Category: Brandon Blog Post

Welcome to our weekly blog on financial matters focusing on debt, debt reduction and alternatives to bankruptcy. Our blog is written by our Senior-Vice President, Brandon Smith, who is a licensed trustee in bankruptcy, hence the title, Brandon’s blog.

Brandon writes on topics of interest for individuals and businesses. We hope that you enjoy Brandon’s blog, visit every week to see the new Brandon’s Blog and spend time on our website learning from the information we provide about bankruptcy, debt consolidation, debt settlement, consumer proposals, restructuring and receivership. We also hope you will spend some time on our website – www.irasmithinc.com, finding out more about our Firm and people.

At Ira Smith Trustee & Receiver Inc., we want to help people for Starting Over, Starting Now, living a debt free life.

Categories
Brandon Blog Post

CREDIT REPORT FROM EQUIFAX: HOW THIS ONTARIO TEACHER’S CREDIT SCORE TOOK AN AWFUL MASSIVE HIT TO ZERO

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Credit report from Equifax: What is the Equifax Credit Score?

A credit report from Equifax Canada Co. shows your recent credit history as well as the Equifax credit score. This credit score is the most widely recognized one in Canada. It is used to determine an individual’s creditworthiness and is used for a host of purposes, including the ability to get a mortgage or credit card. This score is commonly used as a predictive model for lending decisions.

Equifax Canada is one of two credit bureaus in Canada. The other one is TransUnion Canada. Each one uses their own proprietary credit model to produce a credit score on you using their credit scoring algorithms. Consumer credit reports are not always accurate. It is up to you to make sure that it is. But even when you notice something strange it is not always so easy to quickly clear up an obvious error.

In this Brandon Blog, I will tell you the story of Angela Monaghan, an Ontario high school teacher. I will tell you how a very rare error caused her two years of grief when her credit score took a massive credit score drop down to zero!

Credit report from Equifax: What is a Consumer Credit Reporting Agency?

Consumer credit reporting agencies are businesses that collect and analyze information from customers of other businesses, primarily companies that have extended credit to you, but also from public records. The CRA’s primary goal is to provide you with an accurate and complete report of your credit information and its protection.

What is your credit report from Equifax?

You should know what goes into your credit report from Equifax Canada Co. or TransUnion Canada and how your financial behaviour may impact you and your credit. When you think of credit, you should think of Equifax Canada Inc. and TransUnion Canada. They are the two Canadian credit bureaus that hold your Equifax credit report, which is a snapshot of your credit history.

They provide information about what you owe, who you owe it to and what your balances and payment history look like. In addition, their databases reflect your consumer behaviour and determine the risk level associated with any individual that a credit report is requested for because you are applying for any type of credit and permitted that bank or company to do a credit check on you.

A credit report normally includes:

  • your name
  • age and current address
  • your job and where you work
  • what debts you have
  • your paying habits (do you usually pay on time or are your payments late, do you only make minimum payments)

A credit report does not include: a bankruptcy discharged more than 7 years ago unless you have declared bankruptcy more than once. Your credit report, summarizing all this information into a consumer credit score, affects your ability to get credit, which can affect your ability to buy a car or home.

The Ontario Consumer Reporting Act (OCRA) is the legislation that regulates consumer credit reporting in Ontario.

credit report from equifax
credit report from equifax

What is the Ontario Consumer Reporting Act?

The Ontario Consumer Reporting Act (OCRA) is the provincial legislation that regulates consumer credit reporting in Ontario. The OCRA creates the rules under which a consumer reporting agency operates. Examples are:

  • how a consumer’s credit report can be used
  • when someone can request a credit report
  • what consumers can do if their files contain any wrong or incomplete information and many more issues are covered by this provincial law.

OCRA recognizes that businesses, landlords and employers need to have the correct information.

At the same time, it makes sure that:

  • agencies collect, maintain and also report your debt and personal information sensibly and as accurately as possible
  • your right to recognize what is being reported concerning you and also to whom
  • your right to remedy details regarding yourself that are inaccurate.

A party who is convicted of purposefully supplying a consumer reporting business with false or incorrect or deceptive information could be fined up to $25,000 or sent to prison for up to 1 year, or both.

Credit report from Equifax: The Angela Monaghan TransUnion Canada story

A Tiny, Ont. high school teacher, Angela Monaghan still keeps in mind the moment she went to her neighbourhood Canadian Tire in the summer season of 2019. She went there to make an application for a new store credit card to use for expenses related to the school orchestra.

The request was promptly rejected. The application had been flagged because according to her credit file, she recalls the Canadian Tire employee, matter-of-factly stating that she was dead.

The one that had actually passed away was her late husband who had passed away from cancer. Yet as she tells her story, she later uncovered a reporting mistake that indicated she, rather than her late husband, had been declared as dearly departed on her TransUnion credit record by a reporting error.

As soon as the consumer reporting agencies are alerted of someone’s death, they position a death notice on their credit report. This step is meant to stop identity theft. However incorrect death reports do take place periodically. Identity thieves and other criminals always try to use a deceased person’s identity for their own illegal gain.

It took her virtually 2 years from when she became aware of and reported the error to TransUnion to have it officially and fully corrected. During that time, she claims she needed to cope with a TransUnion credit report of zero!

Credit report from Equifax or TransUnion: Be proactive

What happened to Angela Monaghan is very frustrating. After the loss of her husband, this is the last kind of trouble she needed. But you can be proactive. You don’t have to wait until you apply for credit to find out if there is an error on your credit report.

The consumer reporting agencies allow you to apply for your own credit report once a year for free.

How Do I Get My Free Credit Report?

You can request your free credit history report by one of several techniques: credit report by phone, by mail or in person. If you’re asking for your credit report by phone, you will need to enter your Social Insurance Number. You’ll need to send acceptable identification validating that you say who you are and your mailing address if you are asking the credit bureau by mail. Photo identification such as your driver’s licence can identify both you and your current home address at the same time. This is one type of acceptable documents.

Everyone qualifies to receive a free credit report annually from each of the two Canadian credit report reporting companies.

How do I confirm my identity?

In addition to the above, identity confirmation is done by responding to a series of individual and financial questions, where one of the possible answers to each question is a fact about yourself. They will only send you your free credit report by mail.

How much does it cost to order my credit report?

As I already stated, Equifax Canada and TransUnion Canada each allow you to order your credit report once annually for free. So if you really wanted to stay on top of reviewing the information the credit bureaus have on you, you could order from each of them once a year, 6 months apart.

credit report from equifax
credit report from equifax

Correct an inaccuracy on your Equifax credit report: How do I dispute my credit report from Equifax?

Credit reports matter. Let us assume that you have been checking your credit report from Equifax regularly and you find something you believe is a credit report error or potential inaccuracy and should be removed from your file. The error can be as drastic as the one Angela Monaghan had or something a little less distressing, yet still troubling. If you find such an error, you need to initiate an investigation.

What are the steps to dispute information on your credit report from Equifax? There are two ways to submit your dispute info to Equifax for free – online submission or by mail. You of course have to file supporting documentation to prove your dispute is valid.

Once you’ve successfully filed your dispute by mailing the Credit Report Update Form or completing the Equifax Online Dispute, there will be an investigation of your dispute. When reviewing your dispute, if they can make changes to your credit report based on the information you provided, they will do so.

People ask me how long will my investigation take? Equifax states that their dispute process is completed in 5-20 business days. However, they also say that due to COVID-19, investigations and dispute resolutions are experiencing longer than normal processing times for dispute investigations. After their investigation is complete, a confirmation letter or email will be sent to you with the results and outcome of the investigation.

We see their time estimate is not always accurate. It took Angela Monaghan two years to correct the fact that she was not deceased! If you dispute an item and the investigation did not resolve the dispute, you have the right to add a statement to your credit file that is 400 words or less, free of charge, explaining the nature of your dispute.

Spot identity theft early. Review your credit reports.

Inaccuracies on credit reports can be simple errors, or much worse, you could be a victim of identity theft. So much of our financial lives and financial history is stored in computer databases. Computer hackers steal and sell such personal information which is why identity theft continues to be on the rise. As a matter of fact, an Equifax data breach by hackers took place from mid-May through July 2017. Amongst the stolen information were Social Insurance numbers.

With such theft, thieves use your personal information to open up credit card or loan accounts, run up each credit card balance to their respective credit card limit to purchase goods and never pay a cent. When the debts go into arrears, you start getting calls from collection agencies and your credit rating takes a drastic reduction. One of the more common signs of identity theft is a credit card opened up in your name without your knowledge. Having this happen to you could be devastating to you, especially if you have a consistent payment history of paying your credit card in time every month and all of your other debts on time.

It is up to you to confirm that you are not the one who opened these accounts. It is a painstaking and sluggish procedure. You will most likely have to ask for a copy of the real application from the financial institution and match up your genuine signature against the one given on the application to confirm it was not you. It will certainly take some time, however ultimately, you will get it corrected.

There is also one more means to keep up to date with what is happening with your credit report from Equifax, however, it will cost you some cash.

What is credit monitoring?

If you use credit cards, you may one day either be or know someone who is, a victim of identity theft. Bank cards and other types of credit scams are a serious problem, as well as one that is promptly growing as more individuals utilize plastic, including debit cards, e-Transfers or online bill payments to settle their debts. A credit tracking solution can help you stay one step ahead of credit card fraud.

Both Equifax and TransUnion, along with many credit card issuers and financial institutions, provide credit report monitoring solutions. Equifax calls their product Equifax credit watch™. Transunion Canada also has a subscription-based credit monitoring service.

These solutions monitor your credit activity and give you a regular report with alerts after certain updates to your credit file, such as a credit inquiry. If fraud is suspected, you will get an initial fraud alert.

You can think about using this service if you:

  • believe you’ve been the victim of fraud;
  • if you have actually been affected by an information breach; or
  • you just wish to guard in real-time against identity theft.

This service will help you see if somebody is trying to apply for credit in your name. You will be able to spot identity theft in more or less real-time. However, you usually are required to spend money to get this type of protection. Monitoring things twice a year using your free credit reports in most cases should be enough for the average person.

credit report from equifax
credit report from equifax

Credit report from Equifax summary

I hope that you found this credit report from Equifax Brandon Blog informative. Many people feel that they are trapped in a cycle of credit card debts, unsecured lines of credit, tax debt and generally an unmanageable level of debt. Some of this may have come about because you are a victim of identity theft. You may want to do something about those debts but you aren’t sure what to do.

If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

credit report from equifax
credit report from equifax
Categories
Brandon Blog Post

DEBT MANAGEMENT IN ONTARIO PLAN: HOW TO GET A METICULOUS ONE TO WORK FOR YOU IMMEDIATELY

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

debt management in ontario
debt management in ontario

What is debt management in Ontario?

The term “debt management in Ontario” can mean a lot of things to Ontario residents. There are debt management companies that offer a range of services, from credit counselling to debt settlement. In Ontario, these organizations offer their debt management services exclusively to individuals and not to businesses. Debt management is a process that helps you manage your debt and get it under control. A debt management program can only be successful if the person also learns new behaviours in how they deal with money and debt.

WARNING: The Canadian government has put out a consumer alert. This alert, titled Consumer Alert: What you need to know when getting help to pay off debt or repair your credit, warns Canadians about unscrupulous debt settlement companies and what you need to know. In many Brandon Blogs, I have also put out that same warning. There are only two choices when seeking the right credit counsellor to review your alternatives to deal with out-of-control unsecured debt, including tax debt. Legitimate debt management services in Ontario are provided via two types of specialists: accredited community-based non-profit credit counselling agencies and federal government accredited and supervised licensed insolvency trustees.

I recognize that debt is a huge issue for many people in Ontario and all of Canada. Most individuals do not also understand the massive influence it can have on them but trust me, it is all too genuine. In this Brandon Blog post, I review the different alternatives readily available to people looking for debt management in Ontario.

What is debt management in Ontario plan?

A debt settlement plan (debt management plan or DMP) is a tool supplied by a non-profit credit counselling agency that can help you get control of your money and back on course to living the debt-free life you wish to lead. Your dedicated credit counsellor can help you identify if becoming part of a DMP is appropriate for you. If not, the non-profit credit counsellor can lay out all your available alternatives.

