Author: Brandon Smith

Brandon Smith is a licensed insolvency trustee and Senior Vice-President of Ira Smith Trustee & Receiver Inc. The firm deals with both individuals and companies facing financial challenges in restructuring, consumer proposals, proposals, receivership and bankruptcy.

They are known for not only their skills in dealing with practical solutions for individuals and companies facing financial challenges, but also for producing results for their clients with realistic choices for practical decision-making. The stress is removed and their clients feel back in control. They do get through their financial challenges and are able to start over, gaining back their former quality of life.

Brandon Blog Post

BUSINESS DEBT CRISIS OPTIONS COMPLETELY EXPLAINED BY A TORONTO LICENSED INSOLVENCY TRUSTEE

Post author By Brandon Smith
Post date August 4, 2025

debt crisis

The Greater Toronto Area is facing its worst business debt crisis in decades. As a licensed insolvency trustee who has helped many GTA businesses navigate financial challenges, I’m seeing alarming trends that every business owner needs to understand.

The GTA Business Landscape: Canada’s Economic Powerhouse Under Pressure

Toronto is Canada’s business and financial capital. It is the second-largest financial centre in North America. Our diverse economy spans technology, manufacturing, retail, hospitality, and professional services. This diversity usually protects us during downturns, but today’s debt crisis and the need for GTA business debt relief are hitting all sectors.

The IBISWorld Ontario Economic Overview report shows the numbers that tell the story:

Commercial banking generates $117.9 billion in revenue
Retail trade employs 884,368 people in Ontario
Professional services support 562,343 workers
Manufacturing provides 560,630 jobs

Yet despite this economic strength, a June 2025 IPSOS poll found that only 26% of Toronto residents say our economy is in good shape. Most concerning? 41% believe we’re heading in the wrong direction – away from economic prosperity.

How COVID-19 Started Toronto’s Debt Crisis

The Initial Shock That Changed Everything

When COVID-19 hit in March 2020, Toronto’s downtown core emptied overnight. Restaurants, hotels, retail stores, and service businesses saw customers disappear. Some sectors lost 25% of their business immediately.

The Canadian government responded with the Canada Emergency Business Account (CEBA) program. The Government of Canada has reported that over 898,000 Canadian businesses received $49 billion in emergency loans. At the time, this felt like a lifeline.

But here’s what many business owners didn’t realize: CEBA wasn’t free money. It was a loan with a delayed payment schedule.

Permanent Changes That Hurt Businesses

COVID-19 didn’t just create a temporary problem. It permanently changed how people work and shop:

Remote work became permanent – Downtown Toronto office vacancy hit 18.2%
Online shopping exploded – Many customers never returned to physical stores
Business travel disappeared – Hotels and restaurants lost corporate clients
Consumer habits shifted – People became more price-conscious and cautious

Source: The Toronto Metropolitan University June 5, 2025 media release titled “New Economic Report Underscores Urgency to Revitalize Downtown Toronto”.

These weren’t temporary changes. They represent a “new normal” that many businesses still struggle to adapt to.

debt crisis

Current State of the Debt Crisis: The Numbers Are Alarming

The CEBA Cliff Hit Hard

Business failures in Canada jumped by 87.2% in early 2024 – the biggest increase in 37 years. This debt crisis spike happened right after the CEBA loan forgiveness deadlines passed.

Source: The Canadian Association of Insolvency and Restructuring Professionals (CAIRP), July 5, 2024, media release titled: “Q1 2024 Canadian Insolvency Statistics”.

Here in Toronto, CAIRP stated that GTA business insolvency rates climbed from 0.4 per 1,000 businesses in 2021 to 0.7 in 2023. While that sounds small, it represents hundreds of local businesses closing their doors because of the debt crisis.

Source: Canadian Association of Insolvency and Restructuring Professionals (CAIRP) July 5, 2024 media release titled: “Q1 2024 Canadian Insolvency Statistics”

Most Failures Are Permanent Closures

Unlike consumer debt problems, which often involve payment plans, business failures are mostly bankruptcies. This means permanent closure, not restructuring. Business owners are giving up entirely rather than trying to reorganize.

Rising Delinquencies: A Warning Sign of Worse to Come

The debt crisis isn’t just about businesses that have already failed. Over 309,000 Canadian businesses missed at least one credit payment in early 2025 – that’s 11.3% of all businesses with credit.

For GTA businesses, these are some missed payment rates:

Restaurants and hospitality: 16.9%
Retail stores: 13.2%
Overall business loans 60+ days overdue: 3.4%

Ontario leads the country in business payment debt crisis problems, with an 18.8% increase year-over-year.

Why Businesses Can’t Pay Their Bills

Customer spending is down. The average consumer cut credit card spending by $107 per month in early 2025. When your customers have less money, your revenue drops.

Operating costs keep rising. Food costs are up 5.8%, rent up 6.0%, and wages up 4.8%. Profit margins are getting squeezed from both sides.

Household debt is crushing consumers. Canadian consumer debt hit $2.55 trillion. Ontario homeowners saw mortgage payments jump by over $680 monthly after renewal. When families are financially stressed, they stop spending on non-essentials.

CEBA loans are now due. As of January 19, 2024, 161,000 businesses still owed $7.8 billion in CEBA loans. Interest started charging at 5% annually, turning “emergency help” into another monthly payment. Outstanding CEBA loans are due for full repayment on or before December 31, 2026.

New Regulatory Pressures Adding to Business Costs

While the government talks about cutting red tape, Toronto businesses face new municipal-level regulations that add costs:

New Rules Taking Effect

Toronto nightclub licensing changes (January 2025)
Digital platform worker protections (July 2025) – affects delivery and ride-share businesses
New building codes (January 2025) – impacts construction companies
“Renoviction” bylaws (July 2025) – add costs for landlords
Civil litigation procedure changes – increases legal costs

Each regulation may be well-intentioned, but they all add compliance costs when businesses can least afford them.

The Pandemic’s Effects Still Linger

Consumer Behaviour Changed Forever

In our practice, we see businesses still struggling with permanent shifts in customer behaviour:

Customers shop differently now:

More online shopping, less in-store browsing
Greater focus on local businesses
More price-conscious decision-making
Delayed major purchases (cars, appliances, travel)
Higher expectations for health and safety

Businesses must operate differently:

Heavy investment in technology and e-commerce
Flexible work arrangements affect office space needs
Enhanced health and safety measures
More resilient supply chains
Higher service level expectations

The Technology Investment Burden

Every business now needs robust online capabilities. This means ongoing costs for:

E-commerce platforms
Cloud-based systems
Process automation
Cybersecurity
Staff training

For businesses already struggling with a debt crisis, these necessary investments create additional financial pressure.

debt crisis

Economic Pressures: The Double Hit of Recession and Inflation

Inflation Squeezes Profit Margins

Even though headline inflation dropped to 3.8% nationally, key business costs remained high:

Food prices: up 5.8%
Shelter costs: up 6.0%
Overall consumer prices: up 11.4% over two years

Toronto businesses face a cruel math problem: costs rise faster than what customers can pay.

Recession Fears Become Reality

Ontario’s economic growth fell to just 0.8% in 2025, with unemployment rising for eight straight quarters to 7.5%. When unemployment rises, consumer confidence falls, and spending drops further.

The vicious cycle: Higher costs → Higher prices → Fewer customers → Lower revenue → Unable to pay debts

Tightening Credit Markets Make Everything Worse

High interest rates created a credit crunch that hit businesses hard:

Borrowing became expensive: 63% of businesses say high interest rates prevent expansion or investment.

Credit demand dropped: 6% fewer businesses applied for new credit in early 2025. New credit card applications fell 10.3%.

Consumer credit tightened: When customers can’t get credit, they spend even less at your business.

Mortgage renewal shock: Ontario homeowners face mortgage renewal shocks. Payments increase by an average of $680 monthly. This leaves less money for extra spending.

Managing Financial Crises: What Works?

Cash Flow Management Must Be Daily

In this debt crisis, managing cash flow isn’t a monthly task – it’s a daily survival skill.

Track money every day:

Check bank balances each morning
Use a 13-week cash flow forecasting financial model
Know exactly what’s due when
Plan every payment carefully

Speed up money coming in:

Accept all payment methods (cards, e-transfer, mobile)
Offer discounts for quick payment (2% for 10 days)
Call overdue customers personally
Send invoices immediately

Slow down money going out:

Pay critical suppliers first (those who could shut you down)
Use electronic payments to control timing
Negotiate payment plans before you’re in trouble
Consider temporary hour reductions before layoffs

Strategic Payment Prioritization

When cash is tight, not all debts are equal. Here’s the priority order I recommend:

Payroll and source deductions (CRA will shut you down)
Critical suppliers (those who keep you operating)
Rent and utilities (you need a place to operate)
Secured loans (they can seize collateral)
Unsecured loans and credit cards (last priority)

Strategies for Addressing the Debt Crisis

Debt Restructuring Options That Work

Informal arrangements: Sometimes you can negotiate with creditors before formal proceedings. Recent success: a dining establishment reduced its monthly payments from $12,000 to $4,000.

Consumer proposals: If you’ve personally guaranteed business debts, this can reduce personal liability by up to 80%.

Business proposals: For companies, a formal proposal can reduce payments to all creditors simultaneously, thereby eliminating a debt crisis.

Strategic bankruptcy: Sometimes, closing one business cleanly allows you to start fresh without old debts following you.

Asset Management Approaches

Smart asset management can generate cash and reduce the debt crisis:

Sale-leaseback arrangements: Sell equipment or property, then lease it back. This generates immediate cash while keeping operational assets.

Asset liquidation: Sell non-essential assets. That unused equipment or excess inventory can become debt payments.

Intellectual property monetization: You can make money from intellectual property by licensing your processes, customer lists, or trademarks for ongoing income.

Real estate optimization: Consider subleasing unused space, downsizing, or moving to cut overhead costs.

debt crisis

Closing the Funding Gap: Where to Find Money

Government Programs Still Available

Canada Small Business Financing Program:

Up to $1 million in loans
Government backs 85% of lender risk
Better rates than regular business loans
Available through most banks and credit unions

Business Development Bank of Canada (BDC):

Patient capital for struggling businesses
Industry-specific expertise
Flexible repayment terms
Will work with businesses other lenders won’t touch

Ontario-specific programs:

Advanced Manufacturing and Innovation Competitiveness (AMIC)
Canadian Digital Adoption Program (CDAP)
Various regional development funds

Alternative Financing When Banks Say No

Invoice factoring: Sell your accounts receivable for immediate cash (typically 80-90% of invoice value).

Merchant cash advances: Get cash now based on future credit card sales (expensive but fast).

Peer-to-peer lending: Online platforms connect you directly with individual investors.

Revenue-based financing: Repayments are based on monthly revenue rather than fixed payments.

Crowdfunding: Crowdfunding works well for businesses that serve customers directly and have strong stories.

Learning from Denmark: How Copenhagen Handles Debt Better Than North America

Denmark, especially Copenhagen, does things differently – and better in many ways.

As a licensed insolvency trustee, I’ve seen what works and what doesn’t. Denmark’s approach offers real lessons for Canadian businesses struggling with a debt crisis.

How Denmark’s Government Manages Money (And What Businesses Can Learn)

Denmark keeps things simple and clear when managing government debt. Here’s what they do right:

They Have Clear Fiscal Oversight Rules In Denmark everyone knows who’s responsible for what. The Finance Minister makes the big decisions. The Danish National Bank handles the day-to-day money management. No confusion, no finger-pointing.

Everything Is Out in the Open Danish debt management is transparent. They publish their plans, explain their decisions, and stick to clear goals. This builds trust with lenders and keeps borrowing costs low.

They Plan for Problems The Danish National Bank actively watches for risks. They don’t just hope things work out – they prepare for trouble before it happens.

They Focus on Long-Term Costs Instead of looking for quick fixes, Denmark focuses on keeping borrowing costs low over many years. They accept some risk to achieve better long-term results.

How Denmark Helps People With Too Much Debt

Denmark’s consumer debt relief system is much simpler than ours:

One Program, Not Many Unlike Canada, where people might get confused by multiple options, Denmark has one clear debt relief program. Everyone knows how it works.

Pay What You Can, Then You’re Done People pay back what they can afford for five years. After that, the remaining debt disappears. It’s that simple.

This approach reduces stress and gives people a clear path to financial freedom.

What Danish Business Debt Rules Teach Us

Denmark has clear rules for dealing with a business debt crisis:

Clear Collection Process When businesses can’t pay, there’s a step-by-step process everyone understands. No surprises, no unclear rules.

Fair Bankruptcy System If a business truly can’t continue, bankruptcy is available. But there are clear requirements – you can’t just walk away from debts without a good reason.

Some Debts Come First When paying back creditors, certain debts get priority – like employee wages and government fines. This protects workers and ensures fair treatment.

Four Key Lessons for Toronto Businesses

After studying Denmark’s system, here are the most important lessons for GTA businesses:

1. Have Clear Financial Rules Just like Denmark’s government, your business needs clear financial procedures. Know who makes spending decisions. Set borrowing limits. Create rules for paying suppliers.

Whenever we do a financial restructuring under either a BIA Proposal or a CCAA Plan of Arrangement, businesses with clear financial procedures survive crises better than those making it up as they go.

2. Manage Risk Before Problems Start Denmark doesn’t wait for a debt crisis – they plan. Your business should do the same.

Ask yourself:

What could go wrong with my cash flow?
Which customers might stop paying?
What happens if my biggest supplier demands cash only?
How would a recession affect my business?

3. Be Open About Your Financial Situation Denmark’s transparency builds trust and keeps borrowing costs low. The same works for businesses.

Be honest with:

Your bank about cash flow challenges
Suppliers about payment timing
Key customers about any service issues
Your accountant about all financial concerns

I’ve seen businesses get better deals from creditors simply by being upfront about their situation.

4. Think Long-Term Economic Resilience, Not Just Survival Denmark focuses on long-term borrowing costs, not just immediate needs. Businesses should think the same way.

Don’t just ask: “How do I pay this month’s bills?” Instead, ask: “How do I build a business that can handle future challenges?”

This might mean:

Accepting higher costs now for more reliable suppliers
Building cash reserves instead of maximizing current profits
Investing in systems that reduce future risks
Developing multiple revenue streams

Why These Lessons Matter for Canadian Businesses

Denmark’s approach works because it’s predictable and fair. Everyone knows the rules. There are clear consequences for breaking them. People can plan.

Canadian businesses facing debt crisis often struggle because:

Rules seem to change constantly
Different creditors want different things
No one explains the options clearly
Business owners feel lost and alone

Denmark’s system shows there’s a better way.

Applying Danish Lessons in Your Business

You can start using Danish-inspired approaches today:

Create Financial Transparency

Prepare monthly financial reports (even simple ones)
Share appropriate information with key stakeholders
Document your financial decision-making process
Keep clear records of all business debts and payments

Develop Risk Management Habits

Review your biggest financial risks monthly
Create backup plans for your most important suppliers
Maintain relationships with multiple lenders
Build cash reserves when times are good

Establish Clear Procedures

Write down who can authorize spending
Create a priority list for paying bills during tight times
Develop criteria for extending credit to customers
Set clear policies for managing business debt

When Danish-Style Approaches Aren’t Enough

Sometimes, despite good financial management, businesses still face an overwhelming debt crisis. That’s where professional help becomes necessary.

As a licensed insolvency trustee, I help businesses when:

Clear procedures aren’t enough to solve cash flow problems
Risk management didn’t prevent a major crisis
Transparency reveals more problems than solutions
Long-term thinking shows the business isn’t viable

Even then, Danish lessons help. Transparent businesses, planned, and managed risks professionally, have more options when a crisis hits.

The Bottom Line for Toronto Businesses

Denmark proves that simple, clear, fair approaches to debt work well. Their success comes from:

Clear rules everyone understands
Transparency that builds trust
Risk management that prevents problems
Long-term thinking over quick fixes

You can apply these principles whether your business is thriving or struggling. The earlier you start, the better your results will be.

If your business is already in debt crisis, these Danish lessons can still help guide your financial recovery. Combined with professional advice from a licensed insolvency trustee, they provide a roadmap back to financial health.

debt crisis

When to Call a Licensed Insolvency Trustee

Don’t wait until creditors are knocking down your door. The best outcomes happen when business owners seek help early.

Call immediately if:

You’re using credit cards for business expenses
Missing any loan payments
CRA is demanding payment
Suppliers put you on cash-only terms
Considering borrowing against your home
Losing sleep over business finances

What to expect in our first meeting:

Free consultation and options review
Honest assessment of your situation
Clear explanation of all solutions
No pressure to file if other options exist

Your Action Plan: Recovery Is Possible

Toronto’s business debt crisis is serious, but recovery is always possible with the right approach. I’ve guided hundreds of GTA business owners through financial difficulties.

Your immediate next steps:

Face the numbers honestly – create that daily cash flow tracker
Get professional help – talk to a licensed insolvency trustee
Communicate proactively – call creditors before they call you
Focus on cash flow – every decision should consider cash impact
Plan for recovery – what will your business look like post-crisis?

Remember: The longer you wait, the fewer options you have. But even in the worst situations, there’s usually a path forward.

Why Experience Matters in a Debt Crisis

Not all insolvency trustees understand business; some focus only on the consumer market. We specialize in owner-managed business insolvencies, working in the GTA and the wider Ontario market. We know local conditions and have relationships with Toronto-area lawyers, accountants, banks, and others. We know which solutions work for different business types.

Our approach is straightforward: preserve what can be saved, eliminate what can’t, and help you move forward with confidence.

debt crisis

Frequently Asked Questions About Toronto’s Business Debt Crisis

Answers from Ira Smith Trustee & Receiver Inc., Licensed Insolvency Trustee with years of experience helping GTA businesses

What is the current state of Toronto’s business debt crisis?

