Is it possible to file bankruptcy for debts not due?

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It seems unbelievable that someone can have debt and not know about it.  After all, you used your credit card or signed a contract.  It is possible that you incurred the debt sometime ago or thought the issue was resolved but suddenly you receive a notice that you have money owing.  However, as a Kitchener bankruptcy trustee, we come across debt that has a future due date, or the amount is still unknown or undetermined.  Some of the terms you will learn about are contingent debt, disputed debt, unliquidated damages, and future debt.

As a bankruptcy trustee, we deal with people who are trying to free themselves of accumulated debt and having a fresh start by allowing the claims to be discharged.  However, some debts do not fall under the categories in the Bankruptcy and Insolvency Act like fines, support payments, and others.  Also, debt that is secured with collateral will survive the bankruptcy proceedings if you do not surrender the asset to the creditor.

Unliquidated Debts

This is when the amount of the debt is still unresolved.  That can be a situation with the CRA where you know you owe a tax payment but the agency has not yet approved/assessed your return and verified the amount.  The Trustee will investigate the circumstances to see if the unliquidated claim can be included or not.

Contingent Debts

An example of this type of debt is if you are a co-signer with someone else on a loan.  You don’t know if you will be obligated because you don’t know if the person for whom you signed will continue to make payments or will default.

Future Debts

This is a “buy now/pay later” situation.  If your circumstances change before the date the loan becomes due but you have included it and been declared bankrupt, you will not be obligated to repay this amount.

Disputed Debts

This is a situation where debt is in limbo because you are trying to prove whether or not it is valid.  Examples include charges on a fee after you cancel the service, a fraudulent credit card charge, or if you are in the midst of a lawsuit.  In this type of debt, it will depend upon whether or not the claim is upheld as legitimate.

As you can tell, not all debts are clear cut and it takes a Kitchener bankruptcy trustee to advise you appropriately.

Dana MacRae Licensed Insolvency Trustee has been offering debt help in Ottawa and surrounding areas since 2000. With 10 offices across Southwestern Ontario, it’s easy to schedule an appointment. Just go to www.danatrustee.ca and book your appointment online. We offer video conferencing, or book a home consultation and have the trustee come to you (when allowed by COVID-19 protocols). Contact us today at 1.800.665.9965 or info@danatrustee.ca to learn more about our services and find the financial solution that’s right for you.