important question..may be considered unethical

[whyohwhy]

ok, so my wife and i are in a lot of debt and will most likely be declaring bankruptcy. Fortunately for us, we have no assets, except for an resp we opened for our two children.

We met with the trustee today for the first time, and he explained he would be taking the resp, along with the bankruptcy fee, and that would be it. The fee would be split over 9 months (3600) , and he even said once he verifies he is getting the resp, he would even reduce whatever was owing of the fee at that point by half (so if we owed 2800 to him at that point, he would reduce it to 1400 - this is what i think he meant because he said he wouldn't get the resp right away). The debt is 80k, and the resp is worth about 6k if you withdraw it (due to enrollement fees, the resp company takes 2k per child).

anyways, my question is, if i withdrew the resp on my own, and then declared bankruptcy (with a diff trustee obviously), and just kept/hid the 6k, could i technically do this? or could they find out? if i was to meet with a new trustee after withdrawing it, i would just say' "yes, we had an resp about a mth ago, but we withdrew it a few weeks ago and went to the casino hoping we would win enough to get out of debt"...or something similar..

[debee]

Are you in Ontario, Canada? I don't know if there is anyone versed in Canadian law on the forum. I haven't seen any discussions on it. Let's hope I'm wrong and good luck to you!

[whyohwhy]

can u give me your opinion as if i was living in the US?

[debee]

I would encourage you to see a bankruptcy lawyer (or the Cdn equivalent). There is a line drawn in the dirt with asset protection on one side and bankruptcy fraud on the other. I would find out where Cdn law puts that line and just how close you can get to it without risking your discharge.

Disappearing assets, sudden gambling splurges = big red flag for trustee that you are hiding assets from your creditors. It doesn't sound like a good idea to me.

There may be allowed ways to protect some or all of the money. I don't know what they are. I also don't know if the accounts would be safe from seizure if they were left alone for awhile. For instance, we can exempt 529 college savings accounts if they're two years old or older. If something like that applies in your case, you might be able to wait it out and then file.

6k is a crumb under the table compared to the 80k mammoth you would get to discharge. I wouldn't risk being stuck with the 80k (if your discharge could be denied based on the "missing resp") just to save a measly 6k.

Best of luck to you working the situation out.

[whyohwhy]

I would encourage you to see a bankruptcy lawyer (or the Cdn equivalent). There is a line drawn in the dirt with asset protection on one side and bankruptcy fraud on the other. I would find out where Cdn law puts that line and just how close you can get to it without risking your discharge.

Disappearing assets, sudden gambling splurges = big red flag for trustee that you are hiding assets from your creditors. It doesn't sound like a good idea to me.

There may be allowed ways to protect some or all of the money. I don't know what they are. I also don't know if the accounts would be safe from seizure if they were left alone for awhile. For instance, we can exempt 529 college savings accounts if they're two years old or older. If something like that applies in your case, you might be able to wait it out and then file.

6k is a crumb under the table compared to the 80k mammoth you would get to discharge. I wouldn't risk being stuck with the 80k (if your discharge could be denied based on the "missing resp") just to save a measly 6k.

Best of luck to you working the situation out.

you're definitely right...i shouldn't risk it...i'll just move forward...in the end, i'm not losing that much anyways since the trustee is going to cut the fee in half.

[tobee43]

i absolutely agree with debee....you don't want to take any chances on this situation ....also, it's not that easy to "change" trustee's here in the states.

[dumpinmydebt]

You can't pick your Trustee in my district. Personally, I wouldn't risk my bankruptcy to keep $6k. My fresh start is worth more than that.

[dneil]

What is a resp? I had savings bonds for my kids and they didn't take that. Is there a way to prove that this money is specific to the needs of your children's education... etc? I was told that you just have to show what assets are held by you for minor children. That is what I did. Their bank accounts and their savings bonds were protected....

[free2breathe]

RESP = registered education savings plan. It's a Canadian thing

Here is something I found regarding RESP and bankruptcy:


Bankruptcy and RESPs

If you need to file for bankruptcy these funds are not an exempt asset – your Bankruptcy Trustee will be looking for you to either hand over the funds or purchase them back from your bankruptcy estate. The money in these plans is not “ in trust” for your children. Speak to a financial advisor or a bankruptcy lawyer about the difference.

at this site http://creditsolutions.ca/money-mana...ngs-plans-resp

[whyohwhy]

thanks for the info...i am so clueless to this bankruptcy stuff..

[tobee43]

thanks for the info...i am so clueless to this bankruptcy stuff..

whyohwhy.....maybe attempt posting this question in the http://www.bkforum.com/forumdisplay....ptcy-in-Canada



this is a forum here on the site dealing with questions and answers for our canadian neighbors...it's fairly new...but maybe someone may better be able to answer your questions. the laws are different between countries...so hopefully someone may know???