Toronto is facing its worst business debt crisis in decades. The numbers are shocking, and every business owner needs to understand what’s happening.

Here’s the reality: Business failures in Canada jumped 87.2% in early 2024 – the biggest increase in 37 years. Right here in Toronto, business closures climbed from 0.4 per 1,000 businesses in 2021 to 0.7 in 2023. That represents hundreds of local businesses shutting their doors permanently.

What’s really concerning is that over 309,000 Canadian businesses missed at least one credit payment in early 2025. That’s more than 1 in every 10 businesses struggling to pay their bills. Ontario leads the country in payment problems.

How did COVID-19 contribute to the debt crisis, and what permanent changes did it bring?

COVID-19 didn’t just create a temporary problem – it permanently changed how business works in Toronto. As someone who helped many businesses through the pandemic and since then, we saw this transformation firsthand.

The Initial Shock When lockdowns hit in March 2020, downtown Toronto emptied overnight. Restaurants, hotels, retail stores, and service businesses lost customers immediately. Some sectors saw 25% revenue drops in weeks.

The government launched the CEBA program, giving $49 billion in loans to nearly 900,000 businesses. At the time, this felt like a lifeline. However, many business owners didn’t realize that CEBA wasn’t free money – it was a loan with delayed payments.

Permanent Changes That Hurt Businesses The pandemic created a “new normal” that many businesses still can’t adapt to:

Remote work became permanent – Downtown Toronto office vacancy hit 18.2%
Online shopping exploded – Many customers never returned to physical stores
Business travel disappeared – Hotels and corporate catering lost their biggest clients
Consumer habits shifted – People became more price-conscious and cautious about spending

The Technology Investment Burden Every business now needs strong online capabilities. This means ongoing costs for e-commerce platforms, cloud systems, and staff training. For businesses already struggling with a debt crisis, these necessary investments create additional financial pressure.

In our practice, we see businesses that survived the initial COVID shock but are now failing because of the costs of adapting to these permanent changes.

What are the main reasons businesses are struggling to pay their bills?

After helping many GTA businesses, we see the same problems over and over. It’s not just one issue – multiple factors are hitting businesses at the same time.

Customers Have Less Money Your customers are financially stressed too. Average credit card spending dropped $107 per month in early 2025. When families cut back on spending, your revenue drops immediately.

Consumer debt in Canada hit $2.55 trillion. Ontario homeowners saw mortgage payments jump after renewal. When your customers are struggling with their own bills, they stop spending on non-essentials.

Operating Costs Keep Rising While customer spending drops, your costs keep climbing:

Food costs: up 5.8%
Rent and utilities: up 6.0%
Employee wages: up 4.8%

This creates a profit squeeze from both directions – less revenue coming in, more costs going out.

CEBA Loans Are Now Due This is a big one many business owners forgot about. As of January 2024, 161,000 businesses still owed $7.8 billion in CEBA loans. These loans now charge 5% annual interest. What felt like “emergency help” became another monthly payment.

New Regulations Add Costs Toronto keeps adding new rules that sound good but cost money:

New nightclub licensing requirements
Digital platform worker protections
Updated building codes
“Renoviction” bylaws for landlords

Each regulation adds compliance costs when businesses can least afford them.

How do tightening credit markets and inflation make the debt crisis worse?

High interest rates created a perfect storm that’s crushing Toronto businesses. Let me explain how this works.

Borrowing Became Expensive Our entrepreneurial business clients say high interest rates prevent them from expanding or investing. When you can’t borrow money to grow or even maintain your business, you’re stuck.

The Mortgage Renewal Shock Ontario homeowners face payment increases averaging $680 monthly when their mortgages renew. This leaves families with even less money to spend at local businesses.

The Inflation Squeeze While national inflation dropped to 3.8%, key business costs stayed high:

Food prices: up 5.8%
Shelter costs: up 6.0%
Overall prices: up 11.4% over two years

The Vicious Cycle Here’s how it all connects: Higher costs force businesses to raise prices → Higher prices mean fewer customers → Fewer customers means lower revenue → Lower revenue makes it impossible to pay debts.

Add unemployment rising for eight straight quarters to 7.5%, and you have a situation where businesses face higher costs and fewer customers at the same time.

What cash flow management strategies work for struggling businesses?

Cash flow management isn’t a monthly task anymore – it’s daily survival. Here’s what actually works, based on my experience with hundreds of struggling businesses.

Track Money Every Day Check your bank balance every morning with your coffee. Use a simple 13-week cash flow forecast to know exactly what’s due when. This isn’t busy work – it’s survival.

Speed Up Money Coming In

Accept all payment methods (credit cards, e-transfer, mobile payments)
Offer 2% discounts for payments within 10 days
Call customers with overdue accounts personally
Send invoices the same day you deliver goods or services

Slow Down Money Going Out

Pay critical suppliers first (those who could shut you down)
Use electronic payments to control timing
Negotiate payment plans before you’re in trouble
Consider temporary hour reductions before layoffs

Priority Order for Tight Times When cash is extremely tight, pay in this order:

Payroll and government deductions (CRA will shut you down)
Critical suppliers (those who keep you operating)
Rent and utilities (you need a place to work)
Secured loans (they can seize your assets)
Unsecured loans and credit cards (last priority)

What debt restructuring and financing options actually work for businesses in trouble?

We use every option available to help Toronto area companies conquer GTA busines insolvency. Here’s what actually works in real situations.

Debt Restructuring Options

Informal arrangements – Sometimes I can negotiate directly with creditors. Last month, I reduced a restaurant’s monthly payments from $12,000 to $4,000.
Consumer proposals – If you’ve personally guaranteed business debts, this can reduce your personal liability by up to 80%.
Business proposals – For larger companies, we can propose reduced payments to all creditors at once.
Strategic bankruptcy – Sometimes closing one business cleanly lets you start fresh without old debts following you.

Asset Management That Generates Cash

Sale-leaseback – Sell your equipment or building, then lease it back. This generates immediate cash while keeping what you need to operate.
Asset liquidation – That unused equipment or excess inventory can become debt payments.
Intellectual property licensing – License your processes or customer lists for ongoing revenue.
Real estate optimization – Sublease unused space or downsize to reduce overhead.

Financing When Banks Say No

Canada Small Business Financing Program – Up to $1 million with government backing
Business Development Bank of Canada – They’ll work with businesses other lenders won’t touch
Invoice factoring – Sell your unpaid invoices for immediate cash (usually 80-90% of value)
Revenue-based financing – Repay based on monthly sales rather than fixed payments

What can Toronto businesses learn from how Denmark handles a debt crisis?

After studying international approaches to a business debt crisis, Denmark offers four practical lessons for Toronto companies.

Have Clear Financial Rules Like Denmark’s government, your business needs clear procedures. Know who can authorize spending. Set borrowing limits. Create rules for paying suppliers.

In my experience, businesses with clear financial procedures survive crises better than those making it up as they go.

Manage Risk Before Problems Start Denmark doesn’t wait for a debt crisis – they plan ahead. Ask yourself:

What could go wrong with my cash flow?
Which customers might stop paying?
What happens if my biggest supplier demands cash only?
How would a recession affect my business?

Be Transparent About Your Situation Denmark’s openness builds trust and keeps borrowing costs low. Be honest with your bank about cash flow challenges, suppliers about payment timing, and your accountant about financial concerns.

I’ve seen businesses get better deals from creditors simply by being upfront about their situation.

Think Long-Term, Not Just Survival Don’t just ask “How do I pay this month’s bills?” Instead ask “How do I build a business that can handle future challenges?”

This might mean accepting higher costs now for more reliable suppliers, building cash reserves, or developing multiple revenue streams.

When should I call a licensed insolvency trustee for help?

Don’t wait until creditors are knocking down your door and you are in full debt crisis mode. The best outcomes happen when business owners seek help early, while they still have options.

Call immediately if you’re:

Using credit cards for business expenses
Missing any loan payments
Getting demands from CRA
Being put on cash-only terms by suppliers
Considering borrowing against your home
Losing sleep over business finances

What to expect in our first meeting:

Complete confidentiality (everything is protected by law)
Free consultation with no obligation
Honest assessment of your situation
Clear explanation of all available options
No pressure to file for bankruptcy if other solutions exist

Why timing matters: The earlier you call, the more options you have. I can often help businesses restructure and continue operating. If entrepreneurs are early enough, perhaps informal workouts are a possibility. Otherwise, perhaps Division I Proposals are the answer. But if they wait too long, your only choice might be permanent closure.

In my years as a licensed insolvency trustee, I’ve learned that business owners who seek help early have the best chance of saving their companies. Those who wait until the last minute often have fewer choices.

Remember: Asking for professional help isn’t admitting failure – it’s taking control of your future and finding the best path forward for your specific situation.

Take Action Today

The Toronto business debt crisis won’t solve itself. But with proper guidance, your business can not only survive but also emerge stronger and more resilient.

If you’re struggling with a business debt crisis, don’t suffer in silence. Contact me for a confidential consultation. We’ll review your situation, explore all options, and create a plan that works for your specific circumstances.

Asking for help isn’t admitting failure – it’s taking control of your future.

As someone who has helped many Canadian businesses and business owners, I’ve seen companies survive and thrive even in the toughest times. The businesses that succeed are those that face reality honestly, adapt quickly, and aren’t afraid to ask for help when they need it.

If your business is facing financial challenges, don’t wait until it’s too late. Early intervention provides more options and better outcomes. Contact Ira Smith Trustee & Receiver Inc. today to discuss your situation confidentially and explore your options.

You’re not alone in this. There’s a path forward, and it starts with reaching out for the right kind of help. Take that step—you deserve it. If you’re a GTA resident dealing with an overwhelming debt crisis, don’t wait for your credit situation to get worse. As a licensed insolvency trustee serving Toronto, Mississauga, Brampton, Markham, and surrounding areas, I’m here to help you understand your options.

Free consultation available:

No obligation to proceed
Complete review of your Canadian business debt and credit situation
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both a debt crisis and credit score problems.

As a licensed insolvency trustee in the Greater Toronto Area, I tell consumers and business owners to see financial problems not as failures but as challenges. Proper guidance can solve them. By knowing the warning signs of insolvency and getting professional advice early, many people and businesses find a way forward. They can restructure, make strategic changes, or wind down in an orderly way that protects future chances.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help Canadian entrepreneurs understand their options and find a path forward during financial challenges.

At the Ira Smith Team, we understand the financial and emotional components of a debt crisis. We’ve seen how traditional approaches often fall short in today’s economic environment, so we focus on modern debt relief options that can help you avoid bankruptcy while still achieving financial freedom.

The stress of financial challenges can be overwhelming. We take the time to understand your unique situation and develop customized strategies that address both your financial needs and emotional well-being. There’s no “one-size-fits-all” approach here—your financial solution should be as unique as the challenges you’re facing.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your Canadian company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc., and any contributors do not assume any liability for any loss or damage.

debt crisis

Brandon Blog Post

CASH FLOW CRISIS: HOW ONTARIO BUSINESSES CAN MASTER FINANCIAL RECOVERY IN 2025

Post author By Brandon Smith
Post date July 28, 2025

Cash Flow Introduction

Are you an Ontario business owner staying up at night because your cash flow isn’t covering your bills? You have money coming in, but it’s not arriving when you need it most, such as when payroll is due or suppliers are demanding payment. If you’re nodding along, you’re experiencing what thousands of Ontario entrepreneurs face right now: a cash flow crisis that threatens even profitable businesses.

As a Licensed Insolvency Trustee who has guided many Ontario businesses through financial difficulties over the past 20 years, I’ve seen how quickly cash flow problems can destroy a company. But I’ve also witnessed businesses transform their financial management and emerge stronger than ever.

According to information released by Equifax Canada in June 2025 in its Newsroom release titled “Debt Pressure Building Up for Canadian Businesses“, the numbers tell a troubling story: in Q1 2025, over 309,000 Canadian businesses—11.3% of all credit-active businesses—missed at least one payment due to cash flow issues. This represents the highest rate since the 2009 financial crisis. The report also states that in Ontario, businesses in accommodation and food services are experiencing 16.9% payment difficulties, while retail operations face 13.2% payment problems.

Here’s what I want every Ontario business owner to understand: cash flow problems are solvable. With proper knowledge, the right tools, and sometimes professional guidance, you can master your cash flow and build a financially resilient business. This Brandon’s Blog will show you exactly how to do it.

What is Cash Flow?

Definition and Key Concepts

Cash flow is the movement of money into and out of your business over a specific period. Think of it as the financial heartbeat of your company—money flowing in from customers, flowing out to suppliers, employees, and other expenses. Unlike profit, which can include non-cash items like depreciation, cash flow shows you the actual cash available to run your business.

Many Ontario business owners confuse it with profit, but they’re fundamentally different. You can be profitable on paper while having negative cash, or have positive cash while showing an accounting loss. This distinction is crucial for business survival.

Here’s a real example from my practice: A Toronto small business retailer showed $15,000 in monthly profit but had negative cash because customers paid with credit cards (creating a 2-3 day delay) while staff needed to be paid weekly and suppliers demanded COD payment. The timing mismatch created a cash position crisis despite healthy profits.

Importance of Cash Flow

Cash flow is the lifeblood of your business. Without an adequate level, you cannot:

Pay employees on time
Meet supplier obligations
Invest in growth opportunities
Handle unexpected expenses
Maintain business operations

Strong cash flow management provides several key benefits:

Operational stability: Ensures you can meet all obligations as they come due
Growth funding: Provides resources for expansion without external financing
Emergency preparedness: Creates buffers for unexpected challenges
Negotiating power: Gives you leverage with suppliers and customers
Stress reduction: Eliminates the anxiety of wondering if you can pay bills

According to Statistics Canada’s Canadian Survey on Business Conditions, second quarter 2025, Canada’s challenging business environment is such that 65.4% of businesses cite rising costs as their primary concern. Effectively managing this isn’t just important—it’s essential for survival.

Glossary of Common Cash Flow Terms

Understanding cash flow terminology is crucial for effective financial management in business. Here are the key terms every Ontario business owner should know:

A-C

Accounts Payable: Money your business owes to suppliers and vendors for goods or services purchased on credit. Managing payables strategically helps optimize timing.

Accounts Receivable: Money owed to your business by customers for products or services delivered but not yet paid for. Efficient collection of receivables is crucial for a healthy business.

Accrual Accounting: An accounting method where revenues and expenses are recorded when they occur, not when cash changes hands. This creates the difference between profit and cash.

Capital Expenditures (CapEx): Money spent on acquiring or upgrading physical assets like equipment, property, or technology. These investments are subtracted from operating cash flow to calculate free cash flow.

Cash Conversion Cycle: The time it takes for a business to convert its investments in inventory and receivables back into cash. A shorter cycle means better cash flow.

Cash Flow Forecast: A projection of expected cash inflows and outflows over a specific period, typically 13 weeks or 12 months. Essential for planning and avoiding cash shortages.

Cash Flow from Financing Activities: Cash movements related to funding your business, including loan proceeds, repayments, owner investments, and dividend payments.

Cash Flow from Investing Activities: Cash spent on or received from investments in your business’s future, such as equipment purchases, property acquisitions, or asset sales.

Cash Flow from Operating Activities: Cash generated from your core business operations—the most important indicator of business health.

Credit Line: A pre-approved loan amount that businesses can draw upon as needed. Provides flexibility for managing cash fluctuations.

D-H

Days Sales Outstanding (DSO): The average number of days it takes to collect payment from customers. Lower DSO means faster cash collection.

Depreciation: The gradual reduction in an asset’s value over time. It’s a non-cash expense that affects profit but not cash flow.

Direct Method: A cash flow statement preparation method that lists actual cash receipts and payments, providing clear visibility into cash sources and uses.

Free Cash Flow: Operating cash flow minus capital expenditures. Represents cash available for owners, debt repayment, or reinvestment after maintaining current operations.

HST (Harmonized Sales Tax): The 13% combined federal and provincial sales tax in Ontario. Creates significant cash impacts, especially for businesses with longer collection cycles.

I-N

Indirect Method: A cash flow statement preparation method that starts with net income and adjusts for non-cash items and working capital changes.

Insolvency: The inability of a business to pay its debts as they come due. Requires professional intervention to avoid bankruptcy.

Inventory Turnover: How quickly a business sells and replaces its inventory. Higher turnover generally improves cash flow.

Licensed Insolvency Trustee: A federally regulated professional who helps businesses and individuals deal with debt problems and insolvency procedures.

Liquidity: The ability to meet short-term financial obligations. High liquidity means better cash flow management.

Net Cash Flow: The sum of all cash flows (operating + investing + financing), showing the overall change in cash position.

Net Income: Profit after all expenses and taxes. Different from cash flow because it includes non-cash items like depreciation.

O-Z

Operating Cash Flow Margin: Operating cash flow divided by revenue, expressed as a percentage. Healthy businesses typically maintain margins above 10%.

Payroll: Employee wages and benefits—often the largest fixed expense for Ontario businesses and has a critical impact on the cash position of the business.

Seasonal Variations: Predictable changes in business activity throughout the year that affect the seasonal cash patterns.

Trade Credit: Credit extended by suppliers allowing businesses to purchase goods or services and pay later.

Working Capital: Current assets minus current liabilities. Changes in working capital affects the cash position.

13-Week Rolling Forecast: A detailed cash flow projection covering the next 13 weeks, updated weekly. Essential for short-term cash management.

Types of Cash Flow

Understanding the different types helps you identify where your money is coming from and going to. Each type tells a different story about your business’s financial health.