For hard-working people who struggle to meet their monthly bills, a debt management plan might be the answer. Under the terms of a DMP, a person consolidates all of their unsecured debt under one plan. This plan, developed by any one of the many qualified counsellors, usually involves making a single regular payment, a monthly payment, under a debt repayment program, to the credit counselling service. The non-profit accredited credit counselling agency then distributes this money to creditors.

This kind of repayment plan can take normally as long as 5 years to pay off 100% of your unsecured type of debt, but it can also be the solution that allows a person to become debt-free quickly. It’s important to note that such an informal debt management in Ontario plan may not be the best option for everyone.

What to consider before you sign up for debt management in Ontario

There is one major thing to consider before you sign up for a DMP. Before you take out a DMP, you want to make sure that you are in a position that allows you to pay off your debt without the assistance of your creditors.

In a DMP, you are promising to pay your creditors 100% of the principal you owe them when entering into the debt management plan, with no reduction from the total owing. So you need to have established a realistic budget working with your credit counsellor, for the entire DMP period showing you will be able to afford to maintain the monthly payment you are promising to make.

Will creditors continue to contact me while I’m on a Debt Management Plan?

debt management in ontario
debt management in ontario

Most people view the DMP as merely a temporary solution until you have paid off all debts. But in fact, if done properly and taken seriously, it is a legitimate solution and behavioural modification program. If you learn the budgeting skills and accept the financial advice in the program and follow them as a permanent change to your money management behaviour, it will allow you not only to focus on paying down your debt load while you are in the program but teach you the necessary skills to not get into financial crisis in the future. You will have the money to make each regular payment to pay off your normal bills and live a financially healthy life.

Once you’ve signed up for a DMP, your credit counsellor will communicate with your unsecured creditors to advise that you are under their program and that payments to creditors will be coming from the non-profit credit counselling agency. Your unsecured creditors will note that in their respective files and focus their communications to be with the debt management program credit counselling agency.

Does debt management in Ontario hurt your credit?

Most people entering a program for debt management in Ontario are on the financial edge of the ledge already. If they default on their debts, it will produce a lower credit score. While a DMP will lower your credit score at first, in the long run, if you keep up with the program and stick to your payment schedule and make your debt payment plan payments on time as agreed, your credit score will eventually improve.

Do I have to give up my credit cards in debt management in Ontario Program?

The question of whether you need to give up your credit cards in a DMP is among the most common inquiries we get asked by debtors. The answer is although there is no law that says you must surrender your bank card for financial debt management in Ontario plan, you do need to quit borrowing. This includes using your existing credit cards.

However, you can still utilize a secured credit card up to the limit you set with your financial institution that issued it. More likely though, the credit card firm will certainly remove your account once they obtain notification of your DMP.

When you’ve effectively finished your financial debt management in Ontario program, you will become eligible for a normal credit card once more.

What to do during your debt management plan

The Canadian government recommends that you:

  • ask the credit counselling agency for timely written reports on the status of your plan,
  • keep good records of all amounts you pay to the agency, and
  • get receipts of all money you pay to them as well as regular reports of amounts they pay to your unsecured creditors for you.

Carefully review your records and the regular reporting you receive from the agency. Ensure they are paying your creditors on time. This will keep you clear of any type of late fees or further adverse notations on your credit report.

debt management in ontario
debt management in ontario

What are the disadvantages of debt management in Ontario plan?

There are a few possible drawbacks to hopping on a DMP. However, in my view, they are not enough to stop you from doing one if you can afford it. The disadvantages are also common to any debt settlement in Ontario plan.

In no particular order, they are:

  • It won’t cover every one of your outstanding debts. DMPs typically won’t include your secured debts and some unsecured debts, such as student loans. This is especially true if you are still in university or college, have not finished your course of study and need to continue to apply for student loans because you wish to continue either as a full-time or part-time student.
  • Credit counsellors can guide you but will have to take your secured debt payments into account when establishing your monthly budget. You’ll typically need to manage those debts on your own. If you do not have any money left over each month after accounting for secured debt payments, rent or mortgage, food, income tax and other essential monthly purchases, then a DMP will not be possible for you.
  • There could some service charges to pay for the DMP.
  • As indicated above, no real accessibility to credit.

During the initial counselling session, the credit counsellor can help you review your realistic options. Perhaps you can still qualify for an Ontario debt consolidation loan. Keep in mind that if that is an option, you will need to be mindful of the effective interest rate you will be paying on your loan, albeit at an annual rate much less than on your existing debt.

If neither a DMP nor a debt consolidation program are viable debt consolidation options or debt settlement options for you, then you will need to explore with a licensed insolvency trustee the other debt relief options of either a consumer proposal or bankruptcy to eliminate your unsecured debt.

How long can you legally be chased for debt in Ontario?

The answer is two years. A Judge of the Ontario Superior Court of Justice In Bankruptcy and Insolvency recently released a decision. It was an appeal from the decision of a Master sitting in the same court. The case was about the issue of a claim which is statute-barred under the Ontario Limitations Act.

Section 4 of this Act says that you cannot enforce an outstanding debt for a claim the creditor has after 2 years from when the claim was discovered. This includes the day on which a creditor initially should have recognized they had a claim which called for enforcement.

This case was about a creditor filing a proof of claim in a debtor’s personal bankruptcy. The licensed insolvency trustee disallowed the claim because the claim was statute-barred. The creditor appealed the Trustee’s decision to the Master sitting in bankruptcy court. The creditor argued that although legal action cannot be taken on the debt, it does not mean that the debt still does not exist. The Master dismissed the creditor’s appeal and upheld the Trustee’s decision.

The creditor then appealed the Master’s decision to a Judge sitting in the same court. The Judge reviewed the matter and upheld the Master’s decision.

What this decision says is that not only can a debtor not be chased for a debt if no legal action was commenced within the 2 year period, they can’t even file a proof of claim in the debtor’s consumer proposal or bankruptcy!

However, keep in mind that just because it is no longer a legal debt, the creditor would have made a notation with the credit bureau for your credit report before the two-year period ended. So the damage to your credit score has already taken place.

Can a Trustee do a debt management plan?

The answer is a Licensed Insolvency Trustee can do for you the equivalent of a DMP. Consumer proposals can only be administered by a Trustee. Consumer proposals are also the only federal government-approved debt settlement plan in Canada. To be equal to the result of a DMP, you would offer to your unsecured creditors to pay them 100% of all the unsecured debt that you owe. Remember, above I stated that a DMP pays 100% of your unsecured debt.

There are many similarities between a consumer proposal and a DMP if you offer 100%. But as I indicate below, you can still have a successful consumer proposal by offering less than 100% to settle all of your unsecured debts. For details on how a consumer proposal works, check out my Brandon Blog, CONSUMER PROPOSAL FAQ: ANSWERS TO 10 TANTALIZING CONSUMER PROPOSAL QUESTIONS.

debt management in ontario
debt management in ontario

Which is better? A debt management plan In Ontario vs consumer proposal

Everyone’s financial situation is unique. A DMP will not be as harmful to your credit score as with a consumer proposal, nor will it jeopardize any of your assets as with bankruptcy. You’ll also gain money management skills that can help you in the long term and avoid debt in the future. But if you cannot get an Ontario debt consolidation service loan or a debt management plan is not appropriate for you, then there is another formal option that avoids bankruptcy.

In a consumer proposal, you will also gain money management skills. In addition to your no-cost initial consultation, there are also 2 mandatory credit counselling sessions with an accredited credit counsellor in the Trustee’s office. In a DMP, you need to pay 100% of your unsecured debt. In a consumer proposal, the amount you need to pay is calculated against what your unsecured creditors can expect to receive from your bankruptcy. In most cases, it will be much less than 100%. On average, you can expect to only repay about 25% of your total outstanding unsecured debt, including any tax debt.

A consumer proposal is for any person that owes $250,000 or less, other than for any loans secured against your principal residence. If you owe more than this limit, or your company owes too much debt, then you can still get debt relief under a different proposal section of the Bankruptcy and Insolvency Act (Canada) (BIA).

Bankruptcy is of course the very last option anyone should consider. This should be considered only if you do not have the necessary cash flow to successfully complete any debt management plan.

So what is best for you? Give me a phone call and I will let you know whether debt management in Ontario plan or a proposal under the BIA is better for you. I will tell you at no cost to you.

Debt management in Ontario summary

I hope that you found this debt management in Ontario Brandon Blog informative. Many people feel that they are trapped in a cycle of credit card debts, unsecured lines of credit, tax debt and generally an unmanageable level of debt. You may want to do something about those debts but you aren’t sure what to do.

If you have any debts they can be overwhelming because they are so much money and you don’t know how to deal with them. There are various debt management plans available that can help you reduce the amount of money you owe and help you deal with your debts.

If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Categories
Brandon Blog Post

HOW LONG DOES PROBATE TAKE IN ONTARIO? 7 QUESTIONS NEWBIE ONTARIO ESTATE TRUSTEES ARE EMBARRASSED TO ASK

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

How long does probate take in Ontario introduction

If you are handling property that was left by the deceased, either in a will or without a will, the legal procedure to deal with it is called probate. There is even more to the procedure of probate than simply doling out what the person wanted his or her beneficiaries to have.

There are regulations on:

  • Who can fulfill the role of Estate Trustee?
  • The process of the court of probate.
  • The rules determining how estate assets to be separated between property that must be probated and property that does not need to go through probate.
  • How to deal with property and claims after probate has been granted.
  • Dealing with claims against the Estate, especially competing claims.
  • Completing the necessary final personal income tax return and any other outstanding returns, the Estate tax return and dealing with Canada Revenue Agency (CRA) on various personal income tax and estate tax issues.
  • Understanding the terms of any life insurance policy or policies on the life of the deceased, advising the insurer of the death and determining who the life insurance proceeds should be paid to depending on the beneficiary designations.
  • The overall duties of the Estate Trustee.
  • Knowing how long does probate take in Ontario?

There are many questions about probate applications and more about the whole probate process that arise when someone dies and their financial situation needs to be understood, dealt with and their property distributed in accordance with their wishes as laid out in their will. It becomes even more of a challenge when the person dies without a will, which is called dying intestate.

Many times the named Estate Trustee is a close relative or trusted friend. They may have zero experience in acting as an Ontario Estate Trustee. They take on the role out of a sense of love for and obligation to the deceased. Many times they are either embarrassed to ask the estate lawyer questions because they believe they are too rudimentary and they should already know the answer. Sometimes they don’t ask the questions because they do not wish to incur the legal fees each time.

The purpose of this Brandon Blog is to answer the question, how long does probate take in Ontario and the 6 other most frequently asked questions we find people ask us in our role as Estate Trustee in our Smith Estate Trustee Ontario business.

how long does probate take in ontario
how long does probate take in ontario

What is probate in Ontario?

This is a very common question. It is actually the first question; the second one is how long does probate take in Ontario? Probate in Ontario is a legal process asking the court to:

  • give an individual or company the authority to work as the Estate Trustee of an estate.
  • Verify the authority of a person or company identified in the deceased’s will as the Estate Trustee.
  • Formally approve that the deceased’s will is their valid last will.

How long does probate take in Ontario: What you will need to apply

To make probate applications to the court for probate you will require to submit documents needed as set by the Estates court regulations. It includes:

  • A certified true copy of the deceased’s original will if any.
  • If it exists, any addition or supplement that describes modifies or withdraws a will in whole or in part
  • Proof of Death by a copy of the Death Certificate.
  • the fully completed court forms which amongst other things, provide details regarding the nature, extent and valuation of the assets of the deceased at the date of death and calculates the probate fees, otherwise known in Ontario as Estate Administration Taxes. You have probably heard names like death tax or probate fees. In Ontario, the proper name is Estate Administration Tax.

This is the beginning of the probate process.

how long does probate take in ontario
how long does probate take in ontario

What is a Probate Certificate? Is a Probate Certificate Required?

