Filing Bankruptcy in Canada - Affect on US Credit or Immigration?

[Erica & L 52]

Hey guys,

This is a question I've been pondering for a few days now and trying to do some research on it but I'd really like to ask your opinions of it too.

I've been in the US now for 8 months with my wife and we sent off our AOS + EAD + I-130 last week.

In Canada, I have accumulated a lot of debt in the past 3 years. I have around 24K in student loan debt, and around 5K in credit card debt. Basically, I spent a lot of money going to school under a subject that I thought I was interested in and could excel well academically, but turns out, just the opposite was true. My credit card debt, though I know is my responsibility, got so high due to family issues. My mom is an addict, stole from me, pawned my stuff, stole my credit/debit cards, cheques etc until I finally kicked her out of my life, changed the locks, basically took all the extremes I could but really the damage was already done. I had to use large amounts of my credit card to support myself for rent, bills, food and therefore kept having to ask for increases. I've lived on my own for 5 years and always supported myself which became harder when all or most of my savings were stolen.

3 years ago I had no student loan debt, and I had 1 credit card that I maybe used once or twice a month and paid off immediately. I'm only 22 and sometimes just thinking about all the debt I have makes me sick to my stomach. I'm a very responsible, organized person. I budget everything and I feel like a lot of my debt was out of my control, which is the really frustrating part.

My wife is the only one able to work right now, and luckily, I am able to make the minimum payments on all my debt, but because of how much I have, I feel like it's going to be forever before I am debt free and it's almost like we're paying into something monthly but it really isn't making a dent due to the interest. Also, for the first 3 months I was here, I wasn't able to make any payments, so I'm sure my Canadian credit is shot. I called all my loans and arranged special payment plans to get my debt out of collections. Even when I get my EAD and can work, so much of our paychecks will have to go to our debt regardless and it just feels so daunting, like we'll never be able to save properly.

I was seriously considering if filing bankruptcy in Canada would be a good option for me at this point, but I'm wondering...

1. Can I file from the US?

2. Would it affect my US credit in the future?

3. Would it affect my AOS process?

4. How long does the bankruptcy remain on your credit history? I've heard so many different time frames.

5. My uncle co-signed on one of my student loans for me, would filing bankruptcy affect his credit or only if I abandoned my debt? (Which I would never do!)

And yes, I'm aware that if I had to go back to Canada, that I wouldn't be in a good position, and even though I don't see that happening for a very long time when my wife and I have careers and can afford to move back, just the thought of filing for bankruptcy makes me really nervous. And part of me thinks that if I can make the minimum payments, then I should only use bankruptcy as a last resort.

Opinions? Thoughts?

Edited February 8, 2014 by justfromerica

[Emily and Nathan 39]

Hey

I'm going through something very similar.. and had a hard time researching this online.

I however.. and not yet in the US.. I just filed my K1 back in December..

I asked a bakruptcy trustee some of the things you are asking.

1. Can I file from the US? - Yes you can

2. Would it affect my US credit in the future?- Yes.. a lot of creditors in the US.. still have the ability to pull your canadian file. Not all do.

3. Would it affect my AOS process? - No- it has no impact on immigration what so ever. Only impacts your creditors. It is your fiance who would need to prove they are financially stable etc.. not you.

4. How long does the bankruptcy remain on your credit history? Um.. well filing for BKO in Canada.. it stays on your credit for about 7 years.. 9 months to be discharged if it's your first bankruptcy.. and then for 6 years after that. So just about 7.. then it takes time to re-establish your credit etc. However.. I have heard that if you file BKO in Canada... while living in a different country.. that as soon as you re-enter Canada.. you re-assume that debt. That was told to me by the trustee.

5. My uncle co-signed on one of my student loans for me, would filing bankruptcy affect his credit or only if I abandoned my debt? Yes it would. Unfortunately he took on responsibiliy for that debt when he signed onto it. So really.. your creditor could go after him for that money... I'm pretty sure the bad debt will report on his credit bureau if you file as well.

I know how frustrating this is.. I thought of this now.. I have thought about filing for a long time.. And once i realized that I wasn't going to be able to work for quite a while after coming down there..My fiance and I talked about it in depth over like.. a month or two.. and I just signed the papers on Wednesday to have it done. I'm not marrying a millionaire.. and I want to start the next chapter of my life without all this baggage and we don't need the added stress of me finally getting down there.. and then barely being able to make ends meet if he pays my debt. He offed to sell his truck etc.. broke my heart.. I'd never let him pay a dime... Mine wasn't even from school.. it was from Life... Shitty Life.. lol So I really feel for you.. I know how stressful this is.

Keep your chin up.. Hopefully my info helped a bit. I also was a loan officer before.. so I know what I'm talking about.. I'm not a rando saying whatever. everything I said was from what I know.. and talking to the BKO Trustee. Good luck. :/

[Erica & L 52]

Hey

I'm going through something very similar.. and had a hard time researching this online.