1. Operating Cash Flow

Operating cash flow represents money generated from your core business operating activities—selling products or services. Cash flow from operating activities is the most important type because it shows whether your business model is generating cash.

Positive operating cash flow means your business operations are generating more cash than they consume. This is essential for long-term sustainability.

Negative operating cash flow indicates your operations are consuming more cash than they generate, which is unsustainable without external funding.

2. Investing Cash Flow

Investing cash flow tracks money spent on or received from investing activities in your business’s future. Cash flow from investing activities include:

Equipment purchases
Property acquisitions
Technology investments
Sale of business assets

Negative investing cash flow often indicates healthy growth, as you’re investing in your business’s future. However, these investments must be balanced against your ongoing operating cash flow capacity.

3. Financing cash flow

This shows money moving in and out related to funding your business. The most common cash flow from financing activities is:

Loan proceeds (positive)
Loan repayments (negative)
Owner investments (positive)
Dividend payments (negative)

4. Free cash flow

Free cash flow is operating cash flow minus capital expenditures. It represents the cash available for owners, debt repayment, or reinvestment after maintaining current operations.

Formula: Free Cash Flow = Operating Cash Flow – Capital Expenditures

Free cash flow is crucial because it shows the cash your business generates after investing in maintaining its productive capacity.

5. Net Cash Flow

Net cash flow is the sum of all cash flows (operating + investing + financing). It shows the overall change in your cash position over a period.

Positive net cash flow means your cash position improved. Negative net cash flow means your cash position declined.

Cash Flow Formulas Explained

Understanding how to do the different calculations will give you powerful insights into your business’s financial health.

1. How to Calculate Operating Cash Flow

Direct Method: Operating Cash Flow = Cash Receipts from Customers – Cash Payments to Suppliers and Employees

Indirect Method: Operating Cash Flow = Net Income + Depreciation + Changes in Working Capital

The indirect method is more commonly used because it’s easier to calculate from standard financial statements of the balance sheet, showing the financial position of the business and the income statement, showing the profit or loss for the fiscal period.

2. How to Calculate Free Cash Flow

Basic Formula: Free Cash Flow = Operating Cash Flow – Capital Expenditures

Expanded Formula: Free Cash Flow = Net Income + Depreciation – Changes in Working Capital – Capital Expenditures

Free cash flow is particularly important for business valuation and understanding your company’s ability to generate cash for owners.

3. Calculating Net Cash Flow

Formula: Net Cash Flow = Operating Cash Flow + Investing Cash Flow + Financing Cash Flow

This calculation shows your overall cash position change during a specific period.

Cash Flow Forecasting Techniques

This forecasting predicts future cash positions based on expected receipts and disbursements. Effective forecasting involves:

13-Week Rolling Forecast: Update weekly, showing details of incoming and outgoing cash for the next 13 weeks
Monthly Forecast: Broader view covering 12-18 months
Scenario Planning: Best case, worst case, and most likely scenarios
Key Forecasting Steps:

Estimate sales based on historical data and market conditions
Project collection timing based on customer payment patterns
Schedule known expenses (payroll, rent, loan payments)
Include variable expenses tied to sales levels
Account for seasonal variations
Update regularly with actual results

Cash Flow Statements

Cash flow statements provide a formal record of your business’s cash movements, offering crucial insights into financial health and operational efficiency.

Direct Method

The direct method lists actual cash receipts and payments:

Cash Inflows:

Collections from customers
Interest received
Other operating receipts

Cash Payments:

Payments to suppliers
Employee wages
Interest paid
Tax payments

The direct cash flow statement method provides clear visibility into cash sources and uses, making it easier to identify improvement opportunities.

Indirect Method

The indirect method starts with net income and adjusts for non-cash items:

Starting Point: Net Income
Add Back: Depreciation, amortization, losses on asset sales
Subtract: Gains on asset sales
Adjust for Working Capital Changes: Changes in accounts receivable, inventory, and accounts payable.

Most businesses use the indirect cash flow statement method because it’s easier to prepare from existing financial statements.

Differences Between Cash Flow and Profit

Understanding the difference between cash flow and profit is crucial for business survival:

Profit (Net Income):

Includes non-cash items like depreciation
Uses accrual accounting (revenue recorded when earned, expenses when incurred)
Can be positive while cash flow is negative
Disclosed in the income statement

Cash flow

Shows actual cash movements
Reflects the timing of cash receipts and payments
Can be positive while showing accounting losses
Does not include any accrual accounting items

Real Example: A Mississauga manufacturing company showed $50,000 quarterly profit but had negative $25,000 cash flow because customers took 90 days to pay while suppliers required 30-day payment terms.

Significance of Cash Flow Analysis

Cash flow analysis provides insights that profit analysis alone cannot offer, making it essential for business decision-making.

Insights into Financial Health

Cash flow analysis reveals:

Operational efficiency: How well your business converts sales to cash
Liquidity position: Your ability to meet short-term obligations
Growth sustainability: Whether growth is self-funding or through external financing activities
Debt capacity: How much additional debt your business can support
Dividend capacity: How much cash is available for owner distributions

Identifying Investment Opportunities

Strong cash flow analysis helps identify:

Expansion opportunities: When you have excess cash for growth
Efficiency improvements: Areas where cash flow can be optimized
Asset investments: Timing for equipment or facility upgrades
Market opportunities: When you can invest in new markets or products

Regular cash flow analysis also helps you avoid overextending during good times and prepare for downturns.

Managing Cash Flow

Effective cash flow management requires different strategies for different business types and situations.

Strategies for Individuals

For sole proprietors and individual business owners:

Separate Business and Personal Finances: Maintain separate accounts to track business cash flow accurately
Pay Yourself a Salary: Regular draws help predict cash needs
Build Personal Emergency Fund: Separate from business reserves
Plan for Tax Payments: Set aside money for quarterly tax obligations

Strategies for Businesses

Accelerate Collections:

Invoice immediately upon delivery
Offer early payment discounts
Implement automated collection systems
Require deposits for large orders

Optimize Inventory Management:

Use just-in-time inventory systems
Negotiate consignment arrangements
Liquidate slow-moving stock
Improve inventory turnover

Manage Payables Strategically:

Negotiate extended payment terms with suppliers
Take advantage of early payment discounts when beneficial
Schedule payments to match cash inflows
Maintain good supplier relationships

Cutting Expenses and Cost Management

Fixed Cost Reduction:

Renegotiate rent and lease agreements
Consolidate facilities where possible
Review insurance coverage for potential savings
Eliminate unused services and subscriptions

Variable Cost Optimization:

Negotiate better supplier terms
Improve operational efficiency
Reduce waste and inefficiencies
Implement cost control systems

Real Example: A Toronto wholesaler reduced monthly expenses by renegotiating its premises lease terms and switching to more efficient suppliers.

Optimizing Credit Utilization

Business Credit Lines:

Maintain credit lines for cash flow smoothing
Use credit strategically, not as a crutch
Pay down balances quickly to maintain capacity
Monitor credit utilization ratios

Supplier Credit:

Negotiate payment terms that match your cash flow cycle
Maintain good relationships to preserve credit access
Use trade credit to bridge cash flow gaps
Monitor supplier payment terms for changes

Utilizing Cash Flow Analysis Tools

Modern technology offers powerful tools for cash flow management and analysis.

Cash Flow Software Options

The Business Development Bank of Canada (BDC) has compiled a listing titled Free and low-cost accounting and invoicing software. They identify 15 different software packages that can fulfill all of your accounting and financial management needs, including the preparation of the Statement of Cash Flows.

Key Features to Look For:

Real-time cash position monitoring
Automated forecasting capabilities
Integration with bank accounts
Customizable reporting
Mobile accessibility

Benefits and Limitations

Benefits of Cash Flow Tools:

Automation: Reduces manual work and errors
Real-time visibility: Instant access to cash position
Forecasting accuracy: Better predictions based on historical data
Scenario planning: Ability to model different situations
Integration: Connects with banking and accounting systems

Limitations to Consider:

Cost: Quality tools require investment
Learning curve: Staff training may be required
Data quality: Tools are only as good as the input data
Complexity: Some tools may be overly complex for small businesses

FREE OFFER: We have put together a basic 13-week cash flow projection in Google Sheets format. It can be either transferred to your Google Drive or downloaded in Excel format for your use. If you would like a copy of it, please tell our AI financial coach, Fiona Ledger, that you would like a copy of our 13-week cash flow projection template and also provide your name and email address and it will be sent to you.

Ontario-Specific Cash Flow Challenges

Ontario businesses face unique challenges that require targeted solutions:

HST Management: The 13% HST creates significant cash impacts, especially for businesses with longer collection cycles. Planning for HST payments is crucial.
Seasonal Variations: Many Ontario businesses experience significant seasonal fluctuations, requiring careful cash planning for slow periods.
Supply Chain Costs: Rising transportation and logistics costs affect cash timing and amounts.
Labour Costs: Minimum wage increases and benefit costs impact cash predictability.
Energy Costs: Fluctuating energy prices affect operational cash, especially for manufacturing businesses.

Warning Signs of Cash Flow Problems

Recognizing early warning signs helps prevent cash crises:

Operational Indicators:

Difficulty making payroll consistently
Delayed supplier payments
Increased reliance on credit lines
Declining cash reserves
Frequent overdraft fees

Financial Ratio Warnings:

Operating cash flow margin below 10%
Increasing days sales outstanding
Decreasing days payable outstanding
Declining current ratio
Negative free cash flow trends

Behavioural Changes:

Delaying equipment maintenance
Reducing inventory levels excessively
Cutting essential services
Avoiding growth opportunities due to cash constraints

Professional Help for Cash Flow Problems

Some cash problems require professional intervention beyond what business owners can handle alone.

When to Seek Help:

Consistently negative operating cash flow
Inability to meet payroll or critical payments
Creditor pressure and collection actions
Need for formal debt restructuring
Considering business closure due to cash issues

How A Licensed Insolvency Trustee Can Help:

Cash flow analysis: Comprehensive review of your financial situation
Debt restructuring: Formal proposals to creditors
Creditor negotiations: Professional representation in discussions
Business reorganization: Structured approach to financial recovery
Insolvency procedures: When necessary, formal bankruptcy protection, financial restructuring or liquidation processes

Real Success Story: A Hamilton company with annual cash deficits worked with our team to restructure supplier payments, implement better collection procedures, and negotiate with creditors through a formal financial restructuring process. Within six months, they achieved positive cash balances and avoided bankruptcy.

Building Long-Term Cash Flow Resilience

Surviving immediate cash problems is just the beginning. Building long-term resilience requires systematic changes:

Diversification Strategies:

Multiple revenue streams
Diversified customer base
Various supplier relationships
Multiple financing sources

Operational Improvements:

Efficient processes and systems
Strong financial controls
Regular performance monitoring
Continuous improvement culture

Financial Planning:

Regular cash forecasting
Scenario planning and stress testing
Emergency reserve building
Strategic investment planning

Government Resources and Support

Ontario and federal governments offer various programs to help businesses with cash challenges:

Ontario Programs:

Federal Programs:

Accessing Support:

Contact local economic development offices
Work with business advisors
Consult with accountants and lawyers
Engage with industry associations

Taking Action: Your Cash Flow Recovery Plan

If you’re facing cash challenges, here’s your action plan:

Immediate Steps (Next 7 Days):

Calculate your current cash position
Create a 13-week cash flow forecast
Contact customers with outstanding invoices
Review and postpone non-essential expenses
Communicate with key suppliers about payment timing

Short-Term Actions (Next 30 Days):

Implement automated invoicing systems
Negotiate extended payment terms with suppliers
Explore alternative financing options
Conduct a comprehensive expense audit
Seek professional advice if problems persist

Long-Term Strategy (Next 90 Days):

Develop comprehensive cash management systems
Build emergency cash reserves
Diversify revenue streams
Strengthen customer relationships
Create contingency plans for various scenarios

Frequently Asked Questions About Cash Flow

General Cash Flow Questions

Q: What’s the difference between cash flow and profit?

A: This is the most common confusion I see among Ontario business owners. Profit is an accounting measure that includes non-cash items like depreciation and uses accrual accounting principles. Cash flow shows actual money moving in and out of your business.

Q: How much cash should my business keep on hand?

A: Most Ontario businesses should maintain 3-6 months of operating expenses in cash reserves. However, this depends on your industry, seasonality, and revenue predictability. Seasonal businesses like landscaping or retail may need larger reserves to cover slow periods.

Q: How often should I review my cash flow?

A: I recommend weekly cash flow reviews for most businesses, with daily monitoring during tight periods. Monthly reviews aren’t frequent enough to prevent cash crises. Use a 13-week rolling forecast that you update weekly.

Q: Can a profitable business go bankrupt?

A: Absolutely. I’ve seen many profitable Ontario businesses fail because they couldn’t manage cash flow. If you can’t pay employees or suppliers when payments are due, profitability won’t save you. This is why cash management is more critical than profit management for business survival.

Cash Flow Forecasting

Q: What’s the best forecasting method for small businesses?

A: Start with a 13-week rolling forecast that you update weekly. This provides enough detail for immediate planning while being manageable for small business owners. Include three scenarios: best case, worst case, and most likely.

Q: How accurate should my cash flow forecasts be?

A: Aim for 85-90% accuracy in the first four weeks, 75-80% accuracy for weeks 5-8, and 70% accuracy for weeks 9-13. Perfect accuracy isn’t possible, but consistent forecasting improves your predictions over time.

Q: What happens if my forecast is consistently wrong?

A: Regular forecast errors indicate problems with your assumptions or process. Common issues include unrealistic sales projections, poor understanding of collection timing, or inadequate expense tracking. Review your historical data and adjust your forecasting methods.

Managing Cash Flow Problems

Q: My business has seasonal cash flow problems. What should I do?

A: Seasonal businesses need specialized cash management. Build cash reserves during strong seasons, establish seasonal credit lines, consider factoring receivables, and negotiate favourable payment terms with suppliers during the off-season. Many successful Ontario businesses use these strategies to smooth seasonal fluctuations.

Q: When should I seek professional help for cash flow problems?

A: Don’t wait until you’re missing payroll or facing creditor pressure. Seek help when you notice consistent negative operating cash, increasing reliance on credit lines, or difficulty making routine payments. Early intervention provides more options and better outcomes.

Q: Can I fix cash flow problems without borrowing money?

A: Often, yes. Many cash problems stem from poor collection practices, inefficient inventory management, or suboptimal payment timing. Before borrowing, try accelerating collections, optimizing inventory levels, and negotiating better payment terms with suppliers.

Collection and Payment Management

Q: How can I collect payments faster from customers?

A: Implement several strategies: invoice immediately upon delivery, offer early payment discounts (2/10 net 30), use automated collection systems, require deposits for large orders, and maintain clear payment terms. Consistent follow-up on overdue accounts is crucial.

Q: Should I offer early payment discounts?

A: Early payment discounts can improve cash flow, but calculate the true cost. A 2% discount for payment within 10 days instead of 30 days equals a 36% annual interest rate. Only offer discounts if the improved cash flow justifies the cost.

Q: How should I handle customers who consistently pay late?

A: Implement a progressive collection process: friendly reminders, formal notices, phone calls, and ultimately, collection agencies or legal action. Consider requiring cash on delivery or deposits from chronic late payers.

Financial Management

Q: What’s the most important cash flow metric to track?

A: Operating cash flow is the most critical metric because it shows whether your core business generates cash. If operating cash flow is consistently negative, you have a fundamental business model problem that needs immediate attention.

Q: How do I calculate my cash conversion cycle?

A: Cash Conversion Cycle = Days Sales Outstanding + Days Inventory Outstanding – Days Payable Outstanding. A shorter cycle means faster cash conversion. Most businesses should aim to minimize this cycle.

Q: Should I use debt to solve cash flow problems?

A: Debt can provide temporary relief but shouldn’t be your primary solution. Use debt strategically to bridge temporary gaps or fund growth that will improve cash flow. Don’t use debt to mask fundamental business problems.

Emergency Situations

Q: What should I do if I can’t make payroll?

A: This is a serious situation requiring immediate action. Contact your bank about emergency credit, consider factoring receivables, speak with employees about temporary arrangements, and seek professional help immediately. Don’t ignore the problem—it won’t resolve itself.

Q: When should I consider bankruptcy or insolvency procedures?

A: Consider formal insolvency procedures when you consistently cannot pay debts as they come due, creditors are taking legal action, or you’re facing business closure. A Licensed Insolvency Trustee can help you understand your options, which may include restructuring rather than bankruptcy.

Q: Can a Licensed Insolvency Trustee help before I’m insolvent?

A: Absolutely. Licensed Insolvency Trustees provide advisory services for businesses facing financial difficulties. We can help with cash flow analysis, creditor negotiations, and business restructuring to avoid insolvency. Early intervention often prevents bankruptcy.

Conclusion: Master Your Cash Flow, Secure Your Future

Cash management isn’t just about survival—it’s about creating the financial foundation for business growth and success. The Ontario business environment is challenging, but with proper cash management, your business can not only survive but thrive.

As a Licensed Insolvency Trustee who has helped many Ontario businesses overcome cash challenges, I’ve seen that businesses with committed owners who implement systematic cash management can overcome even severe financial difficulties.

The key is understanding your cash patterns, implementing proven management strategies, and seeking professional help when needed. Your business represents years of hard work and investment—don’t let cash problems destroy what you’ve built.

Remember, cash problems are temporary and solvable with the right approach. The businesses that succeed are those that take decisive action early and implement systematic improvements to their cash management.

If you’re struggling with business cash flow and debt issues, don’t wait for the situation to worsen. The key is to stay informed, act decisively, and seek professional help when needed. Whether you’re looking to grow your business or navigate financial difficulties, having the right support makes all the difference.