Here are two probate Ontario FAQs in one! A person could make an application to the Estates court for a Probate Certificate if the:

  • Deceased individual passed away without a will.
  • Deceased’s will does not name an Estate Trustee.
  • Financial institutions or other 3rd party wants evidence of a person’s legal authority to deal with the financial assets of the deceased which does not automatically pass to one more person by right of survivorship. Joint bank accounts, as long as the other name(s) on the accounts were not minors, would automatically pass to the other joint owners without having to through the application for probate through the Estates Court, otherwise known as the Probate Court.
  • List of assets includes real estate where the real property does not automatically pass to one or more individuals because of joint ownership.
  • Stakeholders disagree concerning the appointment of the Estate Trustee or any claim that the named Estate Trustee has a conflict or is otherwise not capable or qualified to act.
  • Parties disagree or there may very well be a prospective disagreement regarding the legitimacy of the deceased person‘s will or some beneficiaries called in the will are not able to supply lawful authorization.

May times just being able to comb through the documents of the deceased to get the necessary information extends how long does probate take in Ontario.

How long does probate take in Ontario? Is a probate certificate always required?

Many people do not realize that a probate certificate is not always required in the Province of Ontario. For example, it is not required if all Estate assets are being transferred to another person through the right of survivorship because they were owned jointly or the beneficiary was a designated beneficiary under an insurance policy. In this case, probate is not required.

Examples of when probate is required, even if the deceased has a valid will are:

  • It does not name an Estate Trustee (formerly called an Executor or Executrix) and a personal representative cannot be found.
  • An Estate Trustee is named but that person has recused themselves and refuses to act.
  • There is Estate property that will not automatically flow to another person due to the right of survivorship or being named as the designated beneficiary in a life insurance policy.
  • It will be necessary to gain control over financial assets or real property and be able to convey them.
  • A vesting order from the Court may be required to transfer ownership upon the sale of Estate assets.

What Happens After Probate is Granted?

After the grant of probate is when the fun really starts. That is when most of the activities of the Estate Trustee really happen like:

  • Putting parties on notice regarding estate assets, property before probate that the Estate Trustee identified.
  • Collection of the property or making sure that jointly owned property is properly transferred.
  • Identifying and paying all rightful claims against the Estate before making any distribution to the beneficiaries.
  • Making sure that no beneficiary or 3rd party is contesting the will or the actions of the Estate Trustee.
  • Final tax return preparation and filing.
  • Dealing with insurance companies.
  • Making sure the correct probate fees have been paid.
  • Understanding the Estate law issues or going to the Estate lawyer for advice when unsure.
  • Handling the entire Estate administration process properly.
  • Estate tax return preparation and filing and all the other activities I have already mentioned above.

All of this is before coming up with a scheme of distribution to the beneficiaries and getting either their unanimous approval or if opposed, an Order from the court approving the proposed distribution. It is important for an Estate Trustee to make sure that they have the proper authority to take the actions they need to and that nobody is opposing the Estate Trustee’s actions.

If an Estate Trustee oversteps their powers or is challenged and found to have been in the wrong, they have a personal liability to the Estate and the stakeholders. As you can see, it helps to have experience in the administration of estates.

So the Estate Trustee better get it right! In smaller Estates, this can be done relatively quickly. In larger Estates, especially if there are many contentious issues, how long does probate take in Ontario can be very elongated.

how long does probate take in ontario
how long does probate take in ontario

How long does probate take in Ontario for a large estate vs a small estate?

How long does it take to prepare a probate application? Once all of the facts are properly collected, it is a matter of hours to prepare and finalize all of the necessary documentation. The probate application can all be submitted online.

How long does it take to grant probate? The delay between filing the application and grant of probate varies greatly from Court registry to Court registry. In smaller regions, it does not take long at all. Historically in the Toronto region, without a court order requesting the court to expedite the issuance of the Certificate of Appointment of Estate Trustee, it could take many long months.

The probate process in Ontario can be either a larger or smaller legal process experience, depending on each unique situation. Estates in Canada that are valued at over $150,000 are covered by the larger probate process. The larger process is really the one that historically was in place in Ontario.

Since April 1, 2021, the province of Ontario has a new estate designation, a “small estate“. A small estate is for the probate legal process when it is valued at $150,000 or less. You can use a streamlined procedure if you are requesting probate of an estate that fits this definition.

If your application meets the requirements, is properly completed and all necessary documents are attached, the court will provide a probate certificate for a small estate. This certificate is referred to as a Small Estate Certificate. The certificate will provide you with the authority to take care of the estate assets that are listed in the certificate.

As this provision just went into place, I don’t have any statistics yet to report on whether or not this will positively affect how long does probate take in Ontario. If the deceased owned a house in their name only in the Greater Toronto Area with equity of at least $150,001, it will not speed things up.

How long does probate take in Ontario? Ontario allows probate applications by e-mail

What is the modification? The court has chosen to permit electronic submissions which are suggested to address the relentless stockpile issues. It also is part of a bigger campaign by the government to update the probate process in Ontario.

As I have stated above, the application for a Certificate of Appointment of Estate Trustee is part of the wider probate process. Allowing applications via email, which started in October 2020, is a reaction to both the backlog and the new truths forced upon the Ontario Superior Court of Justice Estates List section due to the new realities on how the court must adapt to operate in the COVID-19 pandemic era.

With any luck, this will quicken how long does probate take in Ontario.

How long does probate take in Ontario summary

I hope you found how long does probate take in Ontario Brandon Blog post helpful. If you are concerned because there is an Estate that needs a professional Estate Trustee, Smith Estate Trustee Ontario can help you. Since we are also a licensed insolvency trustee firm, we can also help if the deceased Estate is insolvent. We can also help if you or your business have debt problems.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

how long does probate take in ontario
how long does probate take in ontario
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Brandon Blog Post

4 PILLARS LAWSUIT GETS GIGANTIC APPROVAL TO PROCEED FROM COURT OF APPEAL FOR BRITISH COLUMBIA

NOTE: On January 13, 2022, three settlement agreements were approved by the Honourable Justice Mayer of the British Columbia Supreme Court on January 29, 2021, and November 15, 2021. As a compromise of disputed claims, these settlements are not an admission or finding of liability by the settling Defendants. You can read all about the Settlement Administration Plan and how to file a claim by CLICKING HERE to read our latest 4 Pillars blog.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

4 pillars lawsuit
4 pillars lawsuit

The 4 Pillars lawsuit class-action

In my November 25, 2019, Brandon Blog titled “HOW DOES DEBT RELIEF WORK: APPARENTLY NOT GREAT 4 EVERYONE“ I wrote about the litigation involving 4 Pillars Debt and Credit Restructuring Company, 4 Pillars Consulting Group Inc. and other entities (4 Pillars or the 4 Pillars lawsuit), Pearce v 4 Pillars Consulting Group Inc., 2019 BCSC 1851.

Mr. Pearce is suing for damages for the fees billed by 4 Pillars to all persons that paid fees to it in British Columbia in connection with: (i) a consumer proposal under the Bankruptcy and Insolvency Act (Canada) (BIA); or (ii) an informal debt settlement negotiation proposal with the individual’s creditors, all after April 1, 2016.

Mr. Pearce claims that it is appropriate for the refunding fees paid, damages for alleged losses stemming from breaches of the provincial Business Practices and Consumer Protection Act (BPCPA) and BIA, and damages based upon the claim that the fees billed were unscrupulous under section 8 of the BPCPA.

In this Brandon Blog, I describe what the 4 Pillars lawsuit is all about and why the Court of Appeal for British Columbia has allowed it to proceed as a class action proceeding, dismissing the 4 Pillars objections.

4 Pillars lawsuit: What is a class action proceeding?

As part of that litigation, Mr. Pearce applied to the BC Court to have his litigation turned into a class action proceeding. The Court ruled that there were enough grounds for his legal action to move forward as a class-action claim. As can be expected, 4 Pillars objected to that motion. They also unsuccessfully argued that certain sections of the claim should be stricken.

4 Pillars appealed that decision to the Court of Appeal for British Columbia. On May 17, 2021, the Court of Appeal for British Columbia released its decision. In this Brandon Blog, I discuss the appeal, what the appeal court had to say and what it decided in the 4 Pillars lawsuit appeal.

4 pillars lawsuit
4 pillars lawsuit

Debtor Warning – Debt Consultants Sometimes Not What They Appear

What 4 Pillars say their organization’s role is

4 Pillars states that they are professionals who provide a variety of services specific to individuals in debt. They say they outline the choices readily available and also walk people through the procedure. They say that your financial debt settlement will likely be one of the following, which they will manage on your behalf:

  • informal debt settlement
  • consumer proposals
  • bankruptcy

They also say they will work with the person on their aftercare. They also say that their role ranges from providing individual debt settlements on behalf of debtors with collection agencies and their creditors to negotiating with Licensed Insolvency Trustees (individually a Trustee, Bankruptcy Trustee or LIT) on behalf of a debtor in determining the terms of a consumer proposal.

What the Court of Appeal for British Columbia says about the role of 4 Pillars

The Court of Appeal described them this way:

  • 4 Pillars sell their debt restructuring services as debt advisors to individuals on the brink of insolvency who are seeking debt restructuring. They are unlicensed and charge fees above those professionals who are licensed and regulated.
  • Their debt consulting business is not licensed or registered, and they charge customers fees up‑front for services regardless of whether the appellants actually achieve any debt relief.
  • Their debt consulting services are:
    • to meet and work with consumers who are struggling with debt;
    • to help them draft a consumer proposal to present to a LIT:
    • and to engage in back and forth discussions with the LIT in efforts to have the LIT agree to a consumer proposal that is favourable to the debtor.
  • All of these services are provided with the goal that the LIT will then present the consumer proposal to the debtor’s creditors.
  • 4 Pillars may then provide input, on the debtor’s behalf, on any response or request from the creditors.

4 Pillars lawsuit: What do the 4 Pillars debt consultant’s services actually involve?

Just to remind you, this is what the lower BC Court and the Court of Appeal for British Columbia found the 4 Pillars services to be:

  • to meet and work with consumers who are struggling with debt;
  • to help them draft a consumer proposal to present to a LIT:
  • and to engage in back and forth discussions with the LIT in efforts to have the LIT agree to a consumer proposal that is favourable to the debtor.
  • Provide input, on the debtor’s behalf, on any response or request from the creditors.
  • They charge customers fees up‑front for services regardless of whether the appellants actually achieve any debt relief.
  • Charge fees above those professionals who are licensed and regulated.

This is very common amongst all the debt restructuring businesses. It is questionable what value they provide if any at all. Their business model preys on people’s fears of getting advice straight from Licensed Insolvency Trustees.

The services described above a LIT provides at no additional cost above and beyond what the government-approved tariff fee is. The reality is that you do not need the 4 Pillars Consulting Group Inc.

As a LIT, I provide financial advice regarding your unmanageable debt and if you are a candidate for informal debt settlement, I will tell you exactly what to do in our no-cost initial consultation. If you have too much personal debt and are not a candidate for an informal settlement, I have many times prepared consumer proposals that work. As part of that process, I also act as a licensed credit counsellor.

4 pillars lawsuit
4 pillars lawsuit

Is Debt Settlement Really Worth It?

Debt settlement is really worth it. Going to one of these unscrupulous debt settlement companies, instead of a licensed insolvency trustee for debt settlement is NOT.

If you’ve been struggling with debt, it’s time to consider debt settlement through a consumer proposal with the services of a LIT. It likely won’t sound appealing at first, and you may feel that you are taking a gamble, but the process of debt settlement can be incredibly beneficial to you. Keep in mind that even 4 Pillars introduce you to a LIT in order for you to relieve yourself of your debts, hopefully through a consumer proposal process.

A consumer proposal is the only government-approved debt relief program. A LIT can get you a true debt settlement, without having to pay extra unnecessary fees to any of the debt relief companies.

Now let’s see what the Court of Appeal for British Columbia had to say about this 4 Pillars Consulting debt restructuring services business’s appeal from the lower court decision.

