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.

Brandon Blog Post

CEBA UPDATE TODAY: OUR SIMPLE HAPPY GUIDE TO CEBA LOAN TERMS

Post author By Brandon Smith
Post date April 28, 2021

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.

ceba update

Canada Emergency Business Account (CEBA)

The CEBA is a unique program established by the federal government to help Canadian businesses adversely impacted by the lockdowns and other business interruptions produced by the COVID-19 pandemic. The program was originally developed to help companies and non-profits that need additional funding and some business relief. Absent this Canada Emergency Business Account program, the funding that might be available from financial institutions would not address the Canadian business realities of then or unfortunately, still now.

In my April 13, 2020, Brandon Blog “COVID-19 BUSINESS SUPPORT: CANADA EMERGENCY BUSINESS ACCOUNT REVIEW“, I described the CEBA program. Since then there has been a CEBA update or two. As most of us understand, the economic situation is still refraining from doing much better. I am currently being contacted by companies who got CEBA funds yet still are insolvent and feel they will either need financial restructuring or bankruptcy. The CEBA funds were valuable yet were insufficient now that we are in the 14th month of this health and wellness pandemic.

In this CEBA update Brandon Blog, I want to go over the most up-to-date upgrade on CEBA and answer several of the more typical inquiries I am now being asked when business owners consider an insolvency filing for their company.

The easiest way to answer what the CEBA update is will be to start fresh and describe what the program was back when first announced and what it is today after the CEBA changes.

CEBA update: Original CEBA eligibility requirements

The original CEBA loan requirements went like this. The CEBA online application process showed up on April 9, 2020. PM Trudeau introduced this brand-new program as part of the federal government’s general program to supply COVID-19 business operations assistance to Canadian companies. At that time, the program saw financial institutions providing $40,000 in financing to each qualifying company, guaranteed by the federal government.

The loans were processed and financed by the Canadian chartered banks. Despite its name, the Canada Emergency Business Account is actually not a business account. It is a non-revolving term loan. It is government-guaranteed lending of $40,000, The CEBA are interest-free loans that are not due for repayment until December 31, 2022. If not repaid by then, interest will then accrue.

The CEBA was developed by the Canadian government to supply COVID-19 business operations assistance to small and medium companies and also non-profit organizations with their most immediate cash requirements during the COVID-19 dilemma. The process was all online. The online application process included a CEBA pre-screen tool. The applicant went through the questions and submitted the required information. The system then:

provided a CEBA pre-screen tool reference number;
told you that the application was submitted through your bank;
said your bank really has nothing to do with the application process; and
confirmed that you will get an answer within 7 to 10 business days.

The requirements for approval for the $40K CEBA were not difficult to meet. The CEBA was readily available to incorporated companies and non-profits who relied upon their respective CRA Business Numbers and had an operational Canada Revenue Agency Business Number (BN) on or before March 1, 2020. The company or non-profit also needed to be businesses with payroll and have a total 2019 payroll filed under the Canada Revenue Agency Business Payroll Number (BN), between $50,000 and $1 million.

CEBA update: Is my business eligible for CEBA and its expansion?

The program requirements have since been amended since the original CEBA came out. The maximum loan balance, other program details and eligibility criteria have changed. To qualify as one of the eligible businesses for a $60,000 CEBA the applicant needs to be an operating company that is a proprietorship, partnership or a Canadian-controlled private corporation that was in operation in Canada on March 1, 2020.

Other types of entities are not qualified for the $60,000 CEBA or $20,000 Canada Emergency Business Account expansion financing. If you previously were approved for the original $40,000 CEBA, you know that you can qualify now for the $20,000 CEBA expansion from the initial $40K amount already funded. So now sole proprietors operating a sole proprietorship and partners in business partnerships also qualify. Family-owned corporations always did and continue to qualify. It seems that the non-profit enterprises do not for the CEBA update program.

The CEBA update application process now adheres to 1 of 2 streams: (i) the Payroll Stream (To be considered as eligible businesses, applicants that are businesses with payroll paid under the Canada Revenue Agency Business Payroll Number (BN), in the 2019 fiscal year between a lower limit of $20,000 to a maximum limit of $1,500,000) or (ii) the Non-Deferrable Expense Stream (Applicants who are businesses with payroll paid under the Canada Revenue Agency Business Payroll Number (BN), of $20,000 or less in the 2019 calendar year).

The actual wording in the program requirements is expressed in a funny way. It talks about having paid employment income, rather than a payroll expense as I have described it above. I guess Parliament wanted to emphasize the fact that the money should be used to including employing Canadians so that they will earn the employment income being paid by the business payroll!

Every applicant needs to meet the following eligibility criteria:

CRA Business Numbers – has an active business account with a CRA Business Number (BN) registered on or before March 1, 2020.
Has an open business chequing/operating account with the proposed lending institution they are applying through at the time the application process is put into play. Examples would be a CIBC Business Operating Account, an RBC Business Deposit Account, or a similar account at any of the other Canadian chartered banks. If you have a Canadian operating business, it should not be too hard to meet this qualification of having an active business chequing account.
Those making an application for the complete $60,000 CEBA, have not previously utilized the Canada Emergency Business Account Program and also will not request support under the CEBA Program at any other financial institution.
Plans to stay open or to go back to opening up as soon as restrictions are lifted.

CEBA update: Non-deferrable expense stream eligibility

If you are applying under the Non-Deferrable expenditures stream, you have to, in addition, comply with some extra eligibility criteria as follows:

Having verifiable non-deferrable expenses between $40,000 and $1,500,000. Eligible non-deferrable expenses can consist of operating costs like property rental fees, real estate tax, insurance policy protection, and utilities. The government says that expenditures for such non-deferrable operating expenses will certainly undergo confirmation and audit, presumably by Canada Revenue Agency.
Submitted an income tax return with the CRA with a tax year ending in 2019 or, if its tax return for fiscal 2019 is not yet due for filing, 2018.

As always, as soon as you have actually finished the online application via your bank, the Government of Canada will examine the application as well as alert you and your bank of the approval or decline of the funding. Your financial institution will put the funds right into your business chequing/ operating account if you are successful.

So this is how the CEBA expansion has changed the eligibility requirements resulting from the CEBA update. It is obvious that the government wants to help businesses have the necessary cash on favourable terms to make necessary expenses for business purposes.

The CEBA update has also extended the CEBA Application Period. The CEBA update also has now extended the to receive applications from businesses to June 30, 2021, (proposed in the recent Budget to be extended to the Fall of 2021) to request a $60,000 CEBA or the $20,000 expansion at their financial institution. Unless the government announces an extension to this date, time is running out.

CEBA update: How many businesses have applied for CEBA?