You’re not alone in this. There’s a path forward, and it starts with reaching out for the right kind of help. Take that step—you deserve it. If you’re a GTA resident dealing with overwhelming debt, don’t wait for your credit situation to get worse. As a licensed insolvency trustee serving Toronto, Mississauga, Brampton, Markham, and surrounding areas, I’m here to help you understand your options.

Free consultation available:

No obligation to proceed
Complete review of your Canadian business debt and credit situation
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

As a licensed insolvency trustee serving the Greater Toronto Area, I encourage consumers and business owners to view financial difficulties not as failures but as challenges that can be addressed with proper guidance. By understanding the warning signs of insolvency and seeking professional advice early, many people and businesses can find a path forward – whether through restructuring, strategic changes, or in some cases, an orderly wind-down that protects their future opportunities.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

At the Ira Smith Team, we understand the financial and emotional components of debt struggles. We’ve seen how traditional approaches often fall short in today’s economic environment, so we focus on modern debt relief options that can help you avoid bankruptcy while still achieving financial freedom.

Brandon Blog Post

RELATED PARTY LOANS IN BANKRUPTCY: HUGE ATLANTIC SEA CUCUMBER CASE LESSONS FOR GTA BUSINESSES

Post author By Brandon Smith
Post date July 21, 2025

A recent Nova Scotia court decision shows how a related party loan when a business is insolvent has tricky rules that can leave the lender in a difficult situation when the borrower company goes bankrupt. The Atlantic Sea Cucumber Ltd. court decision shows how everything can go wrong when critical mistakes are made with related party business loans and security agreements.

As a Licensed Insolvency Trustee firm serving the Greater Toronto Area for over 20 years, we’ve seen similar disasters happen to local businesses. The good news? These problems are completely preventable when you know the business insolvency rules.

Need help with related party loan or your debt issues? Schedule your free consultation today – don’t wait until it’s too late.

A related party is anyone with close ties to your business. Under Canada’s insolvency legislation, the Bankruptcy and Insolvency Act (BIA), this includes:

You and your company – if you lend money to your own business
Sister companies – two companies owned by the same person
Family members – spouse, children, parents lending to your business
Connected entities – companies with shared ownership or control

Regular bank loans have strict rules, credit applications, other formal paperwork, and clear terms. Related party loans often rely on handshake deals or simple agreements downloaded from the internet.

In bankruptcy, courts scrutinize these “insider” deals carefully. They want to ensure related parties aren’t jumping ahead of other creditors or moving money around unfairly.

Warning: Courts can void related party security granted within 12 months of bankruptcy. This means your security becomes worthless, leaving you as an unsecured creditor.

Atlantic Sea Cucumber Case: The Facts

Let me walk you through the case that every business owner needs to understand: Atlantic Sea Cucumber Ltd. (Re), 2025 NSSC 234.

The Players

Atlantic Sea Cucumber Ltd. (ASC) – The company that went bankrupt
Atlantic Golden Age Holdings Inc. (AGAH) – ASC’s parent company (the related party lender)
Weihai Taiwei Haiyang Aquatic Food Co. Ltd. (WTH) – Major supplier owed $1.32 million

What Went Wrong

The trouble started with a shipment of sea cucumbers, which ASC claimed were “too salty.” This led to a massive legal battle. By February 2023, WTH won a $1.32 million court judgment against ASC.

ASC filed for bankruptcy protection through a Notice of Intention to Make A Proposal in May 2023. The restructuring failed, and there wasn’t enough money to pay everyone. AGAH claimed they should get paid first because they had “security” on ASC’s assets.

The court disagreed. Here’s why AGAH lost.

Why AGAH’s Security Failed: The Critical Mistakes

Mistake #1: “Spent” Security Problem

In 2018, AGAH lent money to ASC with proper security, as elementary as it was. But this loan was fully repaid by November 2020. The court ruled this made the security “spent” – like a used gift card with no value left.

When AGAH made new loans after 2020, they weren’t covered by the old security agreement.

Mistake #2: Last-Minute Paperwork

In March and April 2023, just weeks before bankruptcy, AGAH tried to register new security documents. The timing looked suspicious to the court.

The court’s message was clear: “Late efforts to paper over prior advances rarely work, especially when bankruptcy is looming.”

Mistake #3: Internet Security Agreements

The court noted AGAH’s original security agreement was “inelegant” and likely downloaded from the internet. As the judge said, “The internet is a lousy lawyer.”

Result: AGAH’s argument that the 2018 security agreement was really for a revolving line of credit, rather than a one-time advance, failed. It became an unsecured creditor, losing its priority position and likely getting very little or nothing in the bankruptcy.

1. Proper Transaction Test

The court must determine if related party transactions were “proper,” meaning fair and not designed to cheat other creditors.

The ruling: The 2018 loan was proper, but the 2023 security registration was not proper because it tried to benefit the related party at other creditors’ expense.

2. Void Against the Trustee

This is the most damaging concept for related parties. Even if security seems valid between two or more related parties, it can be “void against the trustee” in bankruptcy.

What this means: Licensed Insolvency Trustees can ignore your security and treat you as an unsecured creditor.

3. 12-Month Look-Back Rule

The BIA presumes related party security granted within 12 months of bankruptcy is void. You must prove it was proper and given for fair value.

Take action now: If your business has financial problems, don’t wait to fix related party loan documentation.

1. Document Everything Professionally

Never rely on:

Handshake agreements
Simple emails
Internet-downloaded forms
AI-generated documents

Always include:

Exact loan amounts
Interest rates
Repayment schedules
Specific collateral descriptions
Default conditions

2. Register Security Immediately

Don’t just sign documents. For personal property, you must register security with your province’s Personal Property Security Act (PPSA) system immediately. Real property security has a different registration system in each province.

In Ontario, this means proper (PPSA) registration that gives public notice to other creditors.

3. Act Before Crisis Hits

Don’t wait until:

Your business faces lawsuits
Cash flow problems emerge
Other creditors demand payment
Bankruptcy becomes likely

The window for proper related party loans closes quickly once financial trouble begins.

4. Get Professional Help Early

As a Licensed Insolvency Trustee firm in the GTA, we are debt professionals who help businesses structure related party transactions correctly from the start. We can work with your lawyer to:

Review existing related party loans
Ensure proper documentation and registration
Plan debt restructuring strategies
Protect your assets legally

Don’t learn these lessons the hard way. Contact us for a free consultation before problems arise.

Lessons for Other Creditors

If you’re owed money by a company with related party loans, have your lawyer investigate those claims. Improperly documented related party loans mean more money available for ordinary unsecured creditors. Also, make sure that you prove your debt by filing your proof of claim if you are an ordinary unsecured creditor. This gives you standing to act and even review what the Trustee is doing and, perhaps more importantly, not doing!

2. The Licensed Insolvency Trustee Protects You

The Licensed Insolvency Trustee’s job is to ensure fairness for all creditors (although that was not necessarily the case in the Atlantic Sea Cucumber matter). We investigate and challenge suspicious related party claims that unfairly benefit insiders.

3. Verify Security Claims

Before extending credit, verify any existing security registrations. This reveals problems with documentation or scope that could affect your recovery.

4. Speak Up About Unfair Deals

If you suspect unfair related party dealings in a bankruptcy, raise concerns with the Trustee. We can investigate and take legal action when necessary.

Any loan between a business and its owners, family members, or connected companies is a related party transaction requiring special documentation and scrutiny.

The BIA allows challenges to related party security granted within 12 months of bankruptcy. Earlier transactions may also be challenged if they’re improper.

You need professional loan agreements, promissory notes, security agreements, proof of advance(s) and proper PPSA or land registry registrations. Internet downloads, AI-generated forms and casual agreements don’t work.

Yes, but they must be documented professionally, registered immediately, and given for fair market value of cash advances or credit lines in the ordinary course of business when the company is financially healthy.

Improperly secured related party loans become unsecured debts, meaning they’re paid after trust claims and valid secured creditors and may receive nothing if assets are insufficient.

The Bottom Line: Don’t Cut Corners

The Atlantic Sea Cucumber case teaches us that related party loans require professional handling from day one. Waiting until financial trouble hits or relying on DIY legal documents almost always fails.

As the court noted: “Don’t cut corners on legal paperwork.” This is especially true for related party transactions that face extra scrutiny in bankruptcy.

Key Takeaways for GTA Businesses:

Document related party loans professionally – no internet forms or handshake deals
Register security immediately – don’t wait for financial trouble
Act while financially healthy – late efforts rarely work
Get expert help early – prevent problems before they start

Don’t let related party loan mistakes destroy your business like they did for Atlantic Sea Cucumber Ltd.

Ira Smith Trustee & Receiver Inc. has helped Greater Toronto Area businesses and consumers navigate complex debt situations for over 20 years. We understand the unique challenges of related party transactions and can help you:

Structure loans properly from the start
Review existing related party agreements
Navigate financial restructuring
Protect your interests in bankruptcy proceedings

Take action now – contact us for a free, confidential consultation. Don’t wait until it’s too late to fix these critical issues.

Ira Smith Trustee & Receiver Inc. is a Licensed Insolvency Trustee firm serving consumers, entrepreneurs, and businesses in the Greater Toronto Area. Brandon Smith has 19 years of experience, and Ira Smith has 45 years of experience in the Greater Toronto Area insolvency marketplace. We specialize in helping clients navigate complex debt situations, business restructuring, and if required as a last resort, bankruptcy proceedings. Licensed and supervised by the Office of the Superintendent of Bankruptcy Canada and its local Official Receiver.

Contact Information:

Phone: 647.799.3312
Email: ira@irasmithinc.com or brandon@irasmithinc.com
Office: 167 Applewood Crescent #6, Vaughan, ON L4K 4K7
Website: https://irasmithinc.com

Brandon Blog Post

BANKRUPTCY AND INSOLVENCY ACT FORMS: YOUR COMPLETE GUIDE

Post author By Brandon Smith
Post date July 14, 2025

Bankruptcy and Insolvency Act Forms

Bankruptcy and Insolvency Act Forms Introduction

Dealing with debt can feel overwhelming. If you are a person looking into bankruptcy or a consumer proposal in Canada, or you are a business owner putting your company into a formal financial restructuring process, you’ll need to understand the paperwork involved by the insolvency profession.

As a Licensed Insolvency Trustee who has helped many individuals, their families and companies in the Greater Toronto Area over the last 20 years, I’ll walk you through everything you need to know about the regulatory framework carried out through Bankruptcy and Insolvency Act forms and precedents.

What Are Bankruptcy and Insolvency Act Forms and Precedents?

Think of the Bankruptcy and Insolvency Act (BIA) forms as official paperwork required by the Canadian government when someone files for bankruptcy proceedings or makes a consumer debt proposal. The Office of the Superintendent of Bankruptcy creates these Bankruptcy and Insolvency Act forms to make sure the process is legal and fair for everyone involved. The Office of the Superintendent of Bankruptcy is part of Innovation, Science and Economic Development Canada.

Bankruptcy and Insolvency Act Forms

These aren’t just suggestions – they’re required by law. Each form serves a specific purpose, like declaring bankruptcy, proving what creditors are owed, or reporting your monthly budget (Form 65). These necessary forms provides the Licensed Insolvency Trustee and all other stakeholders with the necessary information concerning the financial situation of the insolvent debtor, being either a person or company.

Why These Bankruptcy and Insolvency Act Forms Matter to You

Legal Protection: Once filed, these Bankruptcy and Insolvency Act forms stop creditors from calling you or taking money from your paychecks.

Clear Process: They create a step-by-step path to deal with your debt.

Your Rights: The forms protect both your rights and your creditors’ rights.

Fresh Start: Completing them properly gets you closer to financial freedom.

Who Needs Bankruptcy and Insolvency Act Forms?

People filing for personal bankruptcy proceedings
Individuals making consumer proposals
A business owner facing financial trouble whose company enters formal financial restructuring proceedings, including bankruptcy protection
Creditors are sent a notice in writing of your filing. Those who want to collect a portion of what they’re owed as a claim provable through the proof of claim process
A Licensed Insolvency Trustee is the only authorized person in Canada to manage the insolvency process

The Most Important Forms You’ll Encounter

Here are the key Bankruptcy and Insolvency Act forms most people deal with (there are over 90 in total, but you won’t need them all):

Form 21 – Assignment for Bankruptcy

What it does: Officially declares you bankrupt
Who uses it: You and your trustee
When: At the start of bankruptcy proceedings

Form 31 – Proof of Claim

What it does: Creditors use this to prove what you owe them
Who uses it: Your creditors who have a claim provable in your insolvency proceeding
When: After you file for bankruptcy or a proposal

Form 47 – Consumer Proposal

What it does: Your formal offer to pay creditors less than you owe
Who uses it: You and your trustee
When: If you choose a proposal instead of bankruptcy proceedings

Form 65 – Monthly Income and Expense Statement

What it does: Shows your income and expenses each month
Who uses it: You file this monthly during bankruptcy
When: Throughout your bankruptcy period

Form 78 – Statement of Affairs (Business/Corporate Bankruptcy/Proposal)

What it does: Lists everything your business owns and owes
Who uses it: Your company and your trustee
When: At the beginning of the corporate bankruptcy/proposal process

Form 79 – Statement of Affairs (Personal)

What it does: Lists everything you own and owe
Who uses it: You and your trustee
When: At the beginning of the process

Form 84 – Certificate of Discharge

What it does: Officially ends your bankruptcy
Who uses it: Your trustee files this for you
When: When you complete all bankruptcy requirements, you are entitled to a discharge certificate

Bankruptcy and Insolvency Act Forms

Note: New versions of Bankruptcy and Insolvency Act Forms 31, 65, 78, and 79 must be used for all cases filed after September 16, 2024.

Your Step-by-Step Journey Through the Forms

Based on my experience with hundreds of clients, here’s what happens:

Step 1: Free Consultation

We meet to discuss your situation. I will explain your options and what paperwork is involved. No Bankruptcy and Insolvency Act forms have been filed yet – this is just information gathering.

Step 2: Document Collection

You gather information about your debts, assets, income, and expenses. I provide you with a checklist so nothing gets missed.

Step 3: Form Preparation

Together, we complete your forms. I handle the technical aspects while you provide the financial information. Common Bankruptcy and Insolvency Act forms at this stage include your Assignment (Form 21) and Statement of Affairs (Form 79 for an individual or Form 78 for a Company).

Step 4: Filing with the Government

I file your completed forms electronically with the local representative for the Office of the Superintendent of Bankruptcy, known as the Official Receiver for that bankruptcy district. Once filed, creditor protection begins.

Step 5: Creditor Notification

Creditors receive notice in writing of your bankruptcy or proposal. They can then file their Bankruptcy and Insolvency Act forms (like Form 31) to participate.

Step 6: Ongoing Requirements

During bankruptcy, you’ll file monthly income and expense statements and may attend meetings. I guide you through each requirement.

Step 7: Completion

When you finish all duties, I will file your discharge papers (Form 84), which legally end your bankruptcy.

Bankruptcy and Insolvency Act Forms

Recent Changes You Should Know About

The government updated several key forms in September 2024. If you’re starting the process now, you’ll use the newest versions. These updates made some Bankruptcy and Insolvency Act forms clearer and added new questions about your financial situation.

Common Frequently Asked Questions About Bankruptcy and Insolvency Act Forms

What are the common signs that indicate I might need to consider bankruptcy or a consumer proposal?

If you are experiencing persistent collection calls, constant anxiety about your bills, sleepless nights, and feel trapped by overwhelming unsecured debt, these are strong indicators that exploring options under the Bankruptcy and Insolvency Act could be beneficial.

What is the primary purpose of Form 79 Statement of Affairs in the bankruptcy or consumer proposal process?

Form 79, also known as the Statement of Affairs, is a crucial, government-mandated document that provides a comprehensive, sworn disclosure of your entire financial situation. This includes all your assets, debts, income, and the reasons for your financial difficulties, forming the essential basis for your debt relief plan.

What immediate relief can I expect once I file for bankruptcy or a consumer proposal?

The moment the documents are accepted by the Official Receiver of the bankruptcy district, a “stay of proceedings” comes into effect. This legal protection immediately stops direct contact from your creditors, putting an end to collection calls and significantly reducing your financial stress, allowing you to breathe again.

What is the role of a Licensed Insolvency Trustee in helping with debt?

A Licensed Insolvency Trustee is the only professional in Canada to be the legally authorized person to administer bankruptcies and consumer proposals. They serve as your guide, explaining your available options, preparing all necessary legal documents like Form 79, and managing all communications with your creditors on your behalf.

What happens if I make a mistake on a form?

Small errors can usually be corrected. Major mistakes or missing information can delay your case. That’s why working with a Licensed Insolvency Trustee is important – we catch these issues before they become problems.

Can I fill out the forms myself?

Legally, yes. Practically, it’s not recommended. In my 15+ years of practice, I’ve seen people struggle with forms that seem straightforward but have legal implications they don’t understand.

How long does the paperwork take?

For most people, we can complete the initial Bankruptcy and Insolvency Act forms before you arrive for our meeting to sign and file the forms. Monthly forms take about 15 minutes once you get used to them.

What kind of information do I need to provide to my Licensed Insolvency Trustee to start the process?

To begin, you will need to provide your Licensed Insolvency Trustee with full personal details, a complete list of everything you own (assets), all your debts (both secured and unsecured), the names and addresses of all your creditors, any expected future income or lump sums, and the underlying reasons for your current financial situation. Also helpful are:

Recent pay stubs or proof of income
Bank statements
Credit card statements
Loan documents
Property tax bills
List of monthly expenses
Any legal documents related to your debts

Why is complete honesty crucial when providing information for forms like Form 79?