Class action waiver not effective to resist class action certification

The Court of Appeal of British Columbia believes the class action waiver clause is unenforceable as being contrary to public policy. The class action waiver significantly interferes with the administration of justice. It would have the effect of precluding class action lawsuits.

It has the impact of precluding Mr. Pearce, and class participants, from having access to justice and to a dispute resolution procedure in accordance with the law for claims developing from the connection between these parties. Therefore, the class action certification was upheld.

4 pillars lawsuitOther grounds of appeal in the 4 Pillars lawsuit

Having reviewed the evidence filed in respect of 4 Pillars’ applications for summary dismissal and after considering their arguments, the lower court judge was not satisfied that Mr. Pearce’s arguments in the 4 Pillars lawsuit, that 4 Pillars was acting for, or representing, a debtor in arrangements or negotiations with their creditors is bound to fail.

The evidence suggested that 4 Pillars had a role in the negotiations between a debtor and their creditors regarding a consumer proposal – even if they were not directly engaged with creditors.

The lower court’s view was there is a genuine issue to be decided at trial on a full evidentiary record. Accordingly, the judge dismissed the 4 Pillars attempt to strike the portions of the pleadings in respect of the Plaintiffs’ claims under the BPCPA.

The Court of Appeal for British Columbia agreed that it will be necessary to have a trial to figure out if claims can occur from offences of the BIA. Therefore, 4 Pillars was likewise unsuccessful in getting this issue stricken from the 4 Pillars lawsuit.

Trouble ahead for 4 Pillars in Ontario and elsewhere because of the class action in British Columbia?

It will be very interesting to see how this class action 4 Pillars lawsuit winds its way through the BC court. Absent an appeal to the Supreme Court of Canada, it is now game on. Mr. Pearce and all members of the class have the green light to continue the litigation. If successful, it goes to the heart of the 4 Pillars business model. Every franchisee across Canada needs to worry.

I hope you found this 4 Pillars lawsuit Brandon Blog informative.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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Brandon Blog Post

NRA IN THE NEWS UPDATE: MY CANADIAN VIEW OF THE DECEPTIVE NRA BANKRUPTCY CASE DISMISSAL

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

NRA In The News: Why did the NRA file for bankruptcy?

The National Rifle Association (NRA) is America’s gun advocacy organization being the gun rights champion of Second Amendment rights. This independent organization promotes the right to bear arms. Last January 15 it filed for bankruptcy. The bankruptcy declaration did not expose that it was in a financial mess. The NRA, which is known for its aggressive efforts to lobby against gun control laws, filed not because of its financial condition, but for a different reason.

In my January 20, 2021 blog titled: NATIONAL RIFLE ASSOCIATION FILES FOR BANKRUPTCY ANNOUNCES PLAN TO MOVE TO TEXAS FOR FREEDOM, I described why it made its voluntary petition bankruptcy filing under Chapter 11 of the United States Federal Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas in Dallas.

In that Brandon Blog, I described why New York Attorney General Letitia James filed a lawsuit looking to dissolve the National Rifle Association, the largest most significant pro-gun organization in the USA. Attorney General James claims the organization with financial misconduct and unlawful conduct including financial abuses, spending millions of dollars on things like personal expenses, personal trips and other questionable expenditures. The purpose of the NRA bankruptcy filing was to dissolve itself in New York State while evading prosecution. It then planned to reincorporate in the State of Texas.

Recently, NRA in the news arose again. This time it was because a federal Bankruptcy Judge dismissed the NRA bankruptcy case. This permits New York to proceed in its initiative to dissolve the gun-rights group for alleged fraud and abuse.

In this Brandon Blog, I describe the NRA in the news bankruptcy filing case and its dismissal and what would happen in a similar Canadian insolvency case.

NRA in the news: How might bankruptcy help the NRA reincorporate?

When a person or company makes insolvency filing, that generally stops actual or pending litigation while giving more time to analyze exactly how to manage the financial difficulties. In Canada, the stoppage of lawsuits is called a “stay of proceedings”. However, in Canada, the stay of proceedings just relates to lawsuits for the collection of a debt.

Litigation, such as the pending lawsuit of the New York attorney general against the NRA, has nothing to do with proving or collecting on a debt. Rather, it is to prove that laws have been broken. My view is that in Canada, if the insolvency filing was not thrown out entirely, such as it was in this case, for sure the government would be able to get leave of the court to either begin or continue its litigation.

So the powerful gun-rights group thought that if it filed its voluntary Chapter 11 bankruptcy petition for bankruptcy protection, it could buy itself the time it needed to dissolve, stop the New York State legal action and then reincorporate in the gun-friendly state of Texas.

nra in the news
NRA in the news

NRA in the news: Is bankruptcy justified?

Concurrent with its bankruptcy filing, the NRA stupidly made a public statement that it isn’t insolvent or bankrupt saying it is in “its strongest financial condition in years.” This was not a very smart thing to do, as the US Bankruptcy Code is to help insolvent people and companies. That is just begging for a bankruptcy dismissal.

In Canada, in order to do a traditional bankruptcy filing under the Bankruptcy and Insolvency Act (Canada) (BIA), the debtor must be insolvent. The BIA defines an insolvent person as an individual or company who:

  • is not bankrupt;
  • who lives, carries on business or has assets in Canada;
  • whose debts owing to creditors that are provable claims total at least one thousand dollars, and also:
    • for any type of reason unable to pay their debts when due;
    • has stopped paying liabilities in the regular course as they usually come due; or
    • the aggregate of the property is not, at a fair assessment, enough, if sold at a properly conducted sale, to pay off all debts currently or about to become due.

A licensed insolvency trustee should not accept an assignment in bankruptcy from anyone filing bankruptcy from a party whose Statement of Affairs shows they are not insolvent and if accepted, should not be allowed by the Office of the Superintendent of Bankruptcy. A court would certainly not make a Bankruptcy Order in such a situation.

Since the NRA stated that it was not insolvent, which is a condition precedent to file under the US Bankruptcy Code, you can see why NRA in the news for its voluntary bankruptcy petition in the face of the New York Attorney General litigation was very controversial. That is what US bankruptcy experts thought as they predicted that under US bankruptcy law, the court would agree with the opposition by the Justice Department to the NRA bankruptcy plan.

However, there are times when bankruptcy proceedings are appropriate. First, you need to start with the basic premise that the individual, business or company is insolvent. Bankruptcy is one of the more drastic ways people can address their financial problems. It’s a complex topic, and you need to know that there are options other than bankruptcy that can address your situation.

A licensed insolvency trustee can advise you of your options. Some of the factors that may influence whether you should file for bankruptcy or one of the debt settlement options available under the BIA include:

  • How much you owe;
  • How long you owe;
  • The terms of your loan and other debts;
  • Your ability to repay;
  • The presence of co-signers;
  • What are your assets and liabilities;
  • Steady employment or self-employment income;
  • How you’ve previously handled your debts;
  • Your age and employment situation; and
  • Your future plans.

This list is by no means exhaustive, but it is a good start. The Canadian insolvency system is designed to give the honest but unfortunate debtor a fresh start in life.

NRA in the news: Judge Dismisses NRA Bankruptcy Case, Heightening Risk For Dissolution Of Group

Given the Justice Department’s legal challenge to the NRA filing, there needed to be a bankruptcy trial. The controversial NRA has had a rough few years in the media, with everything from their pro-guns stance to their lack of concern about the deaths of American schoolchildren being brought up. However, it seems their woes are not over yet.

NRA in the news arose yet again. Federal Judge Harlin Hale dismisses the NRA Chapter 11 bankruptcy case due to the fact that he viewed the bankruptcy as not filed in good faith. Judge Harlin stated that he believed the NRA’s objective in filing bankruptcy is much less like a typical bankruptcy case in which a debtor is faced with financial problems, such as a judgment that it cannot pay off. Rather, it was filed in bad faith like instances in which courts have discovered bankruptcy was filed for gaining an unfair advantage in litigation or to avoid a regulatory scheme.

The ruling followed a lengthy 12-day bankruptcy trial in Dallas, Texas. NRA president, Wayne LaPierre, acknowledged keeping the NRA into Chapter 11 bankruptcy filing secret without the understanding or acceptance of the majority of the group’s 76-member board of directors as well as various other top officers.

Could this happen in Canada? Definitely. When a filing is made or a Bankruptcy Order made under the BIA either by/against a person or company and it is shown that the filing/Bankruptcy Order ought not to have been made, the court has the authority to either annul the bankruptcy, set aside a Bankruptcy Order or otherwise terminate the proceedings.

Each situation will rest on its own unique set of factors. In general, if it can be shown that the debtor was not insolvent but the filing was done for some other purpose, such as in the NRA Chapter 11 bankruptcy, the court can annul the bankruptcy filing. The same is true if it is shown that the filing was not made in good faith or that the debtor was attempting to commit fraud on the creditors.

nra in the news
NRA in the news

NRA in the news: NRA Bankruptcy Case Is Dismissed. What Happens Next?

With the bankruptcy case of the NRA dismissed, the NRA says it plans to re-file the case in September. The NRA says that the documents filed in court do not reflect the true financials of the association and that the organization has fallen victim to an anti-gun group that is bent on destroying it. The NRA now claims the Chapter 11 filing was to get out from under its debts that it could not pay.

We shall see what transpires next. In the meantime, New York Attorney General Letitia James is free to pursue the NRA. No doubt we will see NRA in the news soon again.

NRA in the news summary

I hope you enjoyed the NRA in the news Brandon Blog post. A bad faith insolvency filing is luckily rare in Canada. However, something like the NRA filing could happen. Canadian courts have the ability to either annul or set aside a filing by a non-insolvent debtor filed for a fraudulent purpose or to misuse the Canadian insolvency system.

Are you worried because you just lost your job through no fault of your own? Is your business dealing with substantial debt challenges and financial problems due to your largest customer failing to perform and pay your company? Do you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

nra in the news
nra in the news
Categories
Brandon Blog Post

LAURENTIAN UNIVERSITY IN SUDBURY: THE LAURENTIAN FEDERATED UNIVERSITIES SUFFERED A CRUSHING DEFEAT

laurentian university in sudburylaurentian university in sudbury

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast

Laurentian University in Sudbury introduction

As widely reported, Laurentian University in Sudbury had federation agreements with the University of Sudbury, Thorneloe University and Huntington University (also known as the Federated Schools or federated universities). These three northern Ontario institutions are each an independent university offering university credits through certain courses that Laurentian University students took.

The reason for the federation agreements, which also had a companion Grant Distribution and Services agreement, is because these three colleges did not have full provincial status to register students, handle the admission to programs, confer degrees or receive provincial funding. Everyone benefitted from the arrangement.

The colleges were able to offer courses (in addition to a few specific courses unique to each respective college) and Laurentian, in turn, shared $7.7 million in funding. Canada Laurentian University made the calculation that it may not need all of the courses they administer on behalf of the 3 colleges. Rather, they can gain a full $7.7 million in funding, rather than just their administrative charge for doing the processing of the academic courses and degrees.

As readers of Brandon Blog know, I have been following the northern Ontario Laurentian University in Sudbury, Ontario financial difficulty insolvency restructuring saga. To date I have written 2 blogs on it:

In my 2 previous Brandon Blogs, I told you about Laurentian University’s academic program cuts comprising 38 English-language undergraduate and 27 French-language undergraduate program closures, in addition to 11 graduate program cuts (4 in French; 7 in English). These undergraduate program and graduate program cuts, dozens of program cuts, have caused job losses amongst the 116 full-time professors and 1 counsellor placement ending up being redundant. It has also obviously affected both undergraduate students and graduate students alike.

In this Brandon Blog, I talk about the Ontario Superior Court of Justice ruling in favour of Laurentian University in Sudbury in its effort to terminate all of its federated agreements.

laurentian university in sudbury
laurentian university in sudbury

Laurentian University in Sudbury: Losing academic programs will ‘hurt,’ prof says

The Laurentian University in Sudbury Board of Governors approved the issuance of issued Notices of Disclaimer of Laurentian University in Sudbury to terminate the university’s current agreement with the other Laurentian affiliates, Huntington University and Thorneloe University College, as well as the University of Sudbury (the Federated Universities). The decision was made amidst growing concern from students at all three universities. The Notices of Disclaimer were issued on April 1, 2021 (no joke!).