Here are the statistics of the use of the CEBA program during this difficult time as of this date:

866,750 businesses were approved for CEBA loans;
532,899 businesses were approved for the CEBA update expansion; and
funds were loaned as a result of the above total $46.56 billion.

What are the CEBA loan terms and is there any CEBA event of default?

The most well-known CEBA term loan provisions are:

The CEBA program supplies access to a $60,000 business loan.
0% interest till December 31, 2022.
No principal payments until after December 31, 2022.
The loan is fully open so, all or part of the non-forgiven portion can be repaid prior to January 1, 2023.
Full repayment by December 31, 2022, will only require the borrower to repay $40,000 of the total $60,000 loan for it to be considered fully repaid. Therefore, there is loan forgiveness of $20,000 if repaid by the end of 2022. The federal government is actually calling this loan forgiveness for early repayment.
The interest rate on any outstanding balance after December 31, 2022, is 5% per annum during the “Extended Term”. The Extended Term runs until December 31, 2025. So after the interest-free period, the Extended Term converts it to a 3-year term loan after December 31, 2022, the Initial Term Date. During the Extended Term, monthly interest payments are required. The full principal balance of $60,000 is due no later than December 31, 2025.

There are some CEBA update loan events of default as follows:

The events of default are quite simple. The bank may need you to pay back the loan, upon the incident of any kind of among the following events of default:

you fail in paying any amount due under the CEBA funding;
you don’t pay according to its terms any other non-CEBA financing outstanding to that same financial institution;
you fail to comply with any one of the terms of the CEBA agreement (which really revolves around interest and repayment), you make any false or deceptive statements to the bank, including without restriction, in your CEBA application;
the business commits an act of bankruptcy or becomes insolvent; or
the business is placed in receivership.

It would appear that the only remedy for the bank upon the default of the borrower is to advise that full repayment is due immediately. There are no other specifics in the CEBA loan agreement providing the lender with any other powers.

There is no personal guarantee attached to this CEBA loan. However, there is some language that speaks to the CEBA agreement being binding on “your heirs, your successors and personal representatives – including executors and administrators”. This language did not make any sense when only corporations could apply in the beginning. The language now makes sense because the CEBA update created the CEBA expansion to include sole proprietors and partners, who of course, are people, not companies.

I have received some calls from entrepreneurs who applied for and obtained the CEBA $60K loan expansion funds. Their company is still in financial trouble; it was just able to hang on longer. The business owners want to know if their company has to enter into an insolvency proceeding, what is their risk as it relates to the CEBA repayment?

To date, I have advised them of my understanding of the CEBA loan terms and CEBA loan events of default as outlined above. I also caution entrepreneurs that the company books and records should be able to show both the receipt of the CEBA interest-free loan and that the funds were used for appropriate business purposes.

CEBA update summary

I hope you enjoyed this CEBA update Brandon Blog post on the current rules for the Canada Emergency Business Account. This is one of several government programs to hopefully allow business continuity to survive.

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.

Brandon Blog Post

EQUALIZATION PAYMENT DIVORCE ONTARIO: THE BASIC RULE FOR MARITAL PROPERTY AND BANKRUPTCY

Post author By Brandon Smith
Post date April 26, 2021

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 of the page and click on the podcast.

Bankruptcy and divorce: Equalization payment introduction

The pandemic has taken a toll on couples both financially and psychologically, which has actually triggered many to consider going for separation and maybe even filing for bankruptcy. This is not to say that every bankruptcy causes a subsequent divorce, or that every separation will certainly necessitate the declaring of bankruptcy.

In my Brandon Blog dated March 2, 2020, titled “DIVORCE DEBT: NOT ALL EQUALIZATION ISSUES ARE EQUAL IN BANKRUPTCY” I described a decision of the Ontario Superior Court of Justice (Commercial List) where the court decided that the claim for an equalization payment is “personal as between the spouses” and cannot be started by the licensed insolvency trustee. However, if the claim was already started by the spouse prior to his or her bankruptcy assignment, then it is a claim for property that the Trustee can continue to advance.

I thought that was the end of the matter, but apparently not. The bankruptcy trustee, who could have left well enough alone, did not. The trustee in bankruptcy appealed the court’s decision to the Court of Appeal for Ontario. Recently, the three-judge panel released their decision of the appeal that was heard last November.

In this Brandon Blog, I discuss this recent Court of Appeal for Ontario decision dealing with an equalization payment, marital property, divorce and bankruptcy in Ontario.

Bankruptcy and property: Insolvency 101 on what happens to property in a personal bankruptcy

It is a fact that when someone files for personal bankruptcy, the bankruptcy provisions states that all of their property vests in the licensed insolvency trustee administering the file. There is a discrete list of assets set by every province in Canada that is exempt from seizure and therefore cannot be sold by the Trustee. Technically, the licensed insolvency trustee gives back to the bankrupt that property. In practical terms, the Trustee never seizes it. But whenever the topic of bankruptcy under federal bankruptcy laws gets mixed in with the Ontario Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), the discussion on matters about bankruptcy always starts to get murky.

A claim for an equalization payment by one spouse against the other in Ontario family law proceedings meets the definition of property. So if the spouse entitled to the equalization payment files an assignment in bankruptcy, that entitlement is their property which now vests in their licensed insolvency trustee. When collected upon, it is available to the bankruptcy estate and its creditors. However, what if that spouse has yet to make the equalization payment claim and goes bankrupt? Does the Trustee have the right to assert that claim?

What are equalization payments in divorce?

In Canada, each province sets their own family law statutes. When it comes to family property and divorce, there are two different possibilities in Canada. The province can elect for those divorcing spouses to have to split their property equally. This would make them a division of property province under family law.

Alternatively, rather than looking for a division of assets, the province can mandate that each spouse calculate their respective net family property. Then the spouse with the higher net family property value has to either pay money or transfer property to the other spouse so that they end up being equal. Hence the money that would be paid over from one spouse to another is called the equalization payment. This is what happens in Ontario. Ontario is not a property division province but rather is an equalization jurisdiction.

The application for equalization and the equalization payment is totally separate from the claim for and determination of spousal support and child support to the other. The equalization claim falls into the category of non-support-related spousal claims.

Rusinek & Associates v. Arachchilage & Baliah, 2020 ONSC 1090 (CanLII)

In my March 2020 blog referred to above, I described this Ontario family law case combined with the insolvency situation of bankruptcy. You can certainly read it if you want all the details. However, the bottom line of that decision is that under the FLA, the post-separation equalization claim is “personal as between the spouses”.