I however.. and not yet in the US.. I just filed my K1 back in December..

I asked a bakruptcy trustee some of the things you are asking.

1. Can I file from the US? - Yes you can

2. Would it affect my US credit in the future?- Yes.. a lot of creditors in the US.. still have the ability to pull your canadian file. Not all do.

3. Would it affect my AOS process? - No- it has no impact on immigration what so ever. Only impacts your creditors. It is your fiance who would need to prove they are financially stable etc.. not you.

4. How long does the bankruptcy remain on your credit history? Um.. well filing for BKO in Canada.. it stays on your credit for about 7 years.. 9 months to be discharged if it's your first bankruptcy.. and then for 6 years after that. So just about 7.. then it takes time to re-establish your credit etc. However.. I have heard that if you file BKO in Canada... while living in a different country.. that as soon as you re-enter Canada.. you re-assume that debt. That was told to me by the trustee.

5. My uncle co-signed on one of my student loans for me, would filing bankruptcy affect his credit or only if I abandoned my debt? Yes it would. Unfortunately he took on responsibiliy for that debt when he signed onto it. So really.. your creditor could go after him for that money... I'm pretty sure the bad debt will report on his credit bureau if you file as well.

I know how frustrating this is.. I thought of this now.. I have thought about filing for a long time.. And once i realized that I wasn't going to be able to work for quite a while after coming down there..My fiance and I talked about it in depth over like.. a month or two.. and I just signed the papers on Wednesday to have it done. I'm not marrying a millionaire.. and I want to start the next chapter of my life without all this baggage and we don't need the added stress of me finally getting down there.. and then barely being able to make ends meet if he pays my debt. He offed to sell his truck etc.. broke my heart.. I'd never let him pay a dime... Mine wasn't even from school.. it was from Life... Shitty Life.. lol So I really feel for you.. I know how stressful this is.

Keep your chin up.. Hopefully my info helped a bit. I also was a loan officer before.. so I know what I'm talking about.. I'm not a rando saying whatever. everything I said was from what I know.. and talking to the BKO Trustee. Good luck. :/

Eek, so basically filing BKO from the US would be pointless because if 20 years down the road we wanted to move back to Canada, the debt would still be there? It would be re-assumed? Despite having the 7 year time span already passed?

I didn't know if the student loan co-signing would be the same situation if I filed because I am the main person on the agreement, and his is just the co-signer, but I guess that makes sense. I just didn't know if filing bankruptcy as opposed to abandoning the debt/agreement was a different matter entirely, and obviously I would never do that.

The only light at the end of my tunnel is that my dad (who I haven't seen since I was two) passed away a few months ago and I am to receive somewhere between 10k-15k from his estate, but I was told that could take up to a year or so to have it go through the system so I guess that could help me out as well. And by that time we will both have full time jobs. Maybe it's more of a waiting game and it's kind of a struggle now but it'll get easier once I get my EAD.

It's just so overwhelming! I just wish I could have a clean slate.

Edited February 8, 2014 by justfromerica

[Emily and Nathan 39]

I agree... The clean slate.. is SUPER appealling.

Why don't you just have a consultation with a bankruptcy trustee (it's free).. and ask them straight up about the re-assuming thing?

That was told to me by the BKO trustee.. but who knows.. maybe that was them just trying to sell me on doing it when i did.. ?

Worth a shot.

[SofiaSkyLila 5]

Student loans are not dischargeable in the US. Check whether or not they are in Canada.

Work with creditors in Canada to see whether or not you can consolidate your high interest credit card debt so that it's more manageable. Before you consider bankruptcy, try to explore other options. Although in the past it stayed on the record for 7 years, in the US it is 10 years.

You might also consult a financial or BK attorney about this too. Find one that has low consultation fees. Someone else suggested speaking to a trustee. That's an excellent idea.

Definitely work with creditors to consolitade your debt.

Edited February 8, 2014 by SofiaSkyLila

[SofiaSkyLila 5]

If you file for BK and the courts find out about your dad's inheritance (the $10 - 15 K) they might use that to pay off your debts. Be careful.

Edited February 8, 2014 by SofiaSkyLila

[Erica & L 52]

I agree... The clean slate.. is SUPER appealling.

Why don't you just have a consultation with a bankruptcy trustee (it's free).. and ask them straight up about the re-assuming thing?

That was told to me by the BKO trustee.. but who knows.. maybe that was them just trying to sell me on doing it when i did.. ?

Worth a shot.

Yeah, I should do that. My wife just got an increase in her job, and we just had to finance a new car because her SUV crapped out and it wasn't worth putting more money into it. Plus we needed a reliable car to travel to Atlanta for our interview, and move to Portland hopefully in a few months.