This news made waves in the Canadian higher education community. Laurentian University in Sudbury decided to terminate its agreement with the Federated Universities effective at the expiry of the notices. Laurentian University cited, in a press release, “concerns relating to low retention and graduation rates.” One grad student described it as “An ugly stain for years to come“.

Huntington University ended up settling with Laurentian University. Perhaps capitulating is a better word. On the other hand, Thorneloe University and the University of Sudbury each brought a motion before the court under section 32(2) of the Companies’ Creditors Arrangement Act (CCAA) for an order that their Federated Universities agreements not be terminated. They did so within the 15 day period they had to oppose the Disclaimers under the CCAA. Their motions were heard on the last two days of April. These motions were heard separately by two different Judges.

laurentian university in sudbury
laurentian university in sudbury

Sudbury’s Laurentian, Huntington universities reach a separation agreement, but Thorneloe and the University of Sudbury fought on

The Thorneloe University College and the University of Sudbury did not want to just capitulate. Huntington reached an agreement with Laurentian University regarding just how to terminate its collaboration. Both Thornloe and the University of Sudbury proceeded with their motions to set aside the Disclaimers. Thornloe’s motion was heard on April 29, 2021, by Chief Justice Morawetz.

Justice Gilmore listened to the University of Sudbury‘s motion on April 30, 2021. The Laurentian University stay of proceedings was expanded briefly up until May 2, 2021. On that date, the Justices released short endorsements dismissing both motions and the CCAA proceedings were extended until August 31, 2021. On May 7, both Justices released their detailed reasons.

The factors that the court needed to consider were:

In choosing whether to make the order opposing the Disclaimers, the court needs to consider whether the:

  • monitor approved the proposed Disclaimers;
  • Disclaimers would boost the prospects of a viable Plan of Arrangement being made for Laurentian; and also
  • Disclaimers would likely cause considerable financial difficulty to a party to the agreement.

The arguments against the Disclaimers in each of the northern Ontario Thorneloe and the University of Sudbury motions were essentially the same. They were:

  • Thorneloe and Huntington did not create Laurentian’s economic problems.
  • The Disclaimer will result in a significant financial challenge for Thorneloe and as a result, Thorneloe will need to make an insolvency filing either under the CCAA or the Bankruptcy and Insolvency Act (Canada).
  • Thorneloe and Huntington are immaterial to Laurentian’s financial scenario. Therefore the Disclaimer would not cause a material improvement for the chances of a successful Plan of Arrangement and a restructuring of Laurentian’s finances.
  • The partnership between Laurentian and the two northern Ontario colleges is not a business relationship to which the provisions of the CCAA were meant to apply.
  • Laurentian is acting in bad faith against the provisions of s. 18.6 of the CCAA.
  • The debtor-in-possession lender (DIP lender) has no reason to make it a condition of increased financing that the Federation Agreements must be terminated.

    laurentian university in sudbury
    laurentian university in sudbury

The court decision about the Laurentian University in Sudbury Disclaimers for Thorneloe University and University of Sudbury

In both cases, everyone had their legal counsel and Thorneloe retained a financial advisor also. Thorneloe‘s financial advisor prepared a report for the court to attempt to counter the submissions of both Laurentian University and the CCAA Monitor.

The Judges each weighed all the evidence very carefully and both concluded that the:

  • Monitor authorized the Disclaimer Notices.
  • Disclaimers will improve the prospects of a successful Plan of Arrangement for Laurentian.
  • Notices of Disclaimer will have negative economic consequences to Thorneloe and the University of Sudbury, yet this is not enough of a factor to prohibit the Notices of Disclaimer.
    University of Sudbury and Thorneloe was provided a choice, similar to Huntington, which was not accepted.
  • Court has a choice to make and neither choice is a good one. It is required to consider
    the more comprehensive implication of refusing the Notices of Disclaimer which would result in the demise of Laurentian.

The choice is if the motions succeed so the Disclaimers are not effective, it might cause an unravelling of Laurentian’s restructuring strategy and also the collapse of Laurentian. This in turn would certainly have a substantial impact on all professors, students and parts of the northern Ontario region and the entire Sudbury community. It would likewise create financial harm to Thorneloe and the University of Sudbury. Certainly, this is not a desirable outcome.

If the Notices of Disclaimer are supported, the court acknowledged that this very well may threaten the survival of the colleges. The court was sympathetic to this but stated that the impact on the colleges will be considerably less than if Laurentian and the colleges both stop operating. Given these two undesirable choices, the much better choice or the least unwanted selection is to support the Notices of Disclaimer.

Therefore, the motions brought by Thorneloe and the University of Sudbury to revoke the Notices of Disclaimer were dismissed. The Judges reject appeals from federated universities. Thorneloe stated it would appeal the decision of the court. As previously stated, Huntington has already struck a brand-new plan with Laurentian. The University of Sudbury is considering what it ought to do next.

laurentian university in sudbury
laurentian university in sudbury

Laurentian University in Sudbury summary

I hope you enjoyed the Laurentian University in Sudbury Brandon Blog post. According to the Monitor’s reporting to the court, on April 30, 2021, Laurentian owes millions of dollars; $321.8 million to be precise.

Are you worried because you just lost your job through no fault of your own? Is your business dealing with substantial debt challenges and financial problems due to your largest customer failing to perform and pay your company? Do you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

laurentian university in sudbury

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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Brandon Blog Post

LICENSED INSOLVENCY TRUSTEE FOR BANKRUPTCY SIMPLE STEPS ON HOW TO AVOID BANKRUPTCY AND SAVE YOUR BUSINESS

licensed insolvency trustee for bankruptcy

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Licensed Insolvency Trustee for bankruptcy on why businesses go bankrupt

In my last Brandon Blog, Business Bankruptcy In Canada: Discover The Causes Of Business Insolvency And Bankruptcy, I described the causes of business insolvency, the types of business entities normally found in Canada and tips on how to pull your business around back from insolvency.

Numerous businesses are battling to survive today, not to mention stay lucrative. They are scaling down or just closing their doors. They are accessing the available government support money for a business. Most entrepreneurs hesitate to seek the advice of a licensed insolvency trustee due to the fact that they are afraid all the licensed insolvency trustee (formerly called a bankruptcy trustee or a trustee in bankruptcy) wants to do is be a trustee for bankruptcy.

In this Brandon blog post, I want to continue from the suggestions from my last blog, to show you exactly how that the last point I push for is to be a trustee for bankruptcy. I first look to reorganize your business. If your business or company remains in danger because of the effect of the COVID-19 pandemic, it will certainly be advantageous for you and also your organization to do so.

I will also show how sometimes, a trustee for bankruptcy or receivership, can actually help save parts of your business. The only other alternative could be to let all the business parts fail, which is the worst possible outcome.

The role of a debtor in bankruptcy or insolvency

Remember, I previously defined insolvency as a financial condition, where bankruptcy is a legal condition and a legal process. You will also recall that in my last Brandon Blog, I described the three common types of business structures in Canada; proprietorship, partnership and corporation. Just as these three business structures are different in form, they are also treated differently in insolvency vs bankruptcy. Here is how I differentiate the role of each debtor.

Proprietorship – Sole proprietorships are a type of business structure in which one individual is the sole owner of the business, which gives that person control over everything related to the business. This includes the business’ name, structure, accounting, legal obligations and tax responsibilities.

As I described last week, in Canada, the person, the sole proprietor, is carrying on business in their personal name, operating as the business name. You can register a sole proprietorship with the provincial government by completing an application form.

A sole proprietorship is the simplest kind of business structure. It permits an individual to sell goods or run a service with complete control of it on their own. Nonetheless, a sole proprietorship is not considered a separate legal entity from the owner. This means that any liabilities incurred by the business are also personal financial obligations of the owner.

So in an insolvency situation, all of the sole proprietor’s assets come into play as do all of his or her debts. It is not just the business assets and business liabilities. It is everything. This is the worst-case scenario for an entrepreneur.

So if the business is viable, and the personal assets and liabilities lead to the sole proprietor being in the situation where they can do a debt settlement plan, they can choose one of two options to restructure their entire personal financial situation. This assumes they cannot resolve their financial issues informally to bring their financial situation back to being solvent.

Partnership – A terrific way to begin a new business is teaming up with one or more people. All of you should enhance the group’s abilities as well as energy. Nonetheless, you also wish to be with people that are trustworthy, industrious and have a certain expertise that will help the business grow. Just like the way a proprietorship is one person, a partnership is made up of two or more people.

A partnership agreement is crucial. This is an agreement between the partners, describing the rights as well as obligations of each partner in the business. The same way a sole proprietor is personally responsible for the debts of the business and is putting all of their personal and business assets at risk, the same is true for partners in a business partnership. The partners are each liable for 100% of the business debts in case of insolvency. The partners cannot limit their liability to only their partnership share of the business.

Corporation – When you incorporate a business, it is a corporation. The company is a different legal entity from its owner shareholders. Shareholders are not responsible for the unpaid debts owed to financial institutions (normally a secured creditor), suppliers to the firm (normally an unsecured creditor) or the government. There are only two exceptions: (i) certain government liabilities that are a personal liability of a Director; and (ii) if the entrepreneur directly guarantees a financial debt of the company, such as a company loan, then that individual will have a liability with respect to such debt.

If the company’s financial future becomes bleak because it is insolvent, there are options. In my last blog, I talked about self-help remedies senior management of a company whose business is viable can try to informally bring the company back to a healthy financial state. You can re-read that blog to see the options available. If the self-help remedies do not work yet then we must look at more formal proceedings.

trustee for bankruptcy
licensed insolvency trustee for bankruptcy

Licensed InsolvencyTrustee for bankruptcy: Settle with creditors and debt collectors without bankruptcy

In a proprietorship or partnership, if the underlying business is viable, then there are a variety of options to try to turn the business around yourself. You would use the self-help methods I described in my last blog. If the self-help options do not work, there are debt settlement options available to the individual(s) under the Bankruptcy and Insolvency Act (Canada) (BIA). They would be the only government-sanctioned debt settlement plan available in Canada. Either a consumer proposal or a Division I Proposal. You can read about how each one works by clicking on the following links:

In a successfully completed debt settlement program, the bankruptcy trustee would not be a trustee for bankruptcy. Rather, the trustee in bankruptcy would be an Administrator under a consumer proposal or a Proposal Trustee in the Division I Proposal.

If the business is not viable or the circumstances are such that a debt settlement plan is not feasible, then personal bankruptcy would be the only other option. You can read about how personal bankruptcy works by looking at our top 20 bankruptcy FAQs section. Upon the bankruptcy of the person, the sole proprietorship is automatically terminated.

Since a partnership is a way of carrying on business personally, then the same insolvency options available to the partners to the business debtor are also available. A restructuring is always preferred over a bankruptcy when the partnership is in financial difficulty.

For a debt settlement insolvency filing, the licensed trustee is not a trustee for bankruptcy. That is the case only if there is an actual bankruptcy assignment. Under provincial law, if a partner goes bankrupt, the partnership is automatically dissolved.

Licensed Insolvency Trustee for bankruptcy: Ask creditors to help you avoid bankruptcy of the corporation

Without wanting to sound like a broken record, you can review my prior blog to go over the self-help remedies for turning a business around, even if it is a corporation. A self-help remedy is always a great alternative to bankruptcy. If that isn’t appropriate, or just plain does not work, then you must get in touch with an insolvency trustee.

Again, if the company’s business is viable, then there are financial restructuring alternatives. these alternatives will be within a government-regulated insolvency proceeding. There are two formal restructuring statutes in Canada:

In both cases, a company should retain the services of both a licensed trustee for bankrutpcy and a bankruptcy lawyer. The lawyer acts as legal counsel to the company. The licensed trustee will be both a financial advisor and steer the company through the restructuring process. The CCAA option is for companies with $5 million or more of debt. A BIA Proposal is for a company with any amount of debt. The main difference between the two processes are:

  • In a failed BIA Proposal, the debtor is immediately deemed to have filed an assignment in bankruptcy. This is not the case in a failed CCAA Plan of Arrangement.
  • A CCAA proceeding is more costly as there are many more court appearances in that forum than in a BIA restructuring.