This means that if a spouse who subsequently becomes bankrupt had not yet made that claim, his or her Trustee cannot start the claim for the determination of equalization on the basis that the claim is a property that vests in the Trustee. However, if the claim had already been made and the equalization process litigation has already begun, and then that spouse becomes bankrupt, the Trustee does take over the right to advance that litigation against the non-bankrupt spouse for the equalization payment which stands in lieu of property rights. Whatever payment comes from it goes to the Trustee for the general benefit of the creditors.

Bankruptcy and equalization payments: Court of Appeal for Ontario says the timing of the bankruptcy matters

From what I have told you so far, you can see that the timing of the person’s voluntary assignment into bankruptcy or the Bankruptcy Order being made (from the filing of a Bankruptcy Application) does matter. For the trustee in bankruptcy to be able to assert that equalization payment claim, the bankrupt spouse had to have already made that claim prior to becoming bankrupt.

The Court of Appeal for Ontario considered the Trustee’s appeal of this lower court decision. It considered the laws around bankruptcy and the FLA and dismissed the appeal. I will now tell you why.

The Court of Appeal stated that a spouse’s claim for equalization becomes property of the bankrupt if that same spouse then declares bankruptcy. The action vests in the trustee in bankruptcy and the Trustee has control over the claim together with the right to get any unpaid equalization payment.

There is no restriction in the Bankruptcy and Insolvency Act (BIA), under the FLA or in the common law, preventing the trustee in bankruptcy from going after it after the now-bankrupt spouse had already started that part of the Family Law litigation.

[NOTE: This bracketed portion is not part of the case heard by the Appeal Court, but this is the appropriate place to share this information with you. I think it is obvious that the bankrupt spouse would not start the equalization claim litigation while being an undischarged bankrupt. Otherwise, the Trustee would be entitled to the proceeds.

Also, presumably, the bankrupt spouse might do better if the non-bankrupt spouse only paid support instead of both support and equalization. I would advise the bankrupt’s family law lawyer to not make an equalization claim, and in return, negotiate for a larger support claim, in lieu of both.

A Trustee cannot directly attach to a support claim. The Trustee would just have to assess that information, along with whatever other income the bankrupt spouse has, to determine if there is any surplus income obligation.]

The Court then went through a thoughtful analysis of whether the entitlement to equalization can be initiated by the licensed insolvency trustee. The Court of Appeal concluded that because the action for equalization is “personal as between the spouses”, only spouses can bring claims for equalization. The Trustee cannot.

It is for these reasons that the Court of Appeal for Ontario confirmed the lower court decision, dismissed the Trustee’s appeal and awarded costs of $10,000 against the Trustee in favour of the non-bankrupt spouse respondent.

I will now go on to provide you with some extra information about divorce proceedings and bankruptcy.

How does an unpaid equalization payment intersect with bankruptcy?

In a bankruptcy, if the non-bankrupt spouse still owes the bankrupt spouse an unpaid equalization payment, the bankruptcy plays no part. That spouse still has to make the payment. Only now, it has to be made to the Trustee.

However, if the spouse who files for bankruptcy owes the non-bankrupt spouse an unpaid equalization payment, that liability is caught in the bankruptcy. The non-bankrupt spouse has a provable ordinary unsecured claim in the bankruptcy of the spouse. As stated above, the bankrupt spouse no longer has to make the equalization payment because it is an unsecured debt and will be discharged from that person’s discharge from bankruptcy.

What happens to spousal and child support payments during bankruptcy? Nothing. Any liability for support, either spousal support or child support, is not eliminated by filing bankruptcy. The bankrupt spouse still has to make those payments. Just like any other spouse, if the bankrupt spouse does not make the support payments, the spouse that is entitled to receive support can obtain collection assistance from the Ontario Family Responsibility Office.

What happens to joint debt if you file for bankruptcy?

Joint debt in a divorce is hard enough to sort out. Layer a bankruptcy on top of that and things may become much clearer, but also potentially unfair. When you file for bankruptcy and have joint debt, it is important to know what happens to the debt. The most common type of joint debt couples share is from joint credit cards. Next would be if one spouse co-signed for or otherwise guaranteed the debts of the other spouse. Other common examples are joint mortgages and joint lines of credit.

A creditor can collect the debt from both you and your co-signer, but in your bankruptcy, the law does not protect your non-bankrupt co-signer from your joint debt. If you file for bankruptcy, your creditors can still come after your co-signer for the debt.

If your estranged spouse is considering bankruptcy as a last-ditch effort to eliminate their overwhelming unsecured debt, it could spell trouble for you if they file for bankruptcy. When they file for bankruptcy, they are trying to erase their unsecured debt. Unfortunately, you will be saddled with the sole responsibility to repay those joint debts. You will have to try as best you can to be protected financially through the divorce process.

You need to decide how you will deal with these debts that your spouse won’t have to pay because of their bankruptcy. If you cannot afford to pay them on your own, in addition to your other living expenses, you may have to consider either bankruptcy or a consumer proposal as an option to save you from this catastrophe.

Are the bankruptcy rules fair, especially given the discussion above about the equalization payment? The BIA is the set of regulations and rules that govern a bankruptcy or insolvency in Canada. The BIA governs both people and companies that have come to be incapable to pay their financial debts. It handles the regulations for the time duration both leading up to insolvency and the declaring of bankruptcy.

The policies established by the BIA have a substantial impact on the lives of debtors and creditors. They are extremely crucial for the survival of the business or person. The rules are fair for everyone. But the effect they have on different stakeholders in an insolvency file may not be very fair.

Equalization payment and Ontario divorce and bankruptcy summary

I hope you enjoyed the equalization payment Brandon Blog post. You may be very frustrated and angry over your marital and financial situations. 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.

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.

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.

equalization payment

Brandon Blog Post

CERTIFICATE OF APPOINTMENT OF ESTATE TRUSTEE RULES KICK IN RIGHT AFTER YOU LOSE SOMEONE CLOSE TO YOU

Post author By Brandon Smith
Post date April 21, 2021

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.

What is a Certificate of Appointment of Estate Trustee?

For anybody that is a potential Estate Trustee, a Certificate of Appointment of Estate Trustee is a required part of the probate procedure. A Certificate of Appointment of Estate Trustee is a document that is issued by the court and provided to the appointed Estate Trustee.

Regular readers of Brandon Blog know that I have written on estate matters before. You also know that in addition to being a licensed insolvency trustee firm, we also act through our related business, Smith Estate Trustee Ontario, acts as a professional estate trustee for both solvent and insolvent deceased estates.

The purpose of this Brandon Blog is to describe the application for probate process in applying for the Certificate of Appointment of Estate Trustee and the responsibilities of the Estate Trustee and how they must perform their duties according to the various rules.

What does a Certificate of Appointment of Estate Trustee do?

