but if there is a deficiency, I am 100% responsible. <sigh> If I went that route, I still am required to make mortgage payments. I asked what would happen if I defaulted and was told I could top them up after the sale of the home. It would take 3 to 4 months of default before they would foreclose and there's a good chance the home would sell before then. BUT, since I'd no longer get any proceeds from the sale, I couldn't make up missed mortgage payments.

Here's where I'm really struggling. As it is, I am seeking legal advice from a Legal Aid lawyer because I have no income other than support and my debts are more than my income. To add more insult to injury, the ex did not make his support payment to me as ordered on Dec 30th. I hate using credit but what choice have I got?! I can't see how I could declare bankruptcy as I would have no means to pay the fees nor to make any sort of payment schedule.

I have ALWAYS paid my credit card payments on time and the thought of my not making payments due this coming week make me feel like a financial failure.

Do you have any suggestions regarding my situation? I can't see any way out but bankruptcy and since bankruptcy will remain on my credit report (in Canada) for 6 years from date of discharge (9 months after declaration) I've been considering letting my debts go to collection after signing my half of the home deed over to the bank. I couldn't pay bankruptcy fees anyway or even maintain some kind of payment schedule afterwards. At least with letting debts go to collection, I wouldn't need to incur any expenses and after research, I've learned bad debt is erased from credit after 6 years.

Even if I could pay for bankruptcy fees, I would be concerned how my spending in the months since separation would be interpreted by creditors. Without any support for several months over the last 8 month period, I've had to rely on credit to get by, (pay for moving expenses, rent, food, utilities, etc).

How do creditors deal with such unforeseeable circumstances? Do they make any exceptions in cases of obvious undue hardship?? If I let debts go to collection, do they always end up before a court?

I do live in Canada but I would think regular practises would be somewhat standard for creditors/collection agencies.

Thank you in advance for any areas you can offer an opinion about.

Stress is not helping my Crohns any!

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