Using one of these two statutes to gain what is called in the media “bankruptcy protection” in order to work out a successful restructuring with your unsecured creditors is always preferable. The company will pay less than it owes while keeping its viable but insolvent business alive. Don’t underestimate the power of preserving jobs in the eyes of a court. A bankruptcy trustee can be very helpful in obtaining great results.

trustee for bankruptcy
licensed insolvency trustee for bankruptcy

Licensed Insolvency Trustee for bankruptcy: When to consider an Assignment for the Benefit of Creditors

If the business is not viable and is insolvent, then the only thing left to consider is an assignment in bankruptcy filing. It is definitely a last resort if everything I have already spoken about in this Brandon Blog just won’t work and you have run out of options. Trustees in bankruptcy always consider the alternatives to bankruptcy, but sometimes filing bankruptcy is the only option available.

In the case of a proprietorship or partnership, it is the individual sole proprietor and one or more of the partners who will be meeting with a trustee in bankruptcy and filing for a personal type of bankruptcy. the personal bankruptcy trustee will administer the personal bankruptcy estate. Again, you can read up on personal bankruptcy by looking at our top 20 personal bankruptcy FAQs section.

In personal bankruptcies, it will be either a streamlined system called a Summary Administration and if not, it is then an ordinary administration bankruptcy. Unlike a company, a person is ultimately entitled to a bankruptcy discharge.

When it comes to the administration of bankruptcy for a corporation, it is always an ordinary administration bankruptcy. The purpose of this Brandon Blog is not to run through all the steps in a personal or corporate bankruptcy process. Above I have provided some links to read up on debt settlement restructuring and personal bankruptcy. For corporate bankruptcy, I recommend that you read our corporate website page on corporate bankruptcy.

Alternatively, you can also read my previous Brandon Blog Bankrupting a Limited Company: Canadian Corporate Bankruptcy Process.

A trustee for bankruptcy administers the bankruptcy process for the benefit of unsecured creditors. Sometimes, it is a secured creditor who needs to enforce their security. They do not necessarily need the company to meet with a trustee for bankruptcy. Rather, the secured creditor needs the appointment of trustee to act not in a bankruptcy administration, but rather, to act as a receiver or receiver-manager to enforce the secured creditor’s position by taking control of the assets subject to the security and ultimately selling them. To read the receivership process, you can read the receivership section of our corporate website.

You can also read my Brandon Blog titled What Is A Receivership? Our Complete Guide To Receivership Solutions.

Licensed Insolvency Trustee for bankruptcy: How to avoid bankruptcy and save your business from closing

I hope you enjoyed the licensed insolvency trustee for bankruptcy Brandon Blog post. Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve. As you can see from this blog, we are not just a trustee for bankruptcy. We believe every person and business should first explore debt settlement to avoid bankruptcy.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

trustee for bankruptcy
licensed insolvency trustee for bankruptcy
Categories
Brandon Blog Post

BUSINESS BANKRUPTCY IN CANADA: DISCOVER THE CAUSES OF BUSINESS INSOLVENCY AND BANKRUPTCY

business bankruptcy in canada
business bankruptcy in canada

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

Business bankruptcy in Canada introduction

A business bankruptcy in Canada creates a very difficult time for its owners, employees, suppliers, and families. Bankruptcy can be the result of many things, including poor business decisions, bad economic health conditions, changes in government regulations, increased competition or a combination of all of these. Yet no matter what brought it about, this will be difficult for those involved with the business. Entrepreneurs will need to find the right party to lean on to help them analyze everything and first see if there is a way to save the business.

If you are in this situation, it is important to know that you do not have to, and should not, go through this alone. In today’s Brandon Blog, I will talk about, from the perspective of a licensed insolvency trustee, what the main causes of business bankruptcy in Canada are and how to avoid business bankruptcy in Canada. These steps will help you look at your business’s financial problems in a different way. It may very well be such that you can do the financial restructuring of all or a part of your company’s business properly and avoid a long-term debt to your creditors.

In my next Brandon Blog, I will write about the formal insolvency proceedings available to an insolvent business in Canada.

What’s in it for you, the entrepreneur? This will help you become a healthier business owner and get you out from under the panic and stress the current environment causes.

Bankruptcy vs insolvency

Regular readers of my Brandon Blog will know that I briefly describe the difference between in many blogs. Before going any further, it will be helpful if I just give you a refresher as to the distinction between the two.

Bankruptcy vs insolvency is two extremely different things, although people often say them thinking they mean the same thing. Insolvency refers to a circumstance where an individual or company has more debts than assets. Once the property has been entirely liquidated, there is not enough cash to settle all the debts. This is the economic problem where the company or individual experiencing financial difficulties is said to be insolvent. It is a financial condition.

Bankruptcy is a legal process. A person or company who is insolvent can file for bankruptcy. Or, one or more creditors can make a Bankruptcy Application to the court for a Bankruptcy Order to be made against the financially troubled insolvent person or company. Bankruptcy is a legal state.

business bankruptcy in canada
business bankruptcy in canada

The main causes of business bankruptcy in Canada

In my opinion, no one cause is responsible for causing business insolvency or business bankruptcy in Canada. It is usually a combination of things. From my experience in dealing with troubled businesses, I have found there are a variety of factors.

Some are internal to the business and some are external. The internal causes are ones that the entrepreneur has full control over. Similarly, the entrepreneur has either very little or no control over external factors. The following, in no particular order, is my laundry list of the main causes of business failure in Canada.

External causes of business failure in Canada

  • an economic slowdown or recession
  • increases in competition
  • loss of a major customer as the outcome of relocation or market modification or business sector
  • government regulations
  • technological change
  • being a victim of a fraud
  • labour issues including the loss of key employees
  • war
  • a global pandemic

Internal causes of business failure in Canada

While variables beyond a businesses’ control absolutely play a significant role in the failure, numerous businesses that declare bankruptcy additionally struggle with internal issues. While external deficiencies are important to some degree, many failures happen as a result of internal issues mostly rooted in the deficiencies of senior management – the entrepreneur.

Internal root causes of bankruptcy can be categorized as consisting of troubles associated with:

  • lack of sufficient business monitoring abilities
  • firm strategies that don’t work
  • growth and acquisitions that did not work either because of overpaying or lack of funding to support the new business growth and activity
  • lack of proper financial planning
  • business administration and record-keeping deficiencies
  • human resource errors
  • lack of proper advertising and marketing
  • undercapitalization – lack of proper cash on hand and financing

Insolvency for business: There are 3 types of business arrangements

Before getting into the strategies that insolvent businesses can use to avoid business bankruptcy in Canada, and to discuss how business bankruptcy works, keep in mind that there are essentially 3 kinds of business setups. They are:

Proprietorship

A proprietorship, also known as a sole proprietorship, is a business entity owned by one individual. There are few formalities to create a sole proprietorship, and many businesses start as sole proprietorships, particularly small businesses. As a sole proprietorship generates profits, the owner is taxed personally on the income.

The main disadvantage to this form of business is that you are personally responsible for all of the business debts and obligations, which means that if you don’t pay the business bills, your creditors can sue you personally and if they get a judgment, seize your personal property, whether it is used in the business or not.

Partnership

A partnership is like a proprietorship, with one main difference. The difference is that it involves two or more people. They share the business profits or losses under an agreed formula. The method used to share profits and losses tends to be based upon each person’s value to the business.

Just like in a proprietorship, the partners are personally responsible for the business financial obligations.

Corporation

When you incorporate a business, you create a corporation. The company is a different legal entity from its owners, the shareholders. That means shareholders are not responsible for the unpaid debts owed to the creditors of the company or its business. The only exemption is that if an entrepreneur shareholder directly guarantees a debt of the company, such as a business loan, then that person is also liable.

In the event of default, the lender can require repayment from both the company and the guarantor. Generally, shareholders just risk the cash they used to purchase the shares of the company and any funds they may have loaned the company.

business bankruptcy in canada
business bankruptcy in canada

Business bankruptcy in Canada: How to avoid bankruptcy and save your business

Now that we understand what can go wrong in a proprietorship, partnership or corporation carrying on business, we need to look at what some fixes may be. Not every business needs to go into bankruptcy due to financial difficulties. The first decision point is if your business is still viable. Is there still a vibrant market for the goods or services your business provides? If yes, then you have something worth trying to save.

Here are the steps I recommend taking in analyzing your business to save it:

1. Assess your business cash flow – When looking at the overview of business cash flow needs, it is important to have a clear understanding of your business structure, the services or products you offer and the number of clients you have. Knowing this information will give you a clearer picture of your cash flow requirements.

You must understand your business’s cash flow needs. The very best method is to develop a reasonable monthly cash flow forecast. This is a record that details your business’s monthly forecasted income and expenses on a cash basis for the next 12 months. This will be an important part of establishing an organization strategy, which will be a guideline for how to improve your business’s financial position.

2. Assess your assets for funding or liquidation opportunities – One of the most important things a business owner should do when looking for ways to raise cash is to seriously assess their current financial position. A company’s assets continue to change over time, and a good business owner will regularly review these figures to make sure the company is in the best possible financial shape to raise cash. This process is called “asset analysis,” and it can help a company identify where and how to obtain the best possible funding.

Perhaps you need to focus on shortening the period of time it takes to collect accounts receivable from your business debtors. Maybe there is either redundant or slow-moving inventory that can be liquidated. Perhaps there are some fixed assets not in use that can be sold to raise cash.

When your business is in trouble, you can’t think about the fact that you may be taking a loss on the sale of inventory or other assets. The name of the game is that you need to raise cash today. If you no longer can use certain assets to produce revenue for your business, it may just be time to sell them to raise the much-needed cash.

3. Take a critical look at all your business expenses – “Take a critical look at all your business expenses” is a sentence that is quite hard to start your day with. It’s a sentence that will lead you to an endless stream of thinking of all the ways you can do to save money. It’s a sentence that will make you question yourself if you are using your cash flow most efficiently. It’s a sentence that will make you think that you might be doing more harm than good to your business.

Nevertheless, it is a must. Businesses in most industries regardless of firm size have been hurt badly due to the COVID-19 pandemic. The credit crunch is in full swing and it’s easy to see how your business has been hit hard. You may not be able to do anything right away about your debt payments, but there may be other opportunities for cutbacks.

If your business has seen its financing alternatives run out, it’s important to take a hard look at your costs. Are you spending too much on advertising, marketing, staff wages and salaries, management salaries or supplies? You need to take a critical line-by-line look and eliminate enough costs given current revenue and market conditions. The cuts will not be easy, but many family’s lives depend on your business continuity.

You need to take the time to sit down and look at your expenses to see where you must cut back given the current business environment.

4. Is renegotiating or at least getting a moratorium on some business loans or leases a possibility? – You’re a business owner and you’re asking yourself whether you ought to try to renegotiate loans or leases. The answer relies on a variety of aspects. You may be bumping up against your business credit limits and know you must try to reorganize your financial debt and cash flow.

It is certainly something that must be thought about since it for sure will certainly be if your business enters into an insolvency proceedings restructuring program with your creditors. So look critically at this option voluntarily. It may not be possible to achieve, but at least you will know that you have thoroughly canvassed the possibilities.

5. Is it possible to create a new cash flow stream using the existing skill sets and staff until the economy turns around? – It’s not uncommon for struggling businesses to experience cash flow problems. For example, a business owner who takes on too much debt may suddenly find themself paying far more interest than they can afford, and the business is now burning through money every month just to keep their creditors at bay.

Sometimes the business owner may simply have too many creative ideas and not enough time to take them to fruition; this can cause them to take on new projects before they can finish the ones they’ve already started.

Rather than focussing on many new projects, look at what new twist on what you already do can be implemented to meet current market demand just to bring in some additional cash from a new source. This may very well save your business until more permanent changes can be implemented and/or the marketplace and the economy turns around.