The Certificate of Appointment of Estate Trustee verifies that the individual (or a professional Estate Trustee such as Smith Estate Trustee Ontario or a trust company) has in fact been selected to act as the Estate Trustee. It shows that she or he has the legal authority to deal with the real property (real estate) and personal property of the estate. All of the estate assets.

When is a Certificate of Appointment of Estate Trustee needed?

The Certificate of Appointment of Estate Trustee is not a legal requirement in the province of Ontario. It’s merely a record supplied by the government that verifies that the individual called the Estate Trustee has really been designated. It makes things a great deal much easier when validating to financial institutions as well as various other third parties that you have the authority to act concerning the estate property.

To obtain the probate Certificate, you need to complete the appropriate application form to give to the provincial government with a certified duplicate of the death certificate as proof of death in addition to a duplicate copy of the Will. If there is no Will, the court will certainly issue an order upon the probate application of an interested party for approving a selection of Estate Trustee. The estate lawyers can certainly assist with providing legal advice and completing such an application. This would be in addition to any other forms the province needs the Estate Trustee to submit for probate Ontario.

Avoid Common Errors in Applying for a Certificate of Appointment of Estate Trustee

When applying for a Certificate of Appointment of Estate Trustee, it is always best to get advice from experienced estate lawyers. The Estate Trustee should go to the lawyer for advice on any matters they are unsure about. While most people are concerned about the estate planning process itself, it is equally important to ensure that the application for a Certificate of Appointment of Estate Trustee is completed accurately, completely, and that the appropriate supporting documentation is also provided. If the application is not completed correctly, the executor of the estate is not appointed as the estate trustee, which can delay the estate management and the distribution of the assets.

Applying for a Certificate of Appointment of Estate Trustee is a simple process, but there are many common errors in the application that can result in the application being rejected, delayed, or the application can end up taking more time than it should. Here are some of the most common errors that occur:

Section 7 of the Ontario Estates Act requires that the application for a Certificate of Appointment of Estate Trustee needs to be submitted with the Superior Court of Justice in the locality where the departed lived when they died. If the person did not live in Ontario at the time of death, the application needs to be submitted to the Court in the region in Ontario where the deceased had property when they passed away.
Be consistent in every document to use the exact same names for individuals and also make sure the spelling matches the names set out in any Will. This includes the dearly departed, estate trustee(s) and estate beneficiaries. If they have any “also known as names”, include those too.
All of the following details must be on the court forms, and it must be consistent in all the different forms submitted:
- date of the Will;
- day of death;
- line of work of the dead before they retired;
- chosen work and addresses of the estate trustee(s).

Proper calculation and payment of the estate administration tax payment obligation.
Obtaining and also the filing of an estate administration bond in accordance with Section 35 of the Estates Act, or filing motion material for an application to obtain a court order that does away with the bond requirement.

Issues specific to Applications for a Certificate of Appointment of Estate Trustee With a Will

Sometimes, the person applying for the Certificate of Appointment of Estate Trustee (or succeeding estate trustee), is someone different than the person named in the Will. The named person must relinquish his/her right by filing the appropriate form indicating renunciation of the right to a Certificate of Appointment of Estate Trustee (or succeeding estate trustee) with a Will.

If the applicant is not the person identified as Estate Trustee in the Will, that person Will need to be provided with written authority from beneficiaries that, together, have a majority share in the value of the properties of the estate. Otherwise, they Will need a court order giving them the necessary authorization.

The estate beneficiaries indicated in the Will must be served with notice of the application for a Certificate of Appointment of Estate Trustee. If one or more cannot be served, for example, they no longer live at the only known address and they so far can’t be found, then it must be disclosed.

Issues specific to Applications for a Certificate of Appointment of Estate Trustee Without a Will

To be considered to administer the entire estate process when someone dies without a Will, the following applies:

You must live in Ontario to make the application.
If the departed was divorced at any time, you must make it clear that a prior marriage ended in divorce and what proof you are relying upon to confirm that the departed individual was ended by divorce.
On the application for Certificate of Appointment of Estate Trustee, where you describe why you are entitled to apply for the Certificate, you must include information relating to the authorization offered by individuals that are qualified to a share in the distribution of the estate who, together, are entitled to the majority in the value of the possessions of the estate. Absent such authorization, a court order Will be required.
The estate beneficiaries indicated in the Will must be served with notice of the application for a Certificate of Appointment of Estate Trustee. If one or more cannot be served, for example, they no longer live at the only known address and they so far can’t be found, then it must be disclosed.
certificate of appointment of estate trustee

I’ve been named an estate trustee in a Will. What do I have to do now that I have the Certificate of Appointment of Estate Trustee?

An Estate Trustee is an individual that has been appointed to carry out the estate administration duties after a person passes away. But what does that entail? The obligations consist of:

seeing to it that funeral arrangements have actually been appropriately made and funeral expenses are paid;
amending and filing the amended estate information return, if applicable;
calculating and paying the proper amount of estate administration tax;
locating and safekeeping crucial files;
getting official copies of the death certificate as proof of death;
settling any type of financial debts of the deceased person;
wrapping up any kind of loose ends like communicating with government departments;
dealing with bank officials to collect the funds from and then closing the deceased’s bank accounts;
figuring out how to deal with any property;
dealing with any estate tax issues and preparing and filing final tax returns;
paying the income tax owing; and
distributing the net funds on hand or specific property to the beneficiaries as stipulated in the Will.

Is an Estate Trustee responsible for the debts of the estate?

The Estate Trustee’s responsibility does not extend in the first instance for the debts of an estate. As a trustee, it’s your job to ensure the debts are paid and all of the estate’s legal obligations are fulfilled. However, as an Estate Trustee, it’s important to know how to handle the debts of the estate to make sure you aren’t personally responsible for the debts. However, if the Estate Trustee distributes funds without taking care of business, then the Estate Trustee IS responsible for the known debts not paid.

Does an Estate Trustee have to advertise for creditors of the estate?

This is a great question. I’m sure anyone with a passing familiarity with the estate law knows that it may not be required for an Estate Trustee in Ontario to publish a notice to call for creditors of the estate. However, it certainly is a best practice to do before distributing the remaining assets to the beneficiaries of the estate. Traditionally, advertising was done by inserting a notice in a newspaper. More recently, the NoticeConnect online system has been held in Ontario to be an approved way to advertise online only.

How does an Estate Trustee make a payment from an estate to a child?

If there is a Will, the child is qualified to get his/her share of the estate the way it is laid out in the Will. The Will may establish a trust where payment is made to the child’s parent(s) in trust for the child, or, to a trustee of a trust established for the child.