I'm going to re-create our budget and see what I can do. I'm wondering if there is a trustee where I am in the US that knows more about the Canadian credit system.

[Erica & L 52]

If you file for BK and the courts find out about your dad's inheritance (the $10 - 15 K) they might use that to pay off your debts. Be careful.

Ack, didn't think of that. Thank you!

[Emily and Nathan 39]

google it up girl..

I'm sure there is.

Worst case scenarro.. Call some places..

A bunch of places.. and just ask if you can ask some questions.

Yeah, I should do that. My wife just got an increase in her job, and we just had to finance a new car because her SUV crapped out and it wasn't worth putting more money into it. Plus we needed a reliable car to travel to Atlanta for our interview, and move to Portland hopefully in a few months.

I'm going to re-create our budget and see what I can do. I'm wondering if there is a trustee where I am in the US that knows more about the Canadian credit system.

[Ontarkie 14,449]

You can't file for bankruptcy for student loans. It's too bad you didn't get debt reduction before you left, you won't qualify now that you are out of Canada.

[Erica & L 52]

You can't file for bankruptcy for student loans. It's too bad you didn't get debt reduction before you left, you won't qualify now that you are out of Canada.

At the time, we thought we had to come back to Canada after 6 months because at the time, DOMA wasn't passed, and same-sex couples couldn't apply for immigration. But yes, it is too bad, sigh!

[Ontarkie 14,449]

That truly does suck.

[Udella&Wiz 325]

Being an honest person has a lot of value as well - running away from the debt in Canada isn't going to improve your money management skills now that you're in the US. $24K of student loan isn't that much and between you and your wife it won;t take as long as you think to pay off. If it was brand new car would you feel like it was too much?

I certainly feel for you in terms of the family issues and stealing the credit card. There were legal avenues you could take or could have taken but I suspect it wouldn't make anyone feel good to turn their mother in...so that just sucks.

PS: I have 3 kids 21, 22, 23 and 2 of the 3 have had some debt they needed to pay off - hence the reason I sound like a parent

[Erica & L 52]

Being an honest person has a lot of value as well - running away from the debt in Canada isn't going to improve your money management skills now that you're in the US. $24K of student loan isn't that much and between you and your wife it won;t take as long as you think to pay off. If it was brand new car would you feel like it was too much?

I certainly feel for you in terms of the family issues and stealing the credit card. There were legal avenues you could take or could have taken but I suspect it wouldn't make anyone feel good to turn their mother in...so that just sucks.

PS: I have 3 kids 21, 22, 23 and 2 of the 3 have had some debt they needed to pay off - hence the reason I sound like a parent

Oh no I would never run away from any payments! That's why the past year has been such a struggle, not being able to work. Before when I worked, I still had all the debt, but I made all my payments on time and had good credit. We never had plans to stay in the US until DOMA was passed, or else I would have dealt with this before I left for sure, or tried to. Now my wife is using her paychecks to pay off my bills and honestly it makes me feel like total garbage. I know she says she doesn't mind and we share our finances etc but it still makes me feel bad, especially right now when I can't contribute and haven't been able to for 8 months+. That's the only reason I was even looking into it, to take some stress off her.

My student loan is: 9K (But it's under repayment assistance, so I don't have to make payments for now if they keep approving me.)

My student line of credit is: 15K

One credit card is: 2.5K

Another credit card is 3K

and then on top of all our other US expenses.

To me, right now, in my current situation, I guess those numbers seem really scary and depressing. I don't think I'd ever buy a 24K car, to be honest

[Emily and Nathan 39]

And if you do choose to file- it has nothing to do with being honest person.

My Dad taught me to pay my debt.. I've never missed a payment on a single thing.

But sometimes life happens.. and it's a decision that makes the most sense for your situation.

So be honest with yourself.. look at the big picture... research.. and whatever the best option is.. do it..

And don't feel guilty if its the crappy option.

Good luck.

Oh no I would never run away from any payments! That's why the past year has been such a struggle, not being able to work. Before when I worked, I still had all the debt, but I made all my payments on time and had good credit. We never had plans to stay in the US until DOMA was passed, or else I would have dealt with this before I left for sure, or tried to. Now my wife is using her paychecks to pay off my bills and honestly it makes me feel like total garbage. I know she says she doesn't mind and we share our finances etc but it still makes me feel bad, especially right now when I can't contribute and haven't been able to for 8 months+. That's the only reason I was even looking into it, to take some stress off her.

My student loan is: 9K (But it's under repayment assistance, so I don't have to make payments for now if they keep approving me.)

My student line of credit is: 15K

One credit card is: 2.5K

Another credit card is 3K

and then on top of all our other US expenses.

To me, right now, in my current situation, I guess those numbers seem really scary and depressing. I don't think I'd ever buy a 24K car, to be honest