Complete honesty is the absolute foundation of the entire debt relief process. Attempting to conceal assets or providing false information can lead to severe consequences, including the denial of your bankruptcy or charges of perjury, which would undermine your path to a fresh start.

How does the process of filing for bankruptcy or a consumer proposal lead to a “fresh start”?

Bankruptcy and Insolvency Act Forms

Guided by your Licensed Insolvency Trustee and based on the detailed financial disclosure provided in Bankruptcy and Insolvency Act forms like Form 79, this legal process offers a clear path to eliminate or significantly reduce your debt. This allows you to regain control of your finances, alleviate stress, and begin anew without the burden of your past financial obligations.

Tips from My Experience

After helping people through this process, here’s my advice:

Be completely honest. Hiding assets or debts can have serious legal consequences. I’ve seen cases delayed by months because someone wasn’t upfront initially.

Keep copies of everything. You’ll want records for your the files.

Ask questions. If something doesn’t make sense, speak up. Understanding the process reduces stress.

Meet deadlines. Some forms have strict timelines. Missing them can cost you money or delay your fresh start.

Stay in touch. Let me know if your financial situation changes during the process.

Red Flags: Mistakes That Can Hurt Your Case

Using old versions of forms after new ones are released
Forgetting to include all debts or assets
Missing required signatures
Providing outdated financial information
Waiting too long to file the required monthly reports

How Working with a Licensed Insolvency Trustee Helps

Only Licensed Insolvency Trustees are authorized persons who can file BIA forms and handle bankruptcies in Canada. Here’s what this means for you:

Expertise: We know the forms inside and out. I’ve completed thousands of these documents.

Legal Protection: Once I file your forms, creditors must stop collection activities immediately.

Government Oversight: We’re regulated by the federal government and must follow strict professional standards.

No Surprises: I explain each form and what it means for your situation.

Ongoing Support: You’re not alone in this process. I’m here to answer questions and handle complications.

Your Next Steps

If you’re in the Greater Toronto Area and considering bankruptcy or a consumer proposal:

Book a free consultation – Call me and we’ll discuss your specific situation and options
Bring your financial documents – The more complete your information, the better I can help
Ask about alternatives – Bankruptcy isn’t always the best solution
Let me handle the paperwork – Focus on your future while I manage the legal requirements

Ready to take the next step? Contact me for a confidential, no-obligation consultation. Together, we’ll review your situation and determine the best path forward.

If you’re struggling with debt, don’t wait. The longer you wait, the fewer options you might have. Contact a Licensed Insolvency Trustee today for a free consultation.

At Ira Smith Trustee & Receiver Inc., we’ve helped thousands of Canadians overcome their debt challenges, starting with honest, professional consumer credit counselling. We’ll review your complete financial situation, explain all your options, and help you choose the best path forward.

Remember: you don’t need to pay someone to access professional help. Real consumer credit counselling starts with a free consultation and continues with transparent, regulated services designed to get you back on your financial feet.

Free consultation available:

No obligation to proceed
Complete review of your debt and credit situation
Clear explanation of how debt solutions affect your credit score
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

Your financial future is too important to leave to chance. Choose regulated, professional consumer credit counselling and take the first step toward financial freedom today.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

Bankruptcy and Insolvency Act Forms

Brandon Blog Post

BANKRUPTCY STAY OF PROCEEDINGS, EVICTION, AND ONTARIO LAW: WHEN HUGE TENANCY TROUBLES COLLIDE

Post author By Brandon Smith
Post date July 7, 2025

What is a Stay of Proceedings?

A stay of proceedings is like hitting the pause button on debt collection. When you file an assignment in bankruptcy, a consumer proposal or a Notice of Intention To Make A Proposal in Ontario, this legal protection automatically stops most unsecured creditors from taking collection action against you. If a claim is one purely for the collection of a debt advanced by one or more unsecured creditors, otherwise known as a claim provable in a bankruptcy or consumer proposal, then the stay of proceedings applies. But what happens when the legal action is not for the collection of a debt, like when an eviction is involved? A recent Ontario court case shows how complex this can get.

Understanding Stay of Proceedings in Canada

The Basics of Stay Protection

Under Canada’s Bankruptcy and Insolvency Act (BIA), a stay of proceedings provides immediate relief from:

Debt collection lawsuits
Wage garnishments
Asset seizures
Harassing creditor collection calls and collection agency calls

This protection starts the moment you file for bankruptcy or a consumer proposal with a Licensed Insolvency Trustee in your bankruptcy jurisdiction.

How Long Does a Stay of Proceedings Last?

The duration depends on your filing type:

First-time bankruptcy: Usually 9 months (21 months with surplus income)
Consumer proposal: Remains active while you make payments (up to 5 years)
Notice of Intention To Make A Proposal: This is a preliminary filing before filing a restructuring Division One Proposal for the benefit of creditors, where you don’t qualify to make a consumer proposal. The timeline is similar to that of a consumer proposal

Stay of Proceedings and Eviction: A Real Ontario Case

The Snaith Case: What Happened

A recent Ontario Superior Court of Justice – Ontario In Bankruptcy and Insolvency case (Re Snaith, 2025 ONSC 3413) shows what happens when bankruptcy meets eviction. Here’s the story:

Leanna Mae Snaith owed $46,250 in rent arrears by January 2025. Despite making some payments, she couldn’t catch up. The Landlord and Tenant Board ordered her eviction unless she paid $47,986 by February 28, 2025.

When Ms. Snaith couldn’t pay, she filed for bankruptcy in April 2025, hoping the stay of proceedings would stop her eviction.

Why the Stay Didn’t Stop the Eviction

The court made several key points:

Eviction orders aren’t debt collection: The tenancy was already terminated before bankruptcy
Post-bankruptcy rent must be paid: New rent after filing isn’t discharged in bankruptcy
Prior court orders remain valid: The eviction order was made before the bankruptcy filing

When Stay of Proceedings Doesn’t Apply

Exceptions to Stay Protection

A stay of proceedings doesn’t stop everything. It doesn’t apply to:

Criminal court cases
Family support payments (child support, spousal support)
Some secured creditor actions
Eviction enforcement when the tenancy was already terminated

Getting Around Stay Protection

Creditors can ask the court to “lift the stay” in certain situations. Under the BIA, the court has the authority to lift the stay if the person requesting the authority to begin or continue their action is likely to suffer material prejudice or if it is equitable on other grounds.

However, in eviction cases, landlords often don’t need to do this if the tenancy ended before bankruptcy.

Stay of Proceedings: What Tenants Need to Know

Can Bankruptcy Stop My Eviction?

The short answer: probably not if you’re already facing eviction.

Before eviction proceedings: A stay might pause the process temporarily
After eviction order: The stay won’t usually stop enforcement
Current rent: You must keep paying rent during bankruptcy

Smart Strategies for Rent Problems

If you’re behind on rent:

Act early: File for bankruptcy or a consumer proposal before eviction proceedings start
Keep paying current rent: Post-filing rent isn’t protected by the stay
Get professional help: Licensed Insolvency Trustees understand these complex rules

Stay of Proceedings: What Landlords Should Know

Your Rights During Tenant Bankruptcy

As a landlord, you should know:

Pre-bankruptcy rent arrears: These become unsecured debts in bankruptcy
Post-bankruptcy rent: Fully collectible and can lead to eviction
Eviction timing: File early to avoid stay complications

Working with Sheriff’s Offices

The Snaith case revealed confusion even among enforcement officers. Some sheriff’s offices won’t enforce evictions during bankruptcy, even when they legally can. You might need a court order confirming your right to proceed as was the case here.

Consumer Proposals vs. Bankruptcy: Stay Differences

Consumer Proposal Stay Benefits

A consumer proposal offers a stay of proceedings while potentially providing better outcomes:

Keep your home (if you can afford the payments)
Paying a portion of your debts
Protection lasts for the duration of the consumer proposal as long as you are meeting your payment obligations (usually up to 5 years)

Bankruptcy Stay Limitations

Bankruptcy provides immediate stay protection, but:

You will lose non-exempt assets
Post-bankruptcy obligations remain
Unless there are extenuating circumstances causing a longer period, the bankrupt will normally be discharged between 9 months (first time bankruptcy and no surplus income) and 21 months (first time bankruptcy with surplus income requirement)

Professional Guidance: Why You Need a Licensed Insolvency Trustee

The Snaith case shows how complex stay of proceedings rules can be. As Licensed Insolvency Trustees in the Greater Toronto Area, we help by:

Explaining how stays apply to your specific situation
Timing filings for maximum protection
Handling creditor communications
Ensuring compliance with legal requirements

Avoiding Common Mistakes

Many people misunderstand stay protection. We’ve seen clients assume bankruptcy solves everything, only to face continued problems with:

Housing costs
Post-filing obligations
Non-dischargeable debts

FAQs About Stay of Proceedings

Does a stay of proceedings stop all creditors?

No. While most creditors must stop collection, some exceptions exist. Secured creditors, family support, and certain government actions may continue.

Can I get evicted during bankruptcy?

Yes, especially if eviction proceedings started before bankruptcy or if you don’t pay current rent.

How quickly does stay protection start?

Stay of proceedings protection begins immediately upon filing bankruptcy or a consumer proposal.

What happens if I violate the stay conditions?

Courts can lift the stay, removing your protection and allowing creditor actions to resume.

Getting Help with Stay of Proceedings Issues

If you’re facing debt problems and potential eviction, don’t wait. Early action often provides better options and stronger stay of proceedings protection. The longer you wait, the fewer options you might have. Contact a Licensed Insolvency Trustee today for a free consultation.

At Ira Smith Trustee & Receiver Inc., we’ve helped Ontario residents and companies overcome their debt challenges, starting with honest, professional advice. We’ll review your complete financial situation, explain all your options, and help you choose the best path forward.

Remember: you don’t need to pay someone to access professional help. Our help starts with a free consultation and continues with transparent, regulated services designed to get you back on your financial feet.

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome debt challenges.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

Brandon Blog Post

THE TRUTH ABOUT COMMON-LAW PARTNER INHERITANCE IN ONTARIO: WHEN LOVE, LOSS, AND LAW COLLIDE

Post author By Brandon Smith
Post date June 30, 2025

Introduction to Inheritance

Definition and Importance

Inheritance is the legal process where assets, money, and property pass from someone who has died to their chosen beneficiaries or family members. This transfer happens either through a written will or according to provincial inheritance laws when no will exists.

Understanding inheritance is crucial for every Ontario family because it affects financial security, family relationships, and future planning decisions.

Asset Transfer Made Simple

When someone dies, their inheritance can include many different types of assets:

Cash and bank accounts
Investment portfolios and retirement savings
Real estate properties and vacation homes
Vehicles, jewelry, and personal belongings
Business interests and intellectual property

The key point is that ownership of these assets legally transfers from the deceased person to the new owners, creating both opportunities and responsibilities for beneficiaries.

The importance of planning cannot be overstated. Without proper planning, families often face unexpected financial hardship, lengthy court battles, and emotional stress during an already difficult time. A recent 2025 court case, Morden v. Niwranski, perfectly illustrates how disputes can tear families apart, especially when common-law partners are involved.

Overview of Canadian Inheritance Laws

Canadian inheritance laws vary by province, but they all follow similar basic principles. In Ontario, such laws aim to protect surviving spouses and children while respecting the deceased person’s wishes. However, these laws can create surprising outcomes for modern families.

Inheritance typically goes to people who had close relationships with the deceased. Ontario’s inheritance laws have specific rules about who qualifies as a “spouse” or “child,” which can surprise modern families with complex relationships.

Key features of Ontario’s inheritance system include:

Automatic rights for legally married spouses
Protection for minor children
Specific rules for common-law relationships
Court oversight of estate administration
Strict timelines for making claims

Unlike some countries, Canada doesn’t have a federal inheritance tax, but estates may face other financial obligations that affect how much beneficiaries receive.

Dying Without a Will

Intestate Succession

When someone dies without a will in Ontario, they die “intestate.” This triggers Ontario’s intestate succession laws, which follow a strict hierarchy to determine who inherits what. The Succession Law Reform Act sets out this order:

Surviving spouse receives the first $350,000 plus additional amounts based on family size
Children split the remaining estate equally
Parents inherit if there’s no spouse or children
Siblings receive the estate if the parents are deceased
Other relatives follow in a specific legal order

Important note: “Spouse” in Ontario means legally married partners only. Common-law partners, no matter how long they’ve lived together, have no automatic rights under intestate succession.

Legal Process and Implications

The intestate succession process in Ontario involves several critical steps that can take months or even years to complete:

Court Appointment: Someone must apply to become the estate trustee without a will (formerly called an executor or administrator). This person has the legal authority to manage the deceased’s assets and debts.

Asset Identification: All assets, debts, and financial obligations must be identified and valued. This includes bank accounts, real estate, investments, and personal property.

Creditor Claims: Outstanding debts must be paid before any distribution to the beneficiaries occurs. This can significantly reduce what beneficiaries actually receive.

Distribution Timeline: Ontario law requires specific waiting periods before assets can be distributed, protecting against unknown creditors or missing heirs.

The legal implications of dying intestate can be severe. Families may face unexpected tax bills, lengthy court processes, and outcomes that don’t reflect the deceased person’s actual wishes.

The Probate Process: Court Approval for Inheritance

Most inheritance situations require probate, which is Ontario’s legal process for validating wills and approving asset transfers. Here’s what happens:

Court Application: Someone applies to become the estate trustee (executor) either under a will or, if intestate, without a will
Will Validation: The court confirms the will is legally valid in cases where one exists
Asset Inventory: All assets and debts are identified and valued
Creditor Notice: Outstanding bills must be paid before distribution to the beneficiaries
Final Distribution: Beneficiaries receive their share according to the will or intestacy laws

Probate can take several months to years and involves court fees, which reduce the total amount beneficiaries actually receive.

Age Requirements for Inheritance in Ontario

Ontario has clear rules about when people can receive their inheritance:

Adults (18 and older): Can receive inheritance immediately after probate is complete and all legal requirements are met.
Minors (under 18): Cannot directly receive inheritance money or property. Instead, the inheritance goes into a legal trust managed by a trustee until the child turns 18. This protection ensures the money is properly managed during the child’s minority.
Special Circumstances: Some wills specify that beneficiaries must reach age 21 or 25 before receiving their full inheritance, even if Ontario law would normally allow distribution at 18.

Role of the Canada Pension Plan

The Canada Pension Plan provides important inheritance benefits that work differently from other assets. These benefits can significantly impact a surviving partner’s financial security.

Canda Pension Plan Survivor’s Pension: Available to both married spouses and common-law partners who meet specific criteria:

Must have lived together for at least one year
Provides monthly payments for life
The amount depends on the deceased’s Canada Pension Plan contributions
Can be combined with the survivor’s own Canada Pension Plan benefits

Canada Pension Plan Death Benefit: A one-time lump sum payment of up to $2,500 that helps cover funeral expenses. Canada Pension Plan death benefits go to the estate or the person who paid for the funeral, regardless of relationship status.

Canada Pension Plan Children’s Benefits: Monthly payments for dependent children under 18 (or up to 25 if attending school full-time). These benefits continue regardless of who has custody of the children.

The Pension Benefits Act

Ontario’s Pension Benefits Act governs how workplace pension plans handle inheritance, creating additional layers of protection for surviving partners.

Registered Pension Plans must follow specific rules:

Married spouses automatically receive survivor benefits unless they waive this right in writing
Common-law partners may qualify for survivor benefits if they meet the plan’s definition of spouse
Pension benefits typically bypass the estate and go directly to the surviving spouse

Locked-In Retirement Accounts (LIRAs) and Life Income Funds (LIFs) follow similar rules, ensuring pension money reaches the intended survivor rather than getting caught up in estate disputes.

Survivor Benefit Options vary by pension plan but typically include:

Immediate monthly payments for life
Reduced payments starting at a later age
Lump sum transfers to the survivor’s registered retirement account

Understanding these inheritance basics helps Ontario families make better estate planning decisions and avoid common pitfalls that lead to family conflicts and financial problems.

With that background introduction into an inheritance in Ontario, I want to discuss the special situation of Ontario inheritance law for common-law partners through a discussion of Giuseppe Lagana’s case in the recent Morden v. Niwranski court decision.

The Real Story Behind Ontario Inheritance Disputes

Giuseppe Lagana’s case perfectly illustrates how intestate succession can create family conflict. He sold his British Columbia home in March 2019 for $342,000 and moved to Ontario to start fresh with his new partner, Ingrid Niwranski. But when Giuseppe died in January 2021 without a will, that money became the centre of a bitter inheritance battle.

The question wasn’t simple: Who gets the $206,551 left in Giuseppe’s investment accounts? His estranged daughter, Amanda, or Ingrid, the woman he lived with for his final years?

This case reveals important truths about inheritance in Ontario that every family should understand.

Inheritance for Spouses and Common-Law Partners

Legal Rights and Considerations

The distinction between married spouses and common-law partners creates dramatically different inheritance outcomes in Ontario. Understanding these differences is crucial for anyone in a relationship.

Married Spouses enjoy comprehensive inheritance protection:

Automatic inheritance rights under intestate succession
Preferential right to apply as estate trustee
Protection against disinheritance through equalization claims
Spousal allowance during estate administration
Rights to the matrimonial home regardless of ownership

Common-Law Partners face significant inheritance challenges:

No automatic inheritance rights under Ontario’s Succession Law Reform Act
Cannot claim spousal support from the estate
No protection against being disinherited
Must prove their partner’s intention to leave them assets
Limited legal standing in estate disputes

The Morden v. Niwranski case shows how common-law partners can overcome these limitations through careful financial planning and clear documentation of their partner’s intentions.