If there is no Will, then the Estate Trustee is limited to who the funds earmarked for the minor beneficiary can be paid to. There has to be a deferral of payment as an Estate Trustee cannot distribute funds or other types of property to a minor child. It can only be paid to either the Accountant of the Superior Court of Justice or the court-appointed guardian of the property.

The parents of the minor child can apply to the Accountant or guardian for periodic payments to be made for expenses incurred for the benefit of the child. Once the child turns 18 years old, then, they are entitled to their share of the remaining funds.

Certificate of Appointment of Estate Trustee summary

I hope you enjoyed this Certificate of Appointment of Estate Trustee Brandon Blog post. If you are concerned because it is now time to act under the Will, but the named executor is unwilling or incapable of acting, that is where Smith Estate Trustee Ontario can be of assistance. We act as substitute trustees appointed by the court in such situations.

Have you been administering an estate and now you have determined that it is an insolvent estate? 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.

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.

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Brandon Blog Post

FROZEN BANK ACCOUNT: DISCOVER MY RUNDOWN OF WHAT RIGHTS YOU HAVE AND WHAT YOU NEED TO DO NEXT

Post author By Brandon Smith
Post date April 19, 2021

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 of this page and click play on the podcast.

Frozen bank account: Can my bank seize my accounts if I file a consumer proposal or bankruptcy?

A frozen bank account is something people usually worry about when they have unpaid financial debts and need to know. There is plenty of mistaken beliefs worrying Canadians about what legal authority the government or creditors need to seize your chequing or interest-bearing accounts, confiscate various other properties including garnishing your income. This is incredibly troubling for people with too much debt considering filing either a consumer proposal or personal bankruptcy.

I know people freak out about their frozen bank account. Rightly so, but it’s not that bad. In this Brandon Blog, I’m going to give you a basic rundown of what rights you have and what you need to do next.

In this Brandon Blog, I discuss the ins and outs of who and how can your bank accounts can get frozen and how an insolvency filing can help you not only to lift the hold on a frozen bank account. It can also get you complete debt settlement and allow you to move forward debt and stress-free.

Who can freeze your bank account in Canada?

We are always asked the question: “Who can freeze my bank account?” There are essentially three different parties who can create your frozen bank account in Canada. They are:

The bank.
The government.
A creditor with unpaid debt from you sued you and won (the judgment creditor).

The latter two require the cooperation of your bank, which they will give.

What does a frozen bank account mean?

When you have a frozen bank account, it means that the bank has for some reason blocked you from using that account. It can be your personal bank account or something else such as a joint account or a business account. The bank for some reason has either temporarily or permanently made the frozen bank account and seized the cash. You will definitely be wanting to start making phone calls to your banking customer service representative!

You can get your bank accounts frozen due to:

Court action because a judgment creditor has had it seized to get repaid, in whole or in part, for an outstanding debt.
Canada Revenue Agency has seized the funds because you or your business owes them money.
Your bank suspects some sort of and the bank flags suspicious activity running through the account they feel they must investigate. Perhaps they suspect money laundering, other criminal activity or other illegal activities. Something running through your account has piqued their activity to create your frozen bank account.
You owe money to the bank for one or more bank loans that have matured and have not been repaid. The bank agreements and loan agreements that you signed gives the bank the right to offset. So not only can they freeze your accounts, they can without getting a judgment offset any balances held by the bank to your credit against the money you owe them. More on this later.

The exact terms of creating the frozen bank account will vary depending on provincial law. What it does mean is that the account holder cannot take any money out. The funds in the account can still be used by the bank to cover any amount owing to them, but the account holder cannot access the funds.

Unpaid Debts to the Government: Canada Revenue Agency (CRA) caused the frozen bank account

There are some standard reasons why CRA may cause your frozen bank account. They are:

You owe money to CRA for personal income tax debts.
Your proprietorship or partnership owes it money for unremitted HST or employee source deductions.
Your company owes CRA money for the unpaid HST tax debts or employee deductions not turned over to them as they should be.

When the Canada Revenue Agency (CRA) freezes your bank account, it is doing it by one of two mechanisms. It has provided your bank with either a third party demand for any funds payable to you or with a Federal Court Order called a “Memorial“.

Either way, CRA has provided your bank with the official documentation requiring your bank to freeze your bank account and remit all funds payable to the bank account owner over to CRA.

The CRA does this in order to get money owed to them. CRA can freeze any bank account. In Ontario, this includes TFSAs and absent a bankruptcy filing, your RRSP is also subject to seizure.

In this Brandon Blog, I am only talking about a frozen bank account and not property in general. What property is subject to a person’s claim of exemption from seizure is a matter of provincial law. Likewise, wage garnishment is also governed by provincial law and is not the subject of this Brandon Blog.

Unpaid debts through creditors: How can creditors freeze my bank account?

If a creditor is looking to collect from you, once they have run out of patience with you, one of the first steps they will take is to sue you. They begin their litigation against you to get a judgment for the amount you owe. If successful, in Ontario, they then provide that judgment to the Sheriff to freeze your bank account. Once the Sheriff serves the judgment notice on the bank, it suspends your right to use your money or assets held at the bank. If a creditor causes you to have a frozen bank account, you will not be able to access your money until the issue is resolved.

It does not matter what the original debt was for – credit card debts default under your credit card agreements, an unsecured loan, payday loans from one or more payday lenders, damages under a contract or any other type of commercial debt. Once the creditor has obtained a judgment, they can get your bank to have your bank account frozen.

Frozen bank account: How to get my bank account unfrozen when I am not insolvent

If you now have an extremely icy bank account as the outcome of a judgment against you or a CRA garnishee, perhaps following a tax audit, you are probably really feeling scared and powerless. While there are no guarantees, there are actions you can take to help get your frozen bank account thawed out and your financial life back on course.

Since you are not insolvent, you cannot even consider an insolvency proceeding. But there are some things you can do.

The first thing you need to do is find out who the perpetrator is that forced your bank to create this deep freeze. Most creditors will get the bank to freeze your account to get you to concentrate on the reality that you need to take care of them. Various other means they have actually made use of to engage with you have clearly not worked. Ask your bank representative who is it that has triggered the icy account.

Since you now know who it is, connect with them. Attempt to reach a bargained negotiation in return for them lifting the freeze promptly on your account. As an example, entering into a payment plan by providing the CRA financial debt collector with a collection of post-dated cheques that will settle your tax debt in full. Absent an insolvency procedure, the CRA agent must decline anything less than 100 cents on the dollar.

If it is a judgment creditor, you may have an opportunity to negotiate a minimized settlement amount if paid instantly. Clearly, the amount will certainly need to be greater than what the creditor anticipates obtaining from your icy bank account. Alternatively, you can enter into a payment schedule that you can honour.

