Bankruptcy Court – Representing Myself

Question: I am currently going through a first bankruptcy, and was expecting an automatic discharge at the end of nine months. However, the Trustee has elected to oppose automatic discharge, on grounds relating to a transfer of my interest in the family home to my spouse (14 months prior to the bankruptcy).

Consequently, I am faced with having to appear in Bankruptcy Court to defend the value of consideration received (representing myself as I obviously can’t afford a lawyer).

What can I anticipate in regards to this Court proceeding. What are the documentary requirements. What Rules govern the proceedings. Are there any good resource links. What other advice would you have for a self represented victim.

Thank you for your help.

Answer: Every situation is different, so unfortunately there are no good resource links that explain the process in detail (although this article about bankruptcy discharge hearings in Toronto bankruptcy court is a place to start).  Here are some general guidelines for you:

Bankruptcy court is a more informal court than a criminal court.  You may speak directly to the judge, and if you don’t understand the question, you can ask for clarification.

Based on what you have said, it appears that the trustee believes these two statements:

1. 14 months prior to your bankruptcy you were insolvent (meaning you couldn’t pay your bills), which is why you transferred your interest in your home to your wife, and
2. you transferred it at less than fair value.

So, in court, you will want to demonstrate that one or both of those statements are not true.

If you knew you were in financial trouble, and that’s why you transferred your interest in the house to your wife, you won’t be able to dispute what the trustee is saying.  However, if your financial situation was not “fatal” 14 months before bankruptcy, you could argue that there was nothing un-toward about transferring the house to your wife.

As for the value of the house, you should have a real estate appraiser provide you with an opinion of value as at the date of the transfer.  If you can get appraisals from two different appraisers, that’s even better.  Then, get a mortgage statement from the mortgage company showing what was owing at the time of the transfer.  With those two documents it’s relatively simple to calculate the equity in the house at the time of the transfer.  The trustee will need to produce an appraisal showing that the house is worth more than your appraisals indicate to demonstrate that there was greater value at the time of the transfer.

With this information, the most logical course of action is to meet with your trustee prior to the court hearing.  You can ask the trustee what they will be recommending to court, and you can advise your trustee what you think is reasonable.

For example, your trustee may suggest that you should pay $10,000 in equity.  You may not believe you should be required to pay anything.  Ask the trustee to explain where they are coming up with their numbers, and then you can decide if you will agree to that payment, or attempt to negotiate a lesser amount.  If you can both agree on the amount, the court hearing is quite simple.

If you can’t agree on the amount, then it may be prudent for you to spend a few dollars and get some legal advice.  Spending $1,000 on a lawyer may be cheaper than paying $10,000 as a court ordered condition of your discharge.