Joint Accounts Can Override Inheritance Laws

Giuseppe and Ingrid opened joint investment accounts with “rights of survivorship.” This legal term means the surviving account holder automatically inherits the money, no matter what the inheritance laws say.

But courts don’t just accept joint accounts at face value. They want proof that the deceased person truly intended to give the money away.

The Legal Battle: Evidence vs. Family Ties

What Made This Inheritance Dispute Complex

The court had to answer a crucial question: Did Giuseppe really want Ingrid to inherit his money, or was she just holding it in trust for his estate?

Under Canadian inheritance law, there’s something called “presumption of resulting trust.” This means when someone puts another person’s name on their account, the law assumes they didn’t mean it as a gift—unless there’s strong evidence proving otherwise.

The Evidence That Won the Case

Ingrid didn’t just rely on the joint account paperwork. She brought compelling evidence:

Bank testimony: The financial planner who set up the accounts testified that Giuseppe was clear about wanting everything to go to Ingrid
Relationship proof: Giuseppe and Ingrid lived together as common-law spouses and referred to each other as husband and wife
Beneficiary designations: Giuseppe had already named Ingrid as beneficiary on his Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA)
Family estrangement: Giuseppe hadn’t spoken to his daughter Amanda since 2018

Why Amanda Lost the Inheritance Battle

Despite being Giuseppe’s biological daughter, Amanda couldn’t prove she deserved the inheritance. The court noted:

No communication with her father for years before his death
No financial support or gifts from Giuseppe in over a decade
Complete breakdown in their relationship

Lessons for Ontario Families

Don’t Assume Inheritance Rights

This case teaches us that inheritance isn’t just about blood relations. Ontario courts look at:

The deceased person’s clear intentions
The quality of family relationships
Proper legal documentation
Evidence of financial planning decisions

Protect Your Common-Law Relationship

If you’re in a common-law relationship in Ontario, take these steps:

Create joint accounts with rights of survivorship for shared assets
Update beneficiary forms on all registered investment accounts, insurance policies and don’t forget a registered retirement income fund
Write a will that clearly states your wishes
Keep good records of your financial decisions and conversations

Get Professional Help for Inheritance Disputes

Estate litigation battles are emotionally draining and legally complex. Professional estate trustees can help families navigate Ontario’s inheritance laws while protecting everyone’s interests.

Why This Ontario Morden v. Niwranski Case Matters

The Morden v. Niwranski decision shows that Ontario courts will look beyond family relationships to find the deceased person’s true intentions. Giuseppe’s clear actions—opening joint accounts, naming Ingrid as beneficiary, and living with her as his spouse—spoke louder than his biological connection to his daughter.

This ruling reminds us that proper estate planning protects the people we care about, not just those related by blood.

Common Questions About Ontario Inheritance Law

Q: Do common-law partners automatically inherit in Ontario? A: No. Only legally married spouses have automatic rights under Ontario law.

Q: Can joint accounts override a will? A: Yes, if properly set up with rights of survivorship, joint accounts pass directly to the surviving account holder.

Q: What happens if someone dies without a will in Ontario? A: Ontario’s intestacy laws determine who inherits, typically favouring married spouses and children over common-law partners.

Q: How can I protect my common-law partner’s inheritance rights? A: Create a will, use joint accounts with rights of survivorship, and update all beneficiary designations.

Professional Estate Administration in Ontario

At Ira Smith Trustee & Receiver Inc., we act as an independent court-appointed estate trustee under the business name Smith Estate Trustee Ontario. We’ve handled numerous estate disputes involving common-law partners, blended families, and complex estate situations. We serve as court-appointed estate trustees when families need independent, professional administration.

Whether you’re facing an estate dispute or want to protect your own family’s future, proper guidance makes all the difference. If you are facing a difficult estate administration in Ontario, contact us for a no-cost consultation.

Smith Estate Trustee Ontario provides professional estate administration services throughout Ontario. We specialize in complex estate disputes and court-appointed estate trustee services. Contact us for guidance on your specific estate situation.

Disclaimer: The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc., and any contributors do not assume any liability for any loss or damage.

Tags asset preservation, common-law partner inheritance in Ontario, estate disputes, estate litigation, estate trustee ontario, evidence requirements, inheritance, inheritance law Ontario, inheritance legal process, inheritance without a will, intestate succession Ontario, investment accounts, joint accounts in Ontario, joint accounts inheritance, Morden v. Niwranski, Ontario inheritance laws, resulting trust, smith estate trustee ontario, spouse inheritance rights

Brandon Blog Post

CONSUMER CREDIT COUNSELING ONTARIO: THE LICENSED INSOLVENCY TRUSTEE COMPLETE GUIDE TO LEGITIMATE DEBT HELP

Post author By Brandon Smith
Post date June 23, 2025

Consumer Credit Counseling: Introduction

Are you drowning in debt and don’t know where to turn? You’re not alone. Millions of Canadians struggle with overwhelming debt every year. The good news is that consumer credit counseling can help you get back on track.

But here’s the problem: not all debt advice is created equal. Some companies claim to offer consumer credit counseling, but they might not have your best interests at heart. This guide will help you understand the difference between legitimate help and potentially harmful advice.

What Is Consumer Credit Counseling?

Consumer credit counseling is professional advice that helps you manage your debt and improve your financial situation. A good credit counselor will:

Review your complete financial distress picture
Explain all your debt relief options
Help you create a realistic budget
Provide ongoing support, education and the opportunity for follow-up sessions after the initial counseling session
Connect you with appropriate debt solutions

The keyword here is “professional.” Real consumer credit counseling comes from trained, licensed professionals who follow strict rules and ethics.

The Hidden Dangers of Unregulated Debt Advisors

Here’s something most people don’t know: anyone can call themselves a “debt advisor” or “credit counselor” in Canada. There are no special licenses required, no training standards, and no limits on what they can charge you.

The Office of the Superintendent of Bankruptcy (OSB) – the government body that oversees debt professionals – has raised serious concerns about this unregulated marketplace. They’ve identified several types of businesses that prey on people struggling with debt:

Debt Advisors: The Middlemen You Don’t Need

These are individuals who work at for profit companies that charge you money to help with bankruptcy or consumer proposals. They often:

Collect your personal information
Give you basic debt advice
Refer you to a Licensed Insolvency Trustee (LIT)
Charge you thousands of dollars for this “service”

The problem? You can go directly to an LIT for free. You don’t need to pay a middleman.

Lead Generators: Selling Your Information

Lead generators advertise debt relief services online and on social media. When you contact them, they sell your information to LITs for a fee. While they usually don’t charge you directly, they often mislead you about:

Who they are
What services do they provide
Your actual debt relief options

Red Flags: How to Spot Potentially Harmful Debt Advice

The OSB has identified several warning signs that should make you think twice about a debt advisor:

1. They Claim to Be Licensed When They’re Not

Some debt advisors lie and say they’re Licensed Insolvency Trustees or that they can file for bankruptcy for you. This is illegal and can result in criminal charges. Only LITs can legally administer bankruptcies and consumer proposals in Canada. A consumer proposal is the only one of the various debt management programs approved by the Canadian government. Since it is under the provisions of the Bankruptcy and Insolvency Act, you could say that it is the only government program debt solution.

2. They Want Money Upfront

Legitimate consumer credit counseling often starts with a free consultation. Be very suspicious of anyone who demands thousands of dollars upfront, especially if they claim this fee is required to access government debt programs.

3. They Promise Guaranteed Results

No legitimate professional can guarantee specific outcomes. Every person’s financial situation is different. Be wary of claims like:

“100% approval guaranteed”
“We can eliminate your debt in 6 months.”
“Settle your debts for pennies on the dollar.”

4. They Push One Solution

Real consumer credit counseling involves reviewing ALL your options. If someone immediately pushes you toward bankruptcy or a consumer proposal without thoroughly reviewing your situation, that’s a red flag.

5. They Want You to Borrow More Money

Never borrow additional money to pay for debt advice. This will only make your financial situation worse.

The Real Cost of Bad Advice

Working with unregulated debt advisors can hurt you in several ways:

Financial Harm

You pay for services you could get for free
You might pay for duplicate services
Hidden fees can add thousands to your debt
You might end up in worse financial shape

Missed Opportunities

You will not get unbiased financial education
You might not learn about all your debt relief options
You could choose the wrong solution for your situation
You might miss out on legitimate programs that could help

Legal Problems

Some debt advisors engage in illegal practices
You might unknowingly participate in fraudulent activities
Your legitimate creditors might not get accurate information about your finances

The International Problem: Lessons from Around the World

The problem with unregulated debt advisors isn’t unique to Canada. Similar issues exist worldwide:

In Singapore, unregulated “debt consultants” charge people $1,000 to $5,000 to help them apply for government debt relief programs. Many people pay these fees only to discover they don’t qualify for the programs. Some firms even encourage people to borrow more money just to pay their consulting fees.

The Singapore government is now proposing laws to make it illegal for these firms to solicit bankruptcy clients, while exempting regulated professionals like lawyers and accountants.

This shows why it’s so important to work only with regulated professionals for consumer credit counseling.

Licensed Insolvency Trustees: Your Best Choice for Consumer Credit Counseling

In Canada, Licensed Insolvency Trustees (LITs) are the gold standard for consumer credit counseling. Here’s why:

They’re Highly Regulated

LITs must:

Complete extensive education and training
Pass rigorous examinations
Maintain ongoing professional development
Follow a strict code of ethics
Submit to regular government oversight

They’re Required to Be Honest and Impartial

Unlike debt advisors who might have financial incentives to push certain solutions, LITs must:

Provide accurate, complete information
Act in your best interests
Remain independent from outside influences
Give you unbiased advice about all your options

They Offer Comprehensive Services

An LIT provides everything you need for consumer credit counseling:

Free initial consultation
Complete financial assessment
Explanation of all debt relief options
Administration of bankruptcy or consumer proposals if needed
Ongoing counseling and support
Regulated, transparent fees

You Can Hold Them Accountable

If you have problems with an LIT, you can file a complaint with the OSB. This government oversight ensures LITs maintain high professional standards.

Your Debt Relief Options: What Real Consumer Credit Counseling Covers

A qualified professional should explain all these options for relief to you:

Non-Insolvency Options

Debt Consolidation: A debt consolidation loan is a way of combining multiple debts into one payment, often with a lower interest rate.

Debt Management Plans: Working with creditors to reduce payments or interest rates.

Budgeting and Financial Planning: Learning to manage your money better to avoid future debt problems.

Negotiating with Creditors: Sometimes, you can work directly with creditors to reduce payments or settle debts.

Insolvency Options

Consumer Proposals: A legal arrangement where you pay back a portion of your debts over time.

Bankruptcy: A legal process that eliminates most debts but has serious long-term consequences.

How to Find Legitimate Consumer Credit Counseling

Follow these steps to ensure you get quality help:

1. Verify Credentials

Always ask if the person you’re talking to is a Licensed Insolvency Trustee. You can verify their license on the OSB website.

2. Start with a Free Consultation

Legitimate consumer credit counseling typically begins with a free, no-obligation consultation. Don’t pay money just to learn about your options.

3. Get Everything in Writing

Any legitimate professional will provide written information about:

Your options
Fees and costs
The process involved
Your rights and responsibilities

4. Ask Questions

A good counselor will welcome your questions and provide clear, understandable answers about:

All available options
The pros and cons of each option
What the process involves
What will it cost
How will it affect your credit

5. Take Time to Decide

Don’t let anyone pressure you into making an immediate decision. Legitimate professionals understand that these are important decisions that require careful consideration.

What to Expect from Quality Consumer Credit Counselling Services

When you work with a legitimate professional, here’s what should happen:

Initial Assessment

Your counselor will review:

Your income and expenses
All your debts and assets
Your financial goals
Your family situation

Education and Options Review

You’ll learn about:

How you got into debt
All available solutions
The consequences of each option
How to rebuild your credit
How to avoid future debt problems

Ongoing Support

Good consumer credit counseling includes:

Regular check-ins on your progress
Adjustments to your plan as needed
Additional education and resources
Support through challenging times

Protecting Yourself: A Checklist

Before working with any debt advisor, ask yourself:

Are they a Licensed Insolvency Trustee?
Are they affiliated with a non-profit credit counselling organization?
Do they offer a free initial consultation?
Have they explained ALL my debt relief options?
Are their fees transparent and regulated?
Do they want money up front before providing services?
Are they pressuring me to make a quick decision?
Do they guarantee specific results?
Can I verify their credentials and reputation?

If you answer “no” to any of the first four questions, or “yes” to any of the last four, consider looking elsewhere for help.

When to Seek Consumer Credit Counseling

Consider getting professional help if you’re experiencing:

Difficulty making minimum payments on your debts
Using credit cards to pay for necessities
Only making minimum payments on credit cards
Considering bankruptcy
Feeling overwhelmed by your financial situation
Receiving calls from collection agencies
Having your wages garnished
Facing foreclosure or repossession

The sooner you seek help, the more options you’ll likely have.

The Bottom Line: Choose Wisely

Consumer credit counseling can be a lifeline when you’re struggling with debt; whether it secured or unsecured debt. But choosing the right money management help is crucial. Unregulated debt advisors can make your situation worse and cost you thousands of dollars you don’t have.

Licensed Insolvency Trustees offer the most comprehensive, reliable consumer credit counseling in Canada. They’re required by law to act in your best interests, provide complete information about all your options, and charge regulated fees.

Don’t let desperation drive you into the arms of unscrupulous debt advisors. Take the time to research your options and choose a regulated professional who can provide the quality consumer credit counseling you deserve.

Take Action Today

If you’re struggling with debt, don’t wait. The longer you wait, the fewer options you might have. Contact a Licensed Insolvency Trustee today for a free consultation.

At Ira Smith Trustee & Receiver Inc., we’ve helped thousands of Canadians overcome their debt challenges starting with honest, professional consumer credit counseling. We’ll review your complete financial situation, explain all your options, and help you choose the best path forward.

Remember: you don’t need to pay someone to access professional help. Real consumer credit counseling starts with a free consultation and continues with transparent, regulated services designed to get you back on your financial feet.

Free consultation available:

No obligation to proceed
Complete review of your debt and credit situation
Clear explanation of how debt solutions affect your credit score
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

Your financial future is too important to leave to chance. Choose regulated, professional consumer credit counseling and take the first step toward financial freedom today.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

Brandon Blog Post

CANADIAN BUSINESSES CHALLENGES AND OPPORTUNITIES IN 2025: A LICENSED INSOLVENCY TRUSTEE’S COMPLETE GUIDE

Post author By Brandon Smith
Post date June 16, 2025

Canadian Businesses Introduction

As a Licensed Insolvency Trustee firm serving the Greater Toronto Area for over 20 years, we’ve seen Canadian businesses go through many ups and downs. Right now, we’re facing some tough times that remind me of the beginning of the 2008-2009 financial crisis. But there’s more to the story than just bad news.

Let me share what I’m seeing on the ground and what it means for owners of Canadian businesses like yours.

Overview of the Canadian Business Environment

The Canadian business landscape in 2025 is complex. While some large corporations are doing well, many small and medium Canadian businesses are struggling. This creates a two-speed economy depending on company size, which affects different sectors in different ways.

Current Economic Indicators

Recent data from Statistics Canada shows mixed signals for Canadian businesses:

Corporate profits rose by $4.2 billion in Q1 2025
The Canadian Small Business Health Index dropped to 99.3
Canadian businesses’ delinquencies are at their highest since 2009
Credit demand from businesses has slowed significantly

These numbers tell us that while big companies might be profitable, smaller Canadian businesses are having a harder time. This gap is important because small businesses employ millions of Canadians and drive local economies.

Regional Differences Across Canada

Not all provinces are experiencing the same challenges. Ontario and British Columbia are seeing the biggest increases in Canadian businesses‘ financial stress:

Ontario business arrears have jumped by 19%
British Columbia business debt has risen by 20%
The Prairie provinces and Atlantic Canada are facing their unique challenges

These regional differences matter because they show how national policies and global events affect different areas of Canada in unique ways.

Key Economic Drivers

Several factors are shaping the Canadian business environment:

Energy Sector Impact: Canada’s energy sector continues to influence the overall economy, though renewable energy investments are growing.

Technology Adoption: Canadian businesses that adapted to digital tools during COVID-19 are generally performing better than those that didn’t.

Supply Chain Resilience: Companies with diversified supply chains are handling current challenges better than those dependent on single sources.

Challenges in the Canadian Business Landscape

Canadian businesses face several major challenges right now. Understanding these helps explain why so many companies are struggling with their finances.

Rising Business Delinquencies

The numbers are concerning. Canadian businesses’ delinquencies have reached levels not seen since the 2009 financial crisis. This means more companies are falling behind on their payments to suppliers, landlords, and lenders.

What does this mean for you as a business owner?

Cash flow problems become more common
It’s harder to get credit when you need it
Suppliers may demand payment up front
Your customers might pay you later (or not at all)

Impact of Trade Tensions

The ongoing trade dispute with the United States is hitting our interconnected trade relationship with the USA and, therefore, Canadian businesses hard. When politicians in Washington announce new tariffs or trade policies requiring a new agreement on trade, it affects your business here in Canada.

Here’s how trade tensions hurt Canadian business:

Supply Chain Disruptions: Products you need might be delayed or cost more. One business owner told me, “I never thought a tweet could shut down my supplies.”

Increased Costs: Tariffs make imported goods more expensive, which squeezes your profit margins.

Uncertainty: It’s hard to plan for the future when trade rules keep changing.

Customer Impact: Higher costs often mean higher prices, which can drive away customers.

Credit Market Tightening

Banks and other lenders are being more careful about who they lend money to. This creates a problem for Canadian businesses that need financing to grow or even survive.