There is no maximum number of hours or days where you can prepare for having your chequing or savings account unfrozen. Each condition will absolutely differ. The intricacies of your negotiations as well as the length of time they take will normally be the guiding aspect.

Consequently, any bargained settlement needs to include an arrangement that will instantly result in your bank raising the freeze and allow you to maintain your cash. Either you or the creditor or both will need to supply your bank with proof of the satisfactory payment arrangement that includes the unfreezing of the frozen bank account.

The one thing I can guarantee you is that neglecting the problem will only slow down the process and will not help your frozen bank account. Your financial institution will certainly clear out your account one way or the other. If you owe your bank, the tried seizure of your account is a default on your loan. The bank will certainly take the cash in your account and offset it versus your loan. Then they will tell the judgment creditor there is no cash available for them.

If it is CRA, your financial institution will send the cash off to them.

If you do not owe your bank any kind of cash, they will send your money to the judgment creditor.

Regardless of which of the above 3 potential outcomes is, if you do not respond to an icy account, the economic repercussions can end up being far more severe.

Frozen bank account: What bankruptcy protection does the Bankruptcy and Insolvency Act provide to get my bank account unfrozen

If you find yourself with too much financial debt, especially from unsettled tax obligations, you might be thinking of bankruptcy. Though the word “bankruptcy” is frequently made use of to explain any type of situation in which a person is unable to pay their debts, the legal term “bankruptcy” really describes a particular legal process administered by the Bankruptcy and Insolvency Act (Canada) (BIA).

In reality, there are three possible provisions of the BIA that can be used by a person to not only do a government-authorized debt settlement program. It also has the added benefit of immediately unfreezing your bank account. The three possible choices are:

Consumer proposal debt settlement plan
Division I proposal debt settlement plan
Bankruptcy

Let’s focus on the bankruptcy protection possibilities, being a consumer proposal or a Division I proposal, rather than a pure bankruptcy liquidation. If you have a bank account that is iced, a filing under the BIA invokes an immediate stay of proceedings. This means that once a person has filed with the licensed insolvency trustee, any action to try to enforce collection on debt cannot be started or continued. This includes the frozen bank account as part of a seizure. Therefore the bank account must be unfrozen once the bank receives notice of the filing.

There are only two exceptions to this for your frozen bank account: one lawful and one debatable.

Lawful – If the seizure has been completed before the bank receives notice of the filing, then it is game over. Your account is unfrozen, but there is no cash left in it. This means the bank has made the payment to itself already, already transferred the money to CRA.

In the case of a creditor, the Sheriff has had to have distributed the money and it has to have already been received by the creditor. If the Sheriff still has it, he cannot proceed to send it on to the creditor. In the case of a proposal, he must return it to the insolvent person who has filed. If a bankruptcy, the Sheriff must hand the money over to the Trustee.

Debatable – You owe the bank money. Once they receive notice of your filing, your lender takes the position that they have the right to offset any money on deposit to your credit against any amount you owe them. After you file and they receive notice, they empty out your account and apply for the money to be put against your bank loan or credit card debt. This action of maintaining your frozen bank account and keeping the cash is debatable.

Can you open a new bank account if your account is frozen? Definitely, just not at the same bank!

Most people can open a new bank account when they have a frozen bank account. However, why would you want to open a new one up with the same bank? They probably view accounts frozen for nonpayment as accounts that are high risk. Your creditors also now know where you bank. If you owe your bank money, as I have already discussed, you cannot keep your cash there anymore anyway.

The frozen bank account prevents you from withdrawing your money. If you have had your bank accounts frozen multiple times, the bank simply won’t issue another account and will be very happy to see you leave.

We always advise anyone contemplating filing a proposal or for bankruptcy, to set up a new account. Then, advise anyone who automatically deposits money into your account, that they should start depositing into your new account. Like your employer or the government.

It is also important to tell anyone you have granted a pre-authorized withdrawal to of the new bank account and make arrangements for them to pull the money out of the new account once there is money in it. Like your mortgagee you make your monthly mortgage payment to or your landlord you pay rent to, utilities, the vehicle loan company. Now your bank or their credit card division cannot automatically take your money to offset your liability to them.

We normally steer people towards one of the online banks, as it is unlikely that they owe money to them. We do not earn any commission for steering business to any bank, so we do not have a conflict. Something like a Simplii or EQ Bank savings and chequing accounts seem to work just fine. Then the person files and nobody can take some debatable action against the funds in their bank account.

Frozen bank account: Get a personalized no-cost debt-free plan today

I hope you enjoyed the frozen bank account Brandon Blog post. The entrepreneur may be very frustrated that the company can no longer pay all its debts as they come due.

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.

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.

Brandon Blog Post

WHAT IS A RECEIVERSHIP? OUR COMPLETE GUIDE TO RECEIVERSHIP SOLUTIONS

Post author By Brandon Smith
Post date April 14, 2021

what is a receivership?

What is a receivership?

What is a receivership is a question I am asked often. Receivership is a remedy available to secured lenders to recoup as much of their debt as possible. A secured creditor, normally a financial institution, has lent funds to the company or individual under a secured financing transaction. They did it this way so in the event the company or person defaults on its finance payments, they can enforce against the assets subject to the security.

Receivership is a different process than bankruptcy for the sale of the properties of a corporation. In Canada, the secured creditor is typically the Bank as the lender. Normally, when a borrower misses payments, they tend to be insolvent. However, it is possible to have a receivership in Ontario even if the borrower is not insolvent.

In this Brandon Blog, I am going to tell you all about receivership. What is a receivership? How it works. When it can be used? What types of receivership are there?

What is a receivership? Examples of receivership in a sentence

What is a receivership? Receivership is a legal proceeding. Either a secured creditor privately appoints the receiver by instrument or a court appoints a person or company, called a receiver, to collect and manage the assets of a person or business that is unable to manage those assets effectively.

To understand more about the receivership process, we first need to look at the types of receivership. These are:

Liquidating receivership – This is a type of receivership that is brought about when a company ceases operations because the management of the company is unable to make it a viable business again. If the business is not viable, then the receiver will not operate it and will find buyers for the assets.
Operating receivership – This form of receivership is when parts of the company are viable or must otherwise continue operating under receivership. The business assets have a great deal of value if operating, but if shut down, relatively no value. In this case, the receiver will continue operating the business and the secured creditor will agree to lend funds if the business’s cash flow is insufficient. While operating the business, the receiver will also look for buyers.

The word “receiver” originally meant “a person appointed by a court to manage the affairs of another, especially a bankrupt or insolvent“. The term is now more widely applied and refers to a person placed in temporary charge and control of another person’s assets or a business entity. A receivership is a form of governance used in a wide range of situations. It is particularly common in the fields of law and business.