6. Take advantage of Canada’s COVID-19 Economic Response Plan for business – Canada’s COVID-19 Economic Response Plan is designed to help businesses by providing relief to companies that owe funds to Canada Revenue Agency, the banks or landlords. It is also intended to try to keep Canadians working. The Plan was introduced in 2020 in response to the pandemic and has been revised several times since then to help struggling businesses in Canada.

The Canadian government’s COVID-19 Economic Response Plan is designed to help the small and medium-sized businesses struggling to survive the impact of the economic downturn. The program offers business owners a chance to hit the refresh button on their business’s finances with a package of tax credits, interest relief and plain old money to help them with their outstanding debts. The program is designed to help all Canadian businesses in general.

I have written many blogs already on various Canadian government programs for business, such as the:

There’s been no spike in personal and business bankruptcies, but surge is expected

There are many businesses across Ontario considering bankruptcy as they sit on the sidelines from the COVID-19 financial impact, according to the Canadian Federation of Independent Business (CFIB).

“Businesses need to start making revenue again, otherwise they’re just not going to survive” said Ryan Mallough, CFIB’s Director of Provincial Affairs for Ontario.

As I previously reported in my Brandon Blog, Small Businesses In Canada Accumulate Massive Debt Due To COVID-19, since the start of the COVID-19 outbreak in March 2020, small businesses in Canada racked up $135 billion worth of debt to stay afloat.

Seven in 10 small businesses in Canada have actually borrowed money because of COVID-19. The average is almost $170,000 per business, according to a new survey released by the CFIB. In total, small businesses in Canada currently owe a cumulative $135 billion.

This is the perfect segue into my next Brandon Blog. I will be talking about what the insolvency proceedings and bankruptcy proceedings options are for businesses, be they a proprietorship, partnership or corporation. Based on the various business types, it will include business insolvency options for personal insolvency, personal bankruptcy, corporate insolvency and corporate bankruptcy.

That Brandon Blog will be of a more practical nature in how the various personal and debtor company business bankruptcy in Canada and insolvency options work.

I feel this is a good time to talk about this in my next Brandon Blog because right now the insolvency statistics show that notwithstanding the tough economic slowdown, insolvency filings are low. I don’t believe the insolvency rate is low, but right now federal government support is masking the true economic health of Canadian businesses.

business bankruptcy in canada
business bankruptcy in canada

Business bankruptcy in Canada summary

I hope you enjoyed the business bankruptcy in Canada Brandon Blog post. You may be very upset and frustrated over this. You may have been directly affected by the course and employee downsizing. Perhaps your pension has just been cut drastically from what you thought it would eventually be. You may even be downright depressed. No doubt the Sudbury entrepreneurs may be very frustrated whether their businesses will be able to continue to pay all their debts as they come due.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

business bankruptcy in canada

Categories
Brandon Blog Post

LAURENTIAN UNIVERSITY INSOLVENCY RESTRUCTURING – OUR UPDATED GUIDE ON ITS MASSIVE CUTS TO GAIN FINANCIAL HEALTH

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

laurentian university insolvency

Laurentian University insolvency: Laurentian students, faculty ‘shocked’ at university’s declaration of insolvency

On February 8, 2021, I wrote my blog about the Laurentian University insolvency filing for creditor protection under the Companies’ Creditors Arrangement Act (Canada) (CCAA) on February 1, 2021. It was the very first time in Canada that a public university took such creditor protection action. That blog is titled: Laurentian University Facing Insolvency Makes Startling CCAA News By Filing For Creditor Protection.

Post-secondary education can be a hard path for lots of young Canadians. The road can be filled with challenging experiences. Nevertheless, students never thought that having their college or university teeter on the edge of bankruptcy while they’re still going there would be a reality they would need to face! “It was a surprise,” declares one third-year Laurentian University student, resembling the views of her peers.

The students found out about the Laurentian University insolvency when they logged into their student portal. That is when they found out that the school has declared itself insolvent. The University President and Vice-Chancellor stated in the CCAA proceedings that the university’s dire financial situation financial issues were first determined as early as 2008-09 when a prior administration.

The students who were accepted to the school on the understanding that the school would continue operating and that their field of study would not be in danger surely feel betrayed by this. What a stressful time for them.

Everyone was pretty shocked when we found out that the Laurentian University insolvency CCAA filing happened. Nobody had really focussed before on the fact that public institutions like Laurentian would become insolvent and then be eligible for a CCAA process.

What went wrong in this Sudbury, Ontario-based university? In this Brandon Blog, I’m going to give you an update to my February 8, 2021, Brandon Blog and what has gone on since then in this Laurentian University insolvency process.

Laurentian University insolvency: Is Laurentian University closing?

No. The purpose of the CCAA filing is to allow Laurentian University to restructure so that hopefully it will remain open for a long time to come. Laurentian has continued operating. Courses are continuing (virtually because of the COVID-19 pandemic).

Laurentian opened up discussions with its different stakeholders, including its students, faculty, other staff, trade suppliers, research-granting agencies and donors immediately after the issuance of the court order approving the Laurentian University insolvency filing.

Laurentian has to negotiate functional modifications in order to drive go-forward financial savings. Consequently, these conversations have included settlement negotiations between Laurentian and the:

  • Committee of representatives chosen by the Senate, to deal with the course offering to restructure.
  • Federated Universities;
  • Laurentian University Faculty Association, the bargaining unit representing the professors; and
  • Laurentian University Staff Union, the bargaining unit for non-faculty personnel.

    laurentian university insolvency
    laurentian university insolvency

Upon the initial CCAA filing, the Laurentian University insolvency application included a request for a sealing order to keep away from public viewing two Exhibits. Laurentian’s position was that stakeholders should not be able to see those documents as it would weaken and perhaps totally frustrate Laurentian’s ability to restructure. The court granted the sealing order.

On March 4, 2021, the Ontario Confederation of University Associations, the faculty union and the Canadian Union of Public Employees served notices looking for leave to appeal the sealing order from the Court of Appeal for Ontario. On March 31, 2021, the Court of Appeal for Ontario issued its decision dismissing the motion for leave to appeal.

Laurentian University cuts 100 professors, dozens of programs

Laurentian University told the court that it had many programs relative to its number of pupils. Since the day of the CCAA declaration, Laurentian had roughly 209 different programs – 166 undergraduate programs as well as 43 programs for graduate students. Laurentian additionally advised that a lot of programs have continually reducing enrolment and are not financially sustainable.

The university undertook an evaluation of low-enrollment programs and a review of the variety of courses to be provided moving forward. This procedure led to a full review of programs as well as potential program closures. The results of this analysis led to recommendations for academic program restructuring. The recommendations were accepted by the Senate Sub-Committee charged with completing this review and also the complete Senate.

The program closures consist of 38 English-language undergraduate programs and 27 French-language undergraduate programs. This represents 39% of the undergraduate programs offered as of February 1, 2021. This will affect about 772 undergraduate students (557 in English language programs and 215 in French-language programs). In addition, Laurentian proposes to close 11 graduate programs (4 in French; 7 in English).

If programs are being cut, then it stands to reason that teaching costs and other staff costs also need to be reduced. At the commencement of the CCAA proceedings, approximately 612 employees were represented by LUFA including 355 full-time faculty, many of whom had tenure pursuant to the collective agreement, 252 sessional faculty or health care professionals and 5 full-time counsellors.

The faculty and the Laurentian Board are parties to a collective agreement with a three-year term which expired on June 30, 2020. Pursuant to the provisions of the agreement, it automatically continues year-to-year unless notice is provided that either the union or university intends to terminate or amend it. In February 2020, the union provided the Laurentian Board with a notice to bargain. The agreement automatically remains in force during any period of negotiation.

On April 7, 2021, after participating in insolvency negotiations and mediation, the parties entered into a new labour agreement term sheet. Since academic programs were cut, faculty cuts had to follow. The term sheet calls for a new collective agreement with a five-year term expiring on June 30, 2025. It declares 116 full-time faculty positions and 1 counsellor position redundant.

The faculty downsizing will be achieved through voluntary resignations and termination of employment. Faculty to be terminated, who is currently teaching, will be terminated effective May 15, 2021. Those faculty who were not teaching in the current term were terminated effective April 30, 2021. There are also some other salary decreases across the board and benefits reductions for continuing faculty.

As far as other unionized staff (non-faculty), there will be 42 job losses. For the remaining non-teaching staff, there will be certain salary and benefits adjustments. For non-union staff, there is some salary rollback and loss of certain benefits.

laurentian university insolvency
laurentian university insolvency

Laurentian University insolvency: Court ruling allows Laurentian University to reduce value of pension plan payouts

The institution oversees three pension and benefit plans: (a) a registered defined benefit pension plan (DBP); (b) a supplementary unfunded retirement plan (SURP) and (c) a retirement health benefits plan (RHBP). The SURP, as well as RHBP, are currently unfunded. Repayments pursuant to the SURP and RHBP have remained stayed, in conformity with the terms of the CCAA Order.

The DBP is a plan registered with the Financial Services Regulatory Authority of Ontario under the Ontario Pension Benefits Act as well as the Income Tax Act (Canada). The DBP has a going-concern pension deficit of roughly $4.5 million. The University needs to deal with the going-concern shortage. Under provincial government regulations, it needs to do so within a 10-year duration.

Terminated personnel that are DBP members, need to think about whether they want to move their pension plan entitlement to a different trustee due to the fact that they are not qualified to receive their pension payments yet. Alternatively, they could maintain their pension with Laurentian University as trustees. For retiring or terminated staff, depending on their situation, they must elect either an immediate pension plan payment or a deferred pension.

On March 17, 2021, the court made an order specifying, amongst other things, that for any kind of DBP participant that wanted to transfer their pension plan, a transfer proportion of 65.8% will be used for any commuted value transfer request for anyone that received a retirement or termination statement and an election form, for whom such transfers had not yet been made.

Therefore, anyone making such an election lost 34.2% of what they believed their pension entitlement was going to be. Various other amendments to the DBP are also proposed to take place in the Laurentian University insolvency matter. As you can imagine, the further amendments are aimed at creating long-term solvency for the DBP. Therefore, it involves certain reductions to what the remaining members thought they bargained and signed up for!

As part of the restructuring, the Laurentian University insolvency process also proposes that the RHBP will be terminated. Any claims against the SERP will be dealt with in the CCAA proceedings.

The SURP was implemented on July 1, 2002, to supply additional retirement benefits to Laurentian staff members who were in the DBP, to get additional benefits for those earning income over a certain limit. Retiring employees that qualified for the SURP were automatically enrolled. They received either a yearly or monthly payment from the SURP. All of the SURP commitments are unfunded. Historically, the university made annual payments in respect of the SURP from existing operating funds every July.

The insolvency negotiations and mediation have led to the Laurentian University insolvency process recommending that the SURPs be terminated. Accumulated obligations will be managed in the Laurentian University insolvency CCAA Plan of Arrangement. All SURP payments stopped on February 1, 2021, as a result of the CCAA stay of proceedings.

By March 17, 2021, all the changes I have talked about so far were approved by the court.

Judges reject appeals from federated universities, Laurentian insolvency plan can proceed

Laurentian has a federated school structure whereby it has formal affiliations with the Federated Universities: the University of Sudbury, Huntington University and Thorneloe University. Laurentian has a federated institution framework whereby it has official affiliations with the Federated Universities: the University of Sudbury, Huntington University as well as Thorneloe University.

The University of Sudbury is a Roman Catholic multilingual university offering programs in Culture and Communication Studies, Indigenous Studies, Philosophy as well as Religious Studies consisting of courses in both English and French. It was founded in 1913 as Collège du Sacré-Coeur before changing its name to the University of Sudbury in 1957.

Huntington is an independent university founded in 1960 with its own charter and offers programs in Communication Studies, Gerontology, Religious Studies as well as Theology.

Thorneloe is a university with historic origins and association with the Anglican Church of Canada. It offers programs in the departments of Ancient Studies, Religious Studies and also Women’s, Gender as well as Sexuality Studies.