Signs of credit tightening include:

Longer approval times for business loans
Higher interest rates
More paperwork and requirements
Smaller loan amounts are being approved

Regulatory and Tax Pressures

Many business owners feel overwhelmed by government regulations and taxes. While some rules protect workers and consumers, they can also make it harder to run profitable Canadian businesses.

Common regulatory challenges include:

Complex tax requirements
Employment standards compliance
Environmental regulations
Industry-specific rules and licensing

Lingering Effects of COVID-19

The pandemic changed how we do business, and some of those changes are still causing problems. Many Canadian businesses are still dealing with:

Higher operating costs
Changed customer behaviours
Staffing shortages
Debt taken on during lockdowns

Opportunities for Canadian Business Growth Strategies and Expansion

Despite the challenges, there are real opportunities for Canadian businesses that position themselves correctly. Smart business owners who are innovative leaders are finding ways to succeed even in tough times.

Digital Transformation Advantages

Canadian businesses that embrace technology are often doing better than those that don’t. The pandemic forced many companies to go digital, and those that did it well are seeing benefits.

Digital opportunities include:

E-commerce Growth: Online sales continue to grow, even as physical stores struggle.

Remote Work Benefits: Companies can hire talent from anywhere and reduce office costs.

Automation Savings: Technology can reduce labour costs and improve efficiency.

Better Customer Data: Digital tools help you understand your customers better.

Market Consolidation Opportunities

When times are tough, weaker competitors often exit the market. This creates opportunities for stronger Canadian businesses to:

Acquire competitors at lower prices
Hire experienced employees from failing companies
Take over market share from Canadian businesses that close
Negotiate better deals with suppliers

Government Support Programs

Various levels of government offer support programs for Canadian businesses. These can provide crucial help during difficult times:

Federal Programs:

Canada Emergency Business Account (CEBA) extension
Export development funding
Innovation grants and tax credits

Provincial Programs:

Ontario Small Business Support Grant
British Columbia Recovery Grant programs
Industry-specific support initiatives

Municipal Programs:

Property tax deferrals
Local development incentives
Small business support funds

Sector-Specific Growth Areas

Some industries are growing despite overall economic challenges:

Healthcare and Senior Services: Canada’s aging population creates opportunities in healthcare, home care, and senior services.

Green Technology: Government commitments to climate goals mean funding and opportunities for clean technology businesses.

Professional Services: As Canadian businesses face complex challenges, there’s a growing demand for legal, accounting, and consulting services.

Essential Services: Canadian businesses that provide necessities often remain stable during economic downturns.

When Canadian Business Financial Challenges Become Too Much

Sometimes, despite best efforts, Canadian businesses face financial problems that seem impossible to solve. This is where my expertise as a Licensed Insolvency Trustee becomes valuable.

Warning Signs to Watch For

If your business shows these signs, it’s time to get professional help:

Consistently late on payments to suppliers
Difficulty making payroll
Maxed out credit lines
Receiving demand letters or legal notices
Customers are complaining about delayed orders
Losing key employees due to unpaid wages

How Professional Help Can Make a Difference

As a Licensed Insolvency Trustee, I help Canadian businesses and their owners navigate financial difficulties. My services include:

Business Restructuring: Sometimes, a business can be saved with the right restructuring plan. This might involve negotiating with creditors, reorganizing operations, or finding new financing.

Asset Sales: If a business can’t continue, I can help maximize the value of its assets through organized sales processes.

Personal Insolvency Solutions: When business debts affect personal finances, I provide options like consumer proposals or personal bankruptcy to give owners a fresh start.

Creditor Negotiations: I work with creditors to find solutions that work for everyone involved.

Advisory Services: I provide actionable advice to develop a roadmap for you to follow, where there is a way for company management to carry out a self-help restructuring without resorting to a formal insolvency process.

The Importance of Acting Early

The earlier you seek help, the more options you have. Many business owners wait too long, thinking things will improve on their own. While optimism is important, it’s also crucial to be realistic about your situation.

Early intervention can:

Preserve more of your business value
Protect your personal assets
Maintain relationships with key employees and customers
Provide more restructuring options

Looking Forward: What Canadian Business Owners Should Do

The current environment is challenging, but it’s not hopeless. Here’s my advice for Canadian business owners:

Focus on Cash Flow Management

Cash flow is the lifeblood of Canadian businesses. In tough times, it becomes even more critical:

Monitor your cash flow weekly, not monthly
Speed up collections from customers
Negotiate better payment terms with suppliers
Keep detailed records of all financial transactions

Build Strong Professional Relationships

Having the right advisors can make all the difference:

Work with an experienced accountant
Maintain relationships with multiple lenders
Know when to consult with legal counsel to solve pressing legal issues
Have a Licensed Insolvency Trustee you can call if needed

Stay Informed and Adaptable

The business environment is changing rapidly. Stay informed about:

Government service support programs
Industry trends and opportunities
Regulatory changes that affect your business
Economic indicators that impact your sector

Plan for Multiple Scenarios

Don’t just plan for success – plan for different possibilities:

Best case: How will you handle rapid growth?
Worst case: What will you do if revenue drops significantly?
Most likely case: What’s your realistic path forward?

Canadian Businesses Conclusion

The Canadian business environment in 2025 presents both significant challenges and real opportunities. While business delinquencies are rising and credit markets are tightening, there are still paths to success for well-managed companies.

The key is to stay informed, act decisively, and seek professional help when needed. Whether you’re looking to grow your business or navigate financial difficulties, having the right support makes all the difference.

Free consultation available:

No obligation to proceed
Complete review of your Canadian business debt and credit situation
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help Canadian entrepreneurs with understand their options and find a path forward during financial challenges.

Tags business challenges Canada, business financial difficulties, business insolvency Canada, business restructuring Canada, canadian business, Canadian business environment, Canadian business landscape, canadian businesses, Canadian company, Canadian entrepreneurs, Company size, Greater Toronto Area insolvency trustee, growth strategies, Ira Smith Trustee, legal issues, licensed insolvency trustee, Ontario business, Toronto business advisor

Brandon Blog Post

CREDIT CARDS DEBT SOLUTIONS TORONTO: THE LICENSED INSOLVENCY TRUSTEE COMPLETE GUIDE

Post author By Brandon Smith
Post date June 9, 2025

credit cards debt

Understanding Credit Cards Debt

It has recently been reported in the Canadian media that Canadians living in the GTA, including Vaughan, Markham, Toronto, Mississauga and York Region are now falling behind in both mortgage payments and other debt payments, including credit cards. If you’re losing sleep over credit cards debt and wondering if another cup of coffee can fix insolvency, you’re in good company. Let me tell you about one potential client who decided to pay down her debt by selling everything but the kitchen sink (that story ends with a suspiciously clean living room and a little more dignity than she expected).

Credit cards debt isn’t just numbers—it’s late-night stress, broken sleep, and more apologizing to your barista than you’d like. But if you’re buried in statements, you need more than the usual advice you’ve heard a dozen times. In this Brandon’s Blog, I’m being real to give you some breathing room.

Before we dive into solutions, let’s be clear on what we’re dealing with. Credit cards debt isn’t just those numbers on your monthly statement—it’s a financial reality that affects millions of Canadians every day.

Definition and Basics

Credit cards debt occurs when you carry a balance from month to month instead of paying off your entire statement balance. Here’s how it works: when you make purchases with your credit card and don’t pay the entire balance by the due date, the remaining amount becomes debt. The credit card company then charges interest on this balance, and if you only make minimum payments, that interest compounds monthly.

In Canada, the average credit card interest rate sits around 19-29% annually. That means if you owe $5,000 and only make minimum payments, you could end up paying thousands more in interest over time. The math is brutal, but understanding it is your first step toward taking control.

Impact on Credit Score

Your credit cards debt directly affects your credit score in several ways. Payment history makes up 35% of your credit score—the biggest factor. Missing payments or making late payments can drop your score significantly. But there’s another sneaky factor: credit utilization.

Credit utilization is how much of your available credit you’re using. If you have a $10,000 limit and owe $7,000, you’re using 70% of your available credit. Experts recommend keeping this below 30%, ideally under 10%. High utilization signals to lenders that you might be financially stretched, which can hurt your score even if you’re making payments on time.

A damaged credit score doesn’t just affect future credit cards—it can impact your ability to get a mortgage, car loan, or even rent an apartment. Some employers and insurance companies also check credit scores.

Legal Consequences: Wage Garnishment and Account Levies

Here’s where things get serious. If you stop making payments entirely, credit card companies won’t just send stern letters forever. In Canada, they can take legal action to collect what you owe.

After several months of non-payment, your account typically gets sent to collections. If collection efforts fail, the creditor can sue you for the debt. If they win (which they usually do), they can obtain a court judgment. With this judgment, they can:

Garnish your wages: In Ontario, creditors can take up to 20% of your gross wages directly from your paycheck
Freeze your bank accounts: They can obtain a court order to freeze funds in your bank accounts
Place liens on property: In some cases, they can put a lien on your home or other assets

The good news? There are legal protections and exemptions. Certain types of income, like social assistance, employment insurance, and pensions, have some protection from garnishment. But don’t wait for it to get this far—there are always better options.

Causes of Credit Cards Debt

Understanding how you got here is crucial for making sure it doesn’t happen again. Let’s break down the main culprits behind credit card debt in Canada.

High Annual Percentage Rates (APR)

Canadian credit card interest rates are among the highest forms of consumer debt. While mortgage rates might be around 5-7%, credit cards typically charge 19-29% annually. Some store cards and cash advance rates can be even higher.

Here’s the kicker: credit card companies make most of their money from interest, not annual fees. They’re betting that you’ll carry a balance, and those high rates ensure they profit handsomely when you do. Even if you think you’ll pay it off quickly, life has a way of getting in the way.

Only Paying the Minimum

This is the credit card company’s favourite scenario. Minimum payments are typically calculated as a small percentage of your balance, often just 2-3%. On a $5,000 balance with a 20% interest rate, your minimum payment might be only $100.

But here’s the trap: most of that payment goes toward interest, not principal. You might pay $80 in interest and only $20 toward your actual debt. At this rate, it would take over 30 years to pay off that $5,000, and you’d pay more than $11,000 in total. The credit card companies designed it this way.

Poor Money Management

Let’s be honest,, without being judgmental, many Canadians never learned proper money management skills. Schools, until very recently, didn’t teach budgeting, and many families don’t discuss finances openly. You’re not alone if you’re figuring this out as you go.

Poor money management often looks like:

Not tracking spending or having a budget
Using credit cards for regular expenses without a payoff plan
Not understanding how interest compounds
Making financial decisions based on emotions rather than facts
Treating available credit as available money

The good news? These are all learnable skills, and it’s never too late to start.

Unexpected Expenses

Sometimes credit card debt isn’t about poor planning—it’s about life throwing you curveballs. Car repairs, medical expenses, job loss, or family emergencies can force you to rely on credit cards for survival.

In Canada, many people don’t have adequate emergency savings. Statistics show that nearly half of Canadians are within $200 of not being able to pay their bills each month. When unexpected expenses hit, credit cards become the only option. While this might be necessary in the moment, it can quickly spiral into long-term debt problems.

credit cards debt

Consequences of Credit Cards Debt

The impact of credit cards debt goes far beyond just owing money. It affects your entire financial life and, frankly, your overall well-being.

Financial Implications

The most obvious consequence is the financial cost. High interest rates mean you’re paying much more than the original purchase price. But the financial implications go deeper:

Opportunity Cost: Every dollar you pay in credit card interest is a dollar you can’t save, invest, or spend on things you need. If you’re paying $200 monthly in credit card interest, that’s $2,400 per year that could have gone toward building an emergency fund or saving for a down payment.

Reduced Borrowing Power: High credit card balances hurt your debt-to-income ratio, making it harder to qualify for mortgages, car loans, or other credit. Even if you do qualify, you might face higher interest rates because you’re seen as a higher risk.

Limited Financial Flexibility: When a large portion of your income goes to debt payments, you have less room to handle life’s ups and downs. A minor emergency can become a major crisis when you’re already stretched thin.

Compound Effect: Credit card debt can create a vicious cycle. High balances lead to high minimum payments, leaving less money for other expenses, which can lead to more credit card use, which increases balances and minimum payments.

Psychological and Physiological Impacts

Here’s what the financial industry doesn’t always talk about: debt stress is real, and it affects your health in measurable ways.

Mental Health Effects: Persistent worry about money can lead to anxiety and depression. Many Canadians report losing sleep over their finances. The constant stress of juggling payments, avoiding calls from creditors, and feeling trapped can take a serious toll on mental health.

Physical Health Impacts: Chronic financial stress doesn’t just stay in your head. It can cause:

Headaches and muscle tension
Digestive problems
High blood pressure
Weakened immune system
Sleep disorders

Relationship Strain: Money problems are one of the leading causes of relationship conflicts and divorce in Canada. The stress of debt can affect how you interact with family and friends. Some people become withdrawn, while others become irritable or defensive about spending.

Self-Worth Issues: Many people tie their financial situation to their worth. Debt can lead to feelings of shame, failure, or inadequacy. This emotional burden can make it even harder to take the practical steps needed to address the debt.

Decision Fatigue: Constantly worrying about money and making difficult financial choices can exhaust your mental energy. This can lead to poor decision-making in other areas of life, creating a cycle where stress leads to more problems.

The important thing to remember is that these impacts are real and valid, but they’re also temporary. As you work toward solving your debt problems, you’ll likely notice improvements in these areas too. Your mental and physical health matter just as much as your financial health—they’re all connected.

Credit Cards Debt Confessions from Rock Bottom: Facing the Debt Monster

If you’re staring at your credit card statements, feeling like you’re drowning in debt with no cash in sight, you’re not alone. Canadians everywhere are feeling the squeeze—rising living costs, job uncertainty, and hefty mortgages and car loans have pushed many to the edge. The stress is real, and sleepless nights are a common occurrence. But here’s the truth: the first step out of this mess is financial honesty—with a healthy dose of tough love.

“Being honest with yourself is the bravest first step out of a debt spiral.” — Lesley-Anne Scorgie

Step One: Brutal Honesty About Your Debt

Before you can build any debt management strategy, you need a clear picture of where you stand. Grab whatever works—a spreadsheet, a napkin, your phone—and list every credit card balance, interest rate, and minimum payment. No skipping, no sugarcoating. This is your financial reality check. Research shows that self-assessment and goal-setting are the cornerstones of effective financial planning.

List all debts (credit cards, loans, lines of credit)
Record each interest rate, especially the high ones
Note when the minimum payments are due

High-interest credit card debt can quietly drain your finances the fastest. Identifying which card is costing you the most is key—this is where your focus should go first.

Step Two: Ditch the Self-Blame, Start Planning

It’s easy to spiral into guilt or shame, but that won’t help you pay off a single dollar. Instead, channel that energy into actionable planning. Canadians’ confidence in repaying credit cards debt is slowly rising—45% now expect it will take six months or more to get out from under, down from 51% last year. That’s progress, and it starts with a plan.

Step Three: Pause All Non-Essential Spending

This is the tough part. Cutting out non-essential spending feels scary, but it’s a game-changer. Cancel subscriptions, skip takeout, and avoid impulse buys. Every dollar you save can go toward your minimum payments. Even small changes add up fast. If you’re worried about missing out, remember: this is temporary, and it pays off in the long run.

Step Four: Use Every Tool—Even Your Tax Refund

Over 70% of Canadians receive a tax refund. If you’re one of them, put that money straight toward your highest-interest debt. It’s a quick way to make a dent and boost your momentum. Research indicates that even a small windfall can help you break the cycle of minimum payments and mounting interest rates.

Real Talk: Stress Is Normal, But Action Is Powerful

Stress and sleeplessness are natural side effects of financial strain. Don’t beat yourself up. Instead, focus on what you can control: honest self-assessment, a clear debt management strategy, and a commitment to trimming expenses. Facing your debt monster head-on is tough, but it’s the only way forward. And remember, if you need help, there are professionals and programs ready to support you.

credit cards debt

The Great Cash Hunt: Squeezing Pennies From Stone (and Facebook)

If you’re a Canadian consumer worried about your credit cards debt and wondering where on earth you’ll find extra income, you’re not alone. The good news? There are more ways to squeeze cash from your current situation than you might think—even if it feels like you’re wringing water from a stone.

Unconventional Ways to Boost Cash Flow

Let’s get creative. Research shows that Canadian debt advice often starts with side hustles and decluttering. Have you considered picking up extra shifts at work or dusting off an old side hustle? Babysitting, dog walking, house cleaning, or even personal training can add up quickly. And don’t forget about that tax refund—over 70% of Canadians are owed money by the CRA. Even if you’re late, file those taxes! That refund could be the cash lifeline you need.

Extra shifts: Ask your employer for overtime or additional hours
Side hustles: Babysitting, dog walking, or cleaning for neighbours
Late tax filing: Don’t skip it—your tax refund might surprise you
Collect owed money: Follow up on bonuses or debts friends still owe you

Declutter With Abandon

Here’s where things get interesting. If it’s collecting dust, it’s potential debt relief. Look around: that old bike, the bread maker you never use, or the stack of video games from 2012. Platforms like Kijiji and Facebook Marketplace are full of buyers. This potential client sold a rare ’90s bike for double what she paid—sometimes nostalgia pays off in real cash.

“Every forgotten gadget or outgrown coat is a tiny step out of debt.” — Lesley-Anne Scorgie

Don’t underestimate the power of decluttering. Not only does it free up space, but it can also give you a quick cash injection. Research indicates that selling possessions is one of the most common ways Canadians improve cash flow in a pinch.