What is a receivership in a sentence – A receivership is a legal process started by a secured creditor either privately appointing a receiver by instrument or making an application to the court for an order that forces a party to carry out the duties of a receiver over the assets of a company or person.

In Canada, section 243(4) of the Bankruptcy and Insolvency Act (Canada) (BIA) dictates that only a licensed insolvency trustee can act as a receiver. From the above, you should now realize that there are two types of receivers: (i) privately appointed receiver; and (ii) court-appointed receiver.

What is a receivership? 10 – Day Notice of Intention to Enforce Security

Section 244 of the BIA relates to a secured creditor who intends to enforce its security against an insolvent debtor, either through private appointment or by making an application to the court. This section states that any secured creditor who intends to enforce against all, or substantially all, of the inventory, accounts receivable or other property used by the insolvent debtor in its business, must give adequate notice. The notice must be in writing by using the form prescribed by the BIA.

The BIA defines adequate as a minimum of 10 days. A secured creditor must send out the 10-day notice of intention to enforce security and cannot enforce its security until the 10 days have expired unless the debtor consents in writing to earlier enforcement. The purpose of giving the 10-day notice is to allow the insolvent debtor a chance to either negotiate some resolution with the secured creditor or otherwise attempt to reorganize its financial affairs. An example of reorganizing would be speaking with new potential lenders, consideration of assets that could be sold to repay or otherwise reduce the indebtedness to the unhappy secured creditor.

The insolvent debtor may also be considering invoking an insolvency process such as a Division I Proposal under the BIA to reorganize all of its debts to implement a financial reorganization strategy. If a proposal or a notice of intention to make a proposal under the BIA is filed by the insolvent debtor before the expiry of the 10 day period, then the enforcement action of the secured creditor has initially stayed.

That secured creditor would have to make an application to the court to show that it has lost total confidence in the insolvent debtor’s abilities and it will not support any reorganization attempt. The application is to lift the automatic stay of proceedings that happened when the insolvent debtor filed, to allow the secured creditor to enforce its security against the assets to try to recover as much of the secured debt as possible through the appointment of a receiver.

Why did 10 days become the official notice period? This was part of amendments to the BIA made in 2009. It arose as a .esult of court decisions over what is reasonable notice. The most famous case is one that insolvency practitioners refer to as Lister v. Dunlop. The case made its way all the way up to the Supreme Court of Canada. The proper name of the case is R.E. Lister Ltd. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726. The decision was released on May 31, 1982.

The case dealt with a variety of issues, including what is receivership. Another of the issues considered was a reasonable notice to be given when a secured creditor demanded repayment of its demand loan, due to one or more defaults on loan? The most common default is defaulting on making the required loan payments on time. The loan agreement and debenture securing the loan stated that it was a demand loan and that the lender must give reasonable notice when making the demand.

However, in the “old days”, there was never a definition of what reasonable notice was. In fact, in Ontario, the law at the time was that reasonable notice only came into being if the business owner asked for a time to repay the loan. What was reasonable was a matter of discussion and negotiation. In Lister v. Dunlop, it was determined that Dunlop did not provide reasonable notice, based on the specific facts in that case.

Case law evolved and eventually, in 2009, the BIA was amended as part of the new provisions to bring receivership under the BIA and receivers subject to the supervision of the Office of the Superintendent of Bankruptcy Canada. The 10 day notice period was Parliament’s way to try to codify what reasonable notice is.

Court Appointed Receivers vs. Privately Appointed Receivers

As discussed above, receivers are appointed when secured creditors want to recover on their secured loans. Receivership is a remedy for secured creditors. It is not a remedy for unsecured creditors. The intent is for the receiver to take possession of the insolvent company assets subject to the security agreement and conduct a sale of assets. The proceeds of the sale will then be distributed in accordance with the priority of the creditors under the BIA. The secured creditor should want to make sure that it is in the first place to receive the funds from the receiver, for the receivership process they are paying for!

From the above, by now, you have probably realized that a privately appointed receiver is appointed in writing by the secured creditor. The receiver gets properly retained and then is given an appointment letter by the secured creditor after the 10 day notice period has either passed or was waived by the insolvent debtor. The privately appointed receiver gets its powers from the security documents which will outline the approved steps the receiver can take.

Court-appointed receivers, as the term implies, are appointed by the court. The secured creditor properly retains the receiver and makes an application to the court for the appointment of the receiver. The secured creditor is the plaintiff in this litigation. If the court grants the order, then the court-appointed receiver begins the receivership administration. The powers and responsibilities of the court-appointed receiver come from the court order, called the Appointment Order.

The steps the receiver will take in determining what method will realize the most money possible from the sale of assets should be pretty well identical under both a court-appointed receivership and a privately appointed receivership. The analysis of how and the steps to be taken to realize the most money possible from the assets of the company in receivership should be the same, regardless of the form of appointment.

Either way, as stated above, the receiver must be a licensed insolvency trustee who is experienced in acting as a licensed insolvency practitioner.

What is a receivership? Duties of a receiver

Receivers are required to act honestly and in good faith. A privately appointed receiver has a duty to the secured creditor who appointed the receiver. A court-appointed receiver has a duty to act in good faith to all creditors.

The main roles of the receiver, whether private or court-appointed, can be summarized as to:

Secure all the assets of the insolvent debtor pledged under the security agreement or covered by the Appointment Order.
Make sure the receiver has control of property, the assets are conserved and properly insured.
Advance the rights of the debtor with the approval of either the secured creditor or the court. This could include continuing or beginning any necessary litigation.
Formulate the plan to maximize the realization from the sale of assets. This also involves a decision as to whether or not to operate the business of the company.
Offer the assets for sale in a properly advertised public sale.
Complete the sale and distribute the net proceeds in accordance with the provisions of the BIA.
Make regular reporting to the court and/or the appointing creditor
Obtain the approval of the secured creditor, and under a court appointment, approval of the court for all actions to be taken by the receiver.
In a court appointment, to obtain the approval of the court for its fee and disbursements and for those of the receiver’s legal counsel.

The Appointment Order generally will give the court-appointed receiver extensive powers.

I want to summarize the difference between company receivership and bankruptcy

I find that many times people will confuse the terms receivership and bankruptcy. What is a receivership is not the same as what is bankruptcy. I want to summarize the difference between company receivership and bankruptcy. There are important differences between bankruptcy and receivership.

The terms bankruptcy and receivership are often mistakenly used; they are not the very same thing. Bankruptcy is a legal process for unsecured creditors. The bankruptcy of a person and that person’s discharge from bankruptcy acts to discharge that person’s unsecured debt. As a company is never discharged from bankruptcy, the bankruptcy process has the effect of ending the company’s business.

