Recent Changes to the Bankruptcy Act 2010- Vancouver, BC

By
Mortgage and Lending with The Mortgage Centre

Hello Vancouver!

Thought I'd share this with you all, as some Realtors may come across Buyers heading for, or have recently completed bankruptcy, information pertinent to Canadians. 

In the past few months, changes to the Bankruptcy and Insolvency Act came into force that Buyers may not have been aware of. These changes  had a significant impact on personal bankruptcies and consumer proposals in this country. The following are a few of the changes which I'm citing:

  • Definition of Income - The definition of "total income" has been amended to include amounts received by the bankrupt individual between the date of bankruptcy and the date of discharge, including amounts for wrongful dismissal, pay equity settlements or workers' compensation, but not including amounts received during the same time period as a gift, inheritance or other windfall. Moreover, a requirement to pay surplus income is enforceable against income that would otherwise be exempt, and income earned but not yet received is included in the definition of "total income."
  • Bankrupts with High Income Tax Debt - First-time bankrupts with personal income tax debt in an amount exceeding $200,000, representing 75% or more of total unsecured proven claims, will no longer be eligible for an automatic discharge from bankruptcy.
  • Surplus Income 1 - First-time bankrupts who have surplus income will be required to contribute the surplus income to their estate for 21 months. Second-time bankrupts will be required to contribute the surplus income to their estate for 36 months. In both cases, the requirement to contribute the surplus income are subject to a change in circumstances that impact on the surplus income obligation.
  • Discharge of Second-Time Bankrupts - Second-time bankrupts will now be eligible for an automatic discharge after 24 months if there is no surplus income and after 36 months if there is surplus income.
  • Definition of Consumer Debtor - A consumer proposal may now be filed by someone with up to $250,000 in debts (up from $75,000), excluding mortgages on their principal residence.
  • Mandatory Counseling - Debtors making a consumer proposal will now have to undergo mandatory counseling in order to receive a certificate of full performance of the consumer proposal.

It's sometimes a bit challenging to come up with creative/useful info or topics for mortgages...but I'm trying...hope you are all finding the Vancouver market hot!!

 

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