What protects me from being ripped off when a friend files bankruptcy?
A good friend, who I sincerely trusted to repay my generosity, ran up a $14,000 debt to me for cash and goods. I paid for the goods and he has possession with a promise to pay me for them. I had contracts signed that he agreed to pay back the monies with 3% interest. When he didn’t pay I took him to small claims court and got a judgement on my behalf. He decided to claim bankruptcy and not only can I not get any of the money that he owes me but I can’t go and collect the things that I paid for and have receipts for. So bankruptcy gets him free of his monetary debts, he gets to keep the car he bought with the loan, he keeps the things that I paid for with a promise to pay for it later, and he has a good paying full-time job with two part-time jobs on the side. He has no kids, no wife, no mortgage and yet he claims bankruptcy to get out of paying for what he has possession of. How can this be? What protects me from being ‘legally stolen from’? I was the nice person who helped him get a start with a promise to repay when he started working. He gets working, doesn’t pay his debts and declares bankruptcy to make me go away. Is this what our laws have come to that this guy would be able to strip me of $14,000, the amount of my student loan by the way, and not go to jail for it? When did bankruptcy become a way for irresponsible, dishonest people to rip off the ‘good’ guy?
What is in our Canadian Law system that protects me from being ripped off by bankruptcy?
Unfortunately, when a person lends money to someone he knows there is a risk of it not being paid back. If you had taken security on the car he purchased with the loan you would have been protected.
I’m sorry for your loss and your misplaced trust, but in the vast majority of cases, a bankrupt debtor is an honest, hard-working individual or family hopelessly trapped in debt through no fault of their own.
Canada, like all western countries, has bankruptcy laws for the general good of the state.