Laurentian and the Federated Universities are connected via a selection of historical connections as well as contractual arrangements. Each of the Federated Universities is a separate legal entity and each is controlled by their own respective board of governors, independent of Laurentian providing oversight of university affairs, respectively.

The Federated Universities do not admit or register their own students and they do not confer their own degrees (with the exception of Theology at Huntington as well as Thorneloe). All Federated University programs and courses are offered by Laurentian University, and all students go to the Laurentian campus. Although the Federated Universities each manage their own respective financial affairs, they cannot receive provincial funding directly. The majority of the public funding for Federated Universities is processed through Laurentian.

As part of the Laurentian University insolvency CCAA restructuring, Laurentian served Notices of Disclaimer on the Federated Universities as it felt it was financially more advantageous for Laurentian to be free from those contractual responsibilities. As a result of the negotiation and mediation process, on April 16, 2021, Laurentian and Huntington entered into an agreement whereby Huntington essentially agreed to cease offering its courses and turn over certain course rights to Laurentian. The only exception allowed in this Laurentian University insolvency process negotiation was that if the court held that the University of Sudbury and Thorneloe University were permitted to continue to receive funding from Laurentian to teach courses or programs, Huntington could also, should it choose to do so.

The University of Sudbury and Thorneloe took a different approach. They each filed motion records in court objecting to the Notices of Disclaimer. The court heard the motions on May 2, 2021, along with Laurentian’s motion to extend the restructuring period and the resulting stay of proceedings to August 31, 2021, and to approve an increase of $10 million to its debtor-in-possession financing.

Laurentian argued that a condition of the increased financing was that the Federated Universities agreements be terminated and that terminating them will improve the University finances. The University of Sudbury and Thorneloe argued that it has not been shown necessary to Laurentian’s future viability and solvency that the Federated Universities relationship had to end and all it really is was an attempt to put them out of business.

Two different judges heard the University of Sudbury and the Thorneloe University motions. Each released their decisions last Sunday night. Each judge dismissed their respective motions. Laurentian’s increased financing and the extension of its restructuring period were also approved. The judges indicated that Reasons would follow. At the time of writing this Brandon Blog, the Reasons have not been released. When they are, I will certainly let you know what the Judges’ thought processes were.

laurentian university insolvency
laurentian university insolvency

Unprecedented Laurentian University insolvency summary

Seeking to escape a mounting debt problem, the administration of Laurentian University insolvency process has led to its filing for bankruptcy protection under the CCAA statute. This will have unfortunate consequences for some students whose courses of study are no longer offered. It will also have a terrible effect on the roughly 164,000 people who live in Sudbury, many of whom are directly involved in the school.

I hope you enjoyed the Laurentian University insolvency Brandon Blog post. You may be very upset and frustrated over this. You may have been directly affected by the course and employee downsizing. Perhaps your pension has just been cut drastically from what you thought it would eventually be. You may even be downright depressed. No doubt the Sudbury entrepreneurs may be very frustrated whether their businesses will be able to continue to pay all its debts as they come due.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

laurentian university insolvency
laurentian university insolvency
Categories
Brandon Blog Post

SOFT CREDIT CHECK: TWEAKS YOU CAN DO TO MAKE IT HARD AND HAPPY

soft credit check
soft credit check

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

Soft credit check introduction: What is a credit score?

When you apply for a loan, or to rent someone’s house, condo or apartment, the bank or landlord will very likely do a credit check on you. What will be of importance to them, amongst other things, is your credit score.

A Canadian credit score is a three-digit number used to indicate the creditworthiness of a debtor, based upon the info in their credit report. It is determined by looking at several factors, including if you usually pay your bills on time, just how much of your readily available credit you use, the number of charge cards you have, as well as your basic level of financial debt. The score ranges from 300 to 900 and also represents the chance that you will pay every one of your expenses on time.

There are two methods that either you or a potential lender can do a credit check on you: soft or hard. Keep in mind that even a potential landlord can fall into the category of prospective lenders. They will be advancing your credit in the form of their property. They are entrusting the tenant to take possession of their property, in return for paying for that privilege every month. In that way, a landlord is also extending credit to a tenant.

Have you ever wondered what the difference is between a soft credit check and a hard credit check? Well, in this Brandon Blog I am going to explain the difference between them for you.

Overview: Hard vs. Soft inquiries on your credit report (And Why They Matter)

The hard inquiry is a credit check that will show up on your credit report. These types of inquiries are typically the result of applying for a new loan, credit card or insurance quotes. A hard inquiry will typically stay on your credit report for up to 3 years.

A soft inquiry, on the other hand, is a credit check that does not show up on your credit report but is visible to creditors. A soft inquiry could be the result of checking your own credit score or shopping around for a new cell phone or cable plan.

More details: What is the difference between hard and soft credit inquiries?

What is a soft credit check you ask? A soft credit check request is something you can do at the beginning of your search for a loan. It will help you to know what your credit score is to help you get better loan rates, special promotions or offers a bank may be running or even help you secure that loan for which you might not qualify if your credit score was outside of an acceptable range. Knowing that information upfront can help you negotiate better for that loan deal you want.

A soft credit check is a surface-level credit inquiry that is used to get a preliminary assessment of your creditworthiness. These take place when you check your credit report or when a lending institution checks your score to pre-approve you for special deals. Soft checks do not influence your credit rating.

A hard credit check is basically a check performed by a company to find out your credit history and score. A hard credit check is different than a soft credit check. Hard checks are performed by companies that decide whether or not to lend you money. Sometimes, a hard check is also referred to as a hard credit inquiry. While a hard check is more informative than soft pulls, it can also adversely affect your score if too many checks are performed.

Sometimes you will enter into a contract for a product or service that requires you to provide authorization on the credit applications to access your credit report and credit score. Whether you are applying for a cell phone contract, to a credit card company, or applying to mortgage lenders or for auto loans, the company is going to check your credit report and score. Knowing what is a “hard credit check” can help you decide if it is worth it to use the service or not.

soft credit check
soft credit check

How could a hard credit check affect your credit score when a soft credit check will not?

Many consumers have a good credit score, but when you are one of the millions of consumers who do not, it can be difficult to get that coveted loan or credit card. To make sure that you do not have to deal with a hard credit check, you should make sure that you have no missed payments on your credit reports and that you have a diverse mix of credit (credit cards, store cards and installment loans, for example).

A hard inquiry can harm your credit score, but usually by just a few points. But how much your score is affected can depend on your specific financial situation.

Having too many inquiries on your credit report especially within a short period of time may also have an impact. And if your credit report shows multiple credit applications within a short period of time, it might appear to lenders that your finances have changed negatively.

When you apply for credit, as I mentioned, a hard credit score check is the way a potential lender can take a deep dive into your credit history. A putative lender would do so to determine if they should approve you for the credit you are applying for. This is different from a cursory soft credit check so a lender can tell you if you might qualify for a special deal or are doing your own self-assessment.

If you’ve ever before been denied for financing, denied an apartment, or had your car loan application rejected, you probably went through a hard credit check and the financial institution or landlord you approached was not happy with your results.

Soft credit check: How your initial credit limit is determined

The normal question individuals typically ask is why their credit line is not higher. In fact, the question is so usual, some credit card companies have their own applications that you can use to forecast your credit line. Nonetheless, as you may anticipate, the response is not quite as straightforward as the credit card issuers would like you to believe.

Your credit rating is an important metric in establishing what your credit line will be set at. If you have an inadequate credit rating, expect a lower credit limit and various other unfavourable terms. On the other hand, a high credit score offers you the opportunity to shop around to find the best credit card agreement and credit card issuer for you.

Soft credit check: Who creates your credit report and credit score?

Each time you make an application for a credit card, a car loan or home mortgage, your credit report is evaluated by the loan provider you are applying to. Your credit report is a document of the financial commitments you have actually currently incurred (credit cards, personal loans, lines of credit and mortgages) and your payment history. It is obtained from one of the two credit bureaus in Canada.

By now you should understand that the higher your credit score, the better your chances are to be approved for the loan or credit card you are applying for. This is because your credit rating will be seen as a lower threat to default, and therefore the bank will feel more positive that you will pay off any credit extended to you.

TransUnion and Equifax Canada are the two credit bureaus in Canada that contain your credit information. Lenders will use one of these two businesses to do the soft credit check or the hard credit check on a potential borrower or existing customer requesting additional or new credit.

These are private businesses that collect, store and share details concerning just how you use debt. Equifax Canada and TransUnion just collect information from creditors concerning your financial experiences in Canada.

soft credit check
soft credit check

Can a lender do a soft credit check or any type of inquiry without my permission?

If you are applying for credit from a financial institution or another type of lender, you will be asked to provide the authorization for them to do search one of the two major credit bureaus in Canada on you as part of their normal credit process. A lender cannot perform a hard credit pull without your OK.

No pre-authorization is required to do soft pulls. Perhaps you wish to just discover if you meet the requirements for a unique promo they may are promoting on one or more of their credit products. Or, possibly the loan provider wants to get a quick picture of your credit file to see if it is worth investing the time running you through their credit application process. The lender can get a response to both issues by carrying out a soft inquiry on you. That they can do soft credit pulls on their own.

Soft credit check: How long inquiries stay on your credit report

Your credit rating is a snapshot of your financial life, and it is important for obtaining credit, renting an apartment, even getting a job. But what happens if you want to buy a house, apply for a job, or apply for a loan and you have a negative or positive inquiry on your credit report? It is important to know how long an inquiry will remain on your report.

The rules surrounding credit inquiries and how long they stay on your Canadian credit report are a little different than in the US. In the US, hard inquiries generally stay on your record for 2 years. In Canada, there is no specific set amount of time that they stay on your report. The length of time a new inquiry is reported is determined by the business that requested the inquiry. According to Equifax Canada, a hard inquiry may not drop off your report for up to 36 months.

Home & Car Insurance Savings From Good Credit Scores

If you’ve ever shopped for auto insurance or homeowners insurance, you’ve no doubt been pressured to buy coverage you don’t need or a policy that seems like the insurance costs are just too high? If that sounds like you, don’t be ashamed! To avoid this, you should first know your credit score, since that will be the key to getting the best insurance rates.

A good credit score does more than simply affect the interest rates you pay on loans – it also affects the rates you pay on your insurance. This is because insurance companies consider your credit score when setting the rates you pay because it correlates to your likelihood of filing a claim and the likelihood of that claim being paid.

In addition, your mortgage company, your landlord and your car dealership will check your credit score when renting property, leasing a car or deciding how much of a down payment you can afford.

soft credit check
soft credit check

Can prospective employers perform a credit check on me?

If the job application you signed gives a potential employer permission to do a hard inquiry on you, then they can. Bad credit history can have many consequences that far exceed a simple refusal to get a loan. It can prevent you from getting a job, and destroy your self-esteem. How do you know if your bad credit is affecting your life? The first step is to find out what’s on your credit report.

The next step is to realize that your negative financial situation didn’t happen overnight. Your financial problems are a result of both bad luck and poor judgment.

Most of us have been there: you’re ready to start your career, turn over a new leaf and begin a new chapter in your life, but you get rejected for a job because one of the background checks turns up a bad credit report. And you are confused. You didn’t know that your report included bad credit information. And you didn’t know that you could fix a bad credit report.

But you can. As I already mentioned, it starts with you doing a soft inquiry on yourself and finding out what the bad information is. Or, once a year, for free, you can do a hard inquiry on yourself and really drill down to find out what negative information is causing the roadblock to your moving forward in life. I highly recommend that you do so as the start to improving your financial situation.

Soft credit check a summary

I hope you enjoyed the soft credit check Brandon Blog post. You may be very upset and frustrated over the current pandemic situation and your personal financial problems. You may even be downright depressed. The entrepreneur may be very frustrated that the company can no longer pay all its debts as they come due.

There may be sufficient value to take care of the secured creditor, but nothing for anyone else, including the unsecured creditors. There may be some business units that should not survive, but if cut out, the business will be viable. A receivership might very well accomplish the goals for the entrepreneur also. I have many times structured a receivership process, in order to meet the goals of the entrepreneur, while satisfying the requirements of the secured creditor.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

soft credit check
soft credit check

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Call a Trustee Now!