Property and bankruptcy
Is it necessary to own property in order to declare bankruptcy?
No! Although a bankruptcy is an assignment of property, it is not necessary to own anything. Moreover, the law provides that the assets included in a bankruptcy also include the assets that the bankrupt will obtain or acquire during the bankruptcy, insofar as such assets have value for the creditors.
What property must be declared in a bankruptcy?
ALL the property belonging to the bankrupt or over which the bankrupt has rights, whether such property is in the bankrupt’s possession or not. On the other hand, the trustee must indicate in the bankruptcy documents if such property can be seized or not.
What property will the trustee take?
All the property, except property rendered exempt from seizure by a document or law. For example, in Quebec, furniture is exempt from seizure if its fair value does not exceed $6,000 Tools and/or vehicles are also exempt from seizure if they are necessary for the bankrupt’s work, as well as any property assigned or pledged in consideration for an exemption from seizure clause. As well, property that is in the bankrupt’s possession but that does not belong to the bankrupt will not be seized by the trustee.
Is there any risk to the spouse’s property?
None, so long as the debtor was not involved financially in their acquisition and the spouse acquired such property using his/her own money. There is a risk in those cases where the property would have been transferred by the debtor to his/her spouse without payment of a fair consideration (unless the fair value was paid), in a five-year period from the bankruptcy.
Have you got any questions? Do not hesitate to consult one of our insolvency professionals.