Strategic Cuts: Kill Non-Essential Spending

Now’s the time to go full-on military with your budget. Cancel unused subscriptions and memberships. Grocery shop with a plan—no more wandering the aisles and tossing random snacks into your cart. Buy only what you need, and aim for zero food waste. If you’re renting or leasing, avoid renewing unless it’s necessary. Every dollar saved is a dollar that can go toward your debt.

Subscriptions: Cut anything you don’t use weekly
Groceries: Shop with a list, buy in bulk, and cook at home
No new leases: Hold off on new car or apartment leases if you can

Remember, cutting recurring costs is more powerful than chasing random coupons. The goal is to redirect every spare dollar toward lowering your credit cards debt. As you chip away at your balances, you’ll start to see progress—and that’s the best motivation of all.

Avalanche, Not Snowball: Smarter Ways to Attack Credit Cards Debt

If you’re staring at a stack of credit card bills and feeling like you’re drowning, you’re not alone. Canadians everywhere are facing the same uphill battle, especially as interest rates stay higher and the cost of living squeezes every last dollar. But there’s a smarter way to dig out—one that doesn’t just chip away at your debt, but helps you save on interest and get ahead faster: the Avalanche Method.

Here’s the real talk: you must always make your minimum payments on every card. That’s non-negotiable. But if you can scrape together even a little extra, whether from a side gig, selling unused stuff, or cutting back on spending, throw every spare dollar at the card with the highest interest rate. That’s your financial enemy number one. This is the heart of the Avalanche Method, and it’s proven to save you more money than the popular “snowball” approach, which focuses on the smallest balance first.

Why does this work? Because interest rates on credit cards debt are brutal. By targeting the highest-rate balance, you slow the snowballing effect of compounding interest. Research shows that Canadians who stick to the Avalanche Method and stay ruthless about not adding new debt can see real progress in as little as 90 days. As Lesley-Anne Scorgie puts it:

“The avalanche method only works if you avoid new debt while attacking existing balances.”

That’s the catch. You have to be relentless. No new purchases, no “just this once” exceptions. If you’re serious about getting out of credit card chaos, every dollar counts—and every new charge sets you back.

But what if you’re still falling behind, even after cutting expenses and boosting your income? Don’t panic. This is when you pick up the phone and call your credit card companies. It might feel intimidating, but remember: they want to get paid. Explain your situation honestly and ask about options like:

Lowering your interest rates
Waiving late or over-limit fees
Setting up a hardship plan

Sometimes, just asking is enough to get a break. And if you hear about debt consolidation or balance transfer offers, listen up. These strategies let you combine your debts—possibly even other loans—into a single payment with a lower interest rate. That means more of your money goes toward the principal, not just the interest. But be careful: applying for too many new credit products can ding your score, and missed payments might make it tough to qualify for the best rates.

If you’re stuck, consider a Debt Management Plan (DMP) through a non-profit credit counselling agency. Research indicates that DMPs can slash your interest rates—sometimes down to zero—and help you pay off debt faster. It’s not a magic fix, but it’s a lifeline for many Canadians feeling overwhelmed by credit card chaos.

Bottom line? The Avalanche Method, paired with honest communication and smart debt management strategies, gives you the best shot at breaking free from high-interest debt. Stay focused, stay ruthless, and remember: you’re not alone in this fight.

credit cards debt

Last Stop: When DIY Doesn’t Cut It, Call the Credit Cards Debt Pros

Let’s be real—sometimes, no matter how hard you hustle, cut back, or negotiate, your debt just won’t budge. If you’ve spent 90 days throwing everything you’ve got at your credit cards debt and you’re still underwater, it’s time to consider a different approach. Don’t wait for disaster to strike. This is the moment to reach out for professional debt relief—and there’s no shame in that.

Here’s the truth: Licensed insolvency trustees are the debt pros. We’re not here to judge you or scold you for past mistakes. Instead, we offer expert, practical help tailored for Canadians facing tough financial realities. Research shows that specialized support from credit counselling agencies and insolvency trustees can make a world of difference when self-guided strategies just aren’t enough. They’ll walk you through your options, including the possibility of an Ontario consumer proposal—a formal arrangement that lets you pay back a portion of what you owe, and stopping those relentless collection calls in their tracks.

What’s a consumer proposal, exactly? Think of it as a structured alternative to bankruptcy, designed specifically for Canadians who need a lifeline. With a consumer proposal, you work with a licensed insolvency trustee to negotiate a manageable repayment plan with your creditors. This can mean lower monthly payments, frozen interest, and—best of all—peace of mind. It’s not a magic wand, but it’s a real, legal solution that can help you rebuild without the crushing stigma of bankruptcy.

Maybe you’re considering borrowing from family or friends to get by. If you go down this road, treat it like a real loan. Write out an agreement, set a clear repayment schedule, and stick to it. This isn’t just about protecting your relationships—it’s about building trust and accountability as you work toward debt relief.

One thing to keep in mind: if you’ve tried for a consolidation loan and been turned down, don’t keep reapplying in a panic. Each application can ding your credit score, making things even harder. Instead, focus on making progress for a few months, then try again if your situation improves.

Most importantly, know this: asking for expert help isn’t failure—it’s financial self-defence. As Lesley-Anne Scorgie puts it:

“Asking for expert help isn’t failure—it’s financial self-defence.”

So, if you’ve given it your all for 90 days and you’re still stuck, don’t let shame or fear hold you back. Connect with a licensed insolvency trustee or a reputable credit counselling agency. They’ll help you explore every option, from consumer proposals to debt management plans, and guide you toward a future where your money—and your life—are back under your control.

Credit Cards Debt: Conclusion

Free consultation available:

No obligation to proceed
Complete review of your debt and credit situation
Clear explanation of how debt solutions affect your Equifax credit score
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

credit cards debt

Brandon Blog Post

EQUIFAX CREDIT SCORE RESET TO ZERO? GTA DEBT RELIEF EXPERT REVEALS HIDDEN TRUTH

Post author By Brandon Smith
Post date June 2, 2025

Are you struggling with debt in Toronto, Vaughan, Newmarket, Mississauga, or anywhere else in the Greater Toronto Area? Your Equifax credit score might be telling a story you didn’t expect. As a licensed insolvency trustee serving the GTA, I’ve seen how credit score surprises can impact families when they need financial help most.

What is an Equifax Credit Score?

Your Equifax credit score is a three-digit number between 300 and 900 that represents your creditworthiness to Canadian lenders. Think of it as your financial report card—it tells banks, credit card companies, and other lenders how likely you are to pay back money you borrow.

Why Equifax Canada matters:

One of the two major credit bureaus (along with TransUnion)
Used by most major Canadian banks and lenders
Influences your ability to get mortgages, car loans, and credit cards
Affects the interest rates you’ll be offered

Understanding Equifax Credit Score Ranges

Here’s what your Equifax credit score means:

800-900 (Excellent): You’ll get the best rates and terms
720-799 (Very Good): Strong credit with good loan options
650-719 (Good): Average credit, decent loan terms available
560-649 (Fair): Below average, higher rates and fewer options
300-559 (Poor): Difficulty getting approved for credit

The reality for GTA residents: If you’re struggling with debt, your score might be in the fair or poor range. But here’s the shocking truth—sometimes even people with good financial habits face unexpected credit score problems.

The Shocking Truth About Equifax Credit Scores in Canada

Your Equifax credit score is more than just a number—it’s your financial passport in Canada. But what happens when that passport gets taken away without warning?

David Tregear from Victoria, BC, thought he was doing everything right. He paid his bills on time and lived debt-free for two years. Then he applied for a car loan and got rejected. When he checked his Equifax credit score, he couldn’t believe what he saw: ZERO. Not a low score—completely erased.

This isn’t a one-off story. It’s happening to Canadians across the country, including right here in the GTA.

How Your Equifax Credit Score Can Disappear (And Why It Matters)

Here’s what Equifax Canada doesn’t tell you: if you don’t use credit for about two years, they can reset your credit score to zero. No warning. No second chances. You become “unscorable.”

Why this matters for GTA residents:

Many Toronto-area lenders use Equifax Canada as their primary credit bureau
A missing Equifax credit score can block you from getting a mortgage, car loan, or even a credit card
TransUnion (the other major credit bureau) doesn’t have this same policy
Your financial options can disappear overnight

How to Access Your Equifax Credit Score

Online Access (Easiest Method):

Visit Equifax.ca and create a free account
Use the Equifax Canada mobile app for quick checks
Get one free credit report per year, plus monthly score updates with paid plans

Other Access Methods:

By phone: Call 1-800-465-7166
By mail: Send a written request to Equifax Canada
In-person: Visit Equifax Canada offices (limited locations)

For GTA residents: Online access is fastest, but if you’re dealing with serious debt issues, sometimes speaking to someone directly helps clarify your options.

Factors That Influence Your Equifax Credit Score

Understanding what affects your score helps explain why it might be low, or why it disappeared entirely:

Payment History (35% of your score)

Late payments hurt your score significantly
Missing payments for 30+ days show up on your report
Bankruptcy and consumer proposals appear here, too

Credit Utilization (30% of your score)

How much of your available credit are you using
Using more than 30% of your credit limit hurts your score
Maxed-out credit cards are major red flags

Length of Credit History (15% of your score)

How long have you had credit accounts
Average age of all your accounts
This is where the “unscorable” problem happens—no recent activity can reset your score

Types of Credit (10% of your score)

A mix of credit cards, loans, and mortgages
Shows you can handle different types of credit

Credit Inquiries (10% of your score)

Hard inquiries from loan applications
Too many inquiries in a short period hurt your score

The debt connection: When you’re overwhelmed by debt, multiple factors work against you—high utilization, missed payments, and desperate applications for more credit.

When Debt Problems Meet Credit Score Problems

As a licensed insolvency trustee in the GTA, I see clients facing double trouble: overwhelming debt AND damaged credit scores. Here’s what I’ve learned:

The Debt-Credit Score Cycle

When you’re drowning in debt, you might think avoiding credit is smart. But if your Equifax credit score gets reset to zero, rebuilding becomes nearly impossible. You can’t get approved for new credit to rebuild your score.

Comparing Equifax with TransUnion: Why It Matters

Key differences between Canada’s credit bureaus:

Scoring Models

Equifax: Uses a 300-900 range, focuses heavily on payment history
TransUnion: Also 300-900 range, but weighs factors slightly differently
Your scores may differ between bureaus based on which lenders report to whom

The “Unscorable” Problem

Equifax: Can reset your score to zero after about 2 years of inactivity
TransUnion: Doesn’t have the same reset policy
Result: You might be scoreable on one bureau but not the other

Lender Preferences

Some GTA financial institutions prefer Equifax
Others use TransUnion
Many check both, but if one shows “unscorable,” you might be denied

Why this matters for debt relief: When considering consumer proposals or other debt solutions, we need to understand which bureau lenders will check and plan accordingly.

How to Get Your Free Equifax Credit Report

Step-by-Step Guide:

Visit Equifax.ca and click “Get My Free Credit Report.”
Verify your identity with personal information
Answer security questions based on your credit history
Review your report carefully for accuracy
Download or print for your records

Protecting your information:

Only use the official Equifax.ca website
Never give your SIN over unsolicited phone calls
Review reports regularly for identity theft signs
Dispute errors immediately

Red flag for GTA residents: If you can’t access your report online or get “insufficient information” errors, you might be facing the “unscorable” problem.

Tools for Improving Your Equifax Credit Score

If You Can Still Get Credit:

Pay bills on time: Set up automatic payments
Lower credit utilization: Keep balances under 30% of limits
Don’t close old accounts: Length of history matters
Limit new applications: Each inquiry temporarily lowers your score

If You’re Struggling with Debt:

Don’t ignore the problem: Credit scores recover faster than you think with proper help
Consider debt consolidation: One payment instead of many
Explore the consumer proposal process: Can eliminate up to 80% of debt while protecting assets
Understand bankruptcy options: Sometimes it’s the fastest path to rebuilding credit

Premium Equifax Services

Equifax Complete™ Family Plan:

Monthly credit score updates
Credit monitoring and alerts
Identity theft protection
Costs around $25-35/month

Equifax ID Patrol™:

Advanced identity monitoring
Dark web scanning
Recovery assistance if identity is stolen

My recommendation for debt-struggling families: Free credit reports are sufficient while you’re getting your finances back on track. Save the monthly fees for debt payments instead.

The Role of Credit History in Your Financial Recovery

How Long-Term Credit Behaviour Affects Your Options

Good credit history before debt problems:

Makes you a better candidate for debt consolidation loans
Can help negotiate better terms with creditors
Provides more options for financial recovery

Poor credit history:

Doesn’t disqualify you from debt relief options
Consumer proposals work regardless of credit score
Bankruptcy in Ontario provides fresh start opportunities

The “unscorable” situation:

Creates unique challenges but doesn’t eliminate options
May require secured credit cards to rebuild
Licensed insolvency trustees can provide specific guidance

Real Stories from GTA Clients

I’ve helped families in Toronto, Vaughan, Newmarket, Scarborough, Brampton, and North York who discovered their Equifax credit score issues only when applying for debt consolidation loans. By then, their options were limited, but never eliminated.

Your Equifax Credit Score and Debt Solutions: What You Need to Know

Consumer Proposals and Your Credit Score

If you’re considering a consumer proposal in Ontario, here’s how it affects your Equifax credit score:

A consumer proposal shows as an R7 rating on your Equifax credit report
This stays on your report for 3 years after completion
It’s better than bankruptcy (R9 rating), which stays for 6-7 years
You keep your assets while getting debt relief

Bankruptcy and Credit Rebuilding

For some GTA residents, bankruptcy is the best fresh start option:

First-time bankruptcy typically lasts 9 months in Ontario
Your Equifax credit score will rebuild faster than you think
We help clients understand the credit rebuilding process from day one

Protecting Your Equifax Credit Score: Practical Tips for GTA Residents

Monitor Your Score Regularly

Check your Equifax credit score every few months
Look for the “unscorable” warning before it’s too late
Keep one small credit account active if you can manage it responsibly

Know Your Rights

Equifax Canada must investigate disputes within 30 days
You can add a consumer statement to your credit file
Provincial and federal agencies can help with serious issues

Don’t Wait Until It’s Too Late

If you’re struggling with debt in Toronto, Vaughan, Mississauga, Markham, or anywhere in the GTA, don’t wait for credit problems to compound your debt problems.

Red Flags: When to Seek Help with Debt and Credit Issues

Contact a licensed insolvency trustee if you’re experiencing:

Minimum payments that barely cover interest
Using credit cards for basic expenses like groceries
Considering payday loans or high-interest alternatives
Credit applications are being denied due to debt levels
Stress about money is affecting your daily life

How We Help GTA Residents Navigate Debt and Credit Challenges

As your local licensed insolvency trustee, I provide:

Free Consultations

Review your complete financial situation
Explain how debt solutions affect your Equifax credit score
Discuss all options before you make any decisions

Personalized Debt Solutions

Consumer proposals that can reduce debt by up to 80%
Bankruptcy protection when it’s the right choice
Credit rebuilding guidance throughout the process

Local GTA Knowledge

Understanding of Ontario employment standards and exemptions
Connections with local credit counselling services
Knowledge of the GTA housing market impacts on financial decisions

The Bottom Line: Don’t Let Credit Score Confusion Add to Your Debt Stress

Your Equifax credit score is important, but it shouldn’t control your life. Whether your score is perfect, damaged, or mysteriously missing, there are always options for Canadians struggling with debt.

David Tregear’s story shows us that even people who think they’re doing everything right can face credit surprises. Don’t let debt problems and credit score issues compound each other.

Frequently Asked Questions About Equifax Credit Scores and Debt

How do debt problems relate to Equifax credit score problems?

Debt problems and low Equifax credit scores often form a difficult cycle. When overwhelmed by debt, individuals may miss payments (hurting payment history), use a high percentage of their available credit (increasing utilization), and potentially apply for more credit, leading to multiple inquiries. If, in an attempt to manage debt, someone stops using credit entirely for about two years, their Equifax score can reset to zero, making it almost impossible to rebuild credit through conventional means.

Can a consumer proposal improve my Equifax credit score?

A consumer proposal will initially lower your Equifax credit score, but it provides a clear path to rebuilding credit while eliminating unmanageable debt.

How long does it take to rebuild credit after bankruptcy?

Most clients see their Equifax credit score improve within 12-18 months of discharge with proper credit rebuilding strategies.

Should I check my Equifax credit score if I’m already in debt trouble?

Yes. Understanding your current credit situation helps determine the best debt relief strategy for your specific circumstances.

Can I get a mortgage in the GTA after a consumer proposal?

Many clients successfully obtain mortgages 1-2 years after completing a consumer proposal, often with better terms than they had while struggling with debt.

Take Action Today

If you’re a GTA resident dealing with overwhelming debt, don’t wait for your credit situation to get worse. As a licensed insolvency trustee serving Toronto, Mississauga, Brampton, Markham, and surrounding areas, I’m here to help you understand your options.

Free consultation available:

No obligation to proceed
Complete review of your debt and credit situation
Clear explanation of how debt solutions affect your Equifax credit score
Practical next steps you can take immediately

Remember: Your current financial situation doesn’t define your future. With the right help and information, you can overcome both debt challenges and credit score problems.

Remember: The earlier you seek help for company insolvency concerns, the more options you’ll have.

If you or someone you know is struggling with too much debt, remember that the financial restructuring process, while complex, offers viable solutions with the right guidance. As a licensed insolvency trustee serving the Greater Toronto Area, I help entrepreneurs understand their options and find a path forward during financial challenges.

If any of this sounds familiar and you’re serious about finding a solution, reach out to the Ira Smith Trustee & Receiver Inc. team today for a free consultation. We’re committed to helping you or your company get back on the road to healthy, stress-free operations and recover from financial difficulties. Starting Over, Starting Now.

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