What is a receivership? Receivership on the other hand, is a legal process for the benefit of secured creditors that safeguards their security if an insolvent borrower defaults on its secured debt financial obligations.

What is a receivership? Is receivership the right solution for you?

I hope you enjoyed the what is a receivership Brandon Blog post. I have gone to great lengths to describe what is a receivership, the different types of receivership and that it is a remedy for secured creditors. However, many times, if properly handled, it can also assist the business owner. The entrepreneur may be very frustrated that the company can no longer pay all its debts as they come due and is looking for a way out, a way to sell the business or a way to get rid of the sick parts of the business and keep the good parts.

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.

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.

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Brandon Blog Post

FALSE PRETENCES: OUR STEP-BY-STEP NEW APPROACH CREDITORS MUST TAKE FOR THEIR CLAIM TO SURVIVE A BANKRUPTCY

Post author By Brandon Smith
Post date April 12, 2021

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

False pretences and bankruptcy introduction

Just because you have filed for bankruptcy, doesn’t mean you are free and clear of your debts. In fact, some debts, such as those obtained with the use of false pretences, may not be discharged through bankruptcy at all.

A creditor can file a form 31 proof of claim for a debt incurred by false pretences. However, it takes more than just stating it in a proof of claim. A court must have made that determination. If not, the debt can be ruled as dischargeable through bankruptcy. But if the court has made that determination and it is the basis of the claim, that debt will not be discharged upon the bankrupt receiving his or her bankruptcy discharge.

I have discussed the topic of false pretences and bankruptcy before, but based on a recent Ontario court decision, I need to break down the basics of this type of debt and how it relates to a person’s bankruptcy.

What is a false pretence?

A false pretence is a false claim or statement made to induce a person to part with property or to give some valuable thing or advantage. It is a criminal offence in Canada. False pretences are the main element of the crime. The essence of this common law offence is that a person knowingly makes a false statement of fact, intending to induce the victim to act on it to his/her detriment. The reason why the false pretence is punished is that it is a fraud on the public.

Some people choose to give false information when they apply for credit or an extension of credit to make their financial situation look better. This is often done by people who have no intention of repaying the debt and therefore use certain fake information with the intent of deliberately misleading the creditor. They are hoping that the potential creditor will not verify all the information. They can get away with this when they are not required to prove false information with the creditor.

Crimes of Dishonesty: What is the criminal offence of false pretences?

The offence of false pretences is a criminal offence that occurs when a person obtains property from another person by deceiving or defrauding the other person. This can be done either by a false representation of existing facts or by a false promise. The person must intend to defraud and in doing so possess the intent to commit an offence. This is a fairly complex offence under paragraph 362(1) of the Canadian Criminal Code and includes a wide variety of possible scenarios. More often than not, it involves obtaining personal property under false pretences.

Section 362(1) of the Criminal Code of Canada states:

“Every one commits an offence who

(a) by a false pretence, whether directly or through the medium of a contract obtained by a false pretence, obtains anything in respect of which the offence of theft may be committed or causes it to be delivered to another person;…”

If you have been charged with a criminal offence under subsection 362(1)(a) of false pretence in Canada, you need to ensure you have a good defence. Sometimes, it is a difficult offence to prove beyond a reasonable doubt. The only thing the Crown really needs to prove is that you made a false representation to obtain the property of another and that the other person believed you (and was therefore defrauded). It is up to you to ensure that you have a good defence.

But I am not writing this Brandon Blog to focus on criminal behaviour. Rather, I want to discuss this concept from the perspective of someone who might file an assignment into bankruptcy.

Debt arising from false pretences not released by the bankrupt’s discharge

Section 178 (1)(e) of the Bankruptcy and Insolvency Act (Canada) (BIA) states that an order of discharge does not release the bankrupt from any type of financial obligation or liability arising from obtaining property or services by false pretences or fraudulent misrepresentation other than a debt or liability that arises from an equity claim.

In the past, it was quite customary for a creditor seeking judgment for recovery of a debt who is alleging that the debt arises from circumstances caught by section 178(1)(e) of the BIA to also seek both the civil judgment for the money and also a declaration in the judgment that the debt is one of the debts that falls into the category of not being released just because the bankrupt received his or her bankruptcy discharge. This relief was sought even though the defendant was not involved in any bankruptcy proceeding.

In the past, the courts have provided such relief where the evidence before the court substantiated it, notwithstanding the defendant was not an undischarged bankrupt. There are now two cases in Ontario that say such a dual judgment, both the civil award of money plus the BIA debt declaration will not be made anymore where there is not an actual bankruptcy proceeding.

The most recent false pretences released decision in Ontario – *Bank of Montreal v. Mathivannan, 2021 ONSC 2538***

On April 6, 2021, the Honourable Justice Kurz of the Ontario Superior Court of Justice released his decision in this case. The Bank of Montreal (BMO) was attempting to get a summary judgment against a defendant for $35,723.71 plus pre as well as post-judgment interest as a result of an unpaid conditional sales contract.

BMO alleged in its statement of claim that the claim arose because the defendant had fraudulent intent by purposely misrepresenting her employment and employment income in her application for credit, being a statement in writing, under a conditional sales agreement for an automobile. The false document application was made to the dealership for financing to purchase a vehicle from it. The conditional sales agreement was then assigned to BMO as a normal financing business practice that is used.

The defendant was noted in default. Under the rules, when noted in default, it is as if the defendant admitted the allegations of fact contained in the statement of claim. However, the opposite is not true. The plaintiff is not necessarily entitled to a judgment merely because the allegations of fact are deemed to have been admitted. They actually must be proven.

The deemed admissions of fact that come from the statement of claim are that:

Defendant made certain representations as to her employment and her employment income.
BMO relied on those representations and provided the defendant credit.
Those details supplied by the defendant were false.
That false information was created solely for the objective of defrauding BMO to advance credit for the purchase of the vehicle.
BMO gave the credit based on those representations.

The court’s decision regarding the false statements in the credit application document

The court determined that BMO’s statement of claim:

Falls short to state how the false statements meet the test for false pretences or fraudulent misrepresentation.
It did not say whether they were significant or not.
The affidavit evidence used to support the statement of the claim simply offers the verdict that they were false and illegal.
With those non-inclusions, the pleadings in the claim do not support a finding of fraudulent misrepresentation or false pretences.

The court had no problem in giving BMO judgment for the civil claim for money, being the $35K plus pre and post-judgment interest. Where the court had a problem was in the evidence of the fraud. Therefore, the request for the additional relief of stating that the debt is one not released by the defendant’s discharge when she obtains her discharge from bankruptcy has not yet taken place.

The court did not grant the additional relief to protect this claim in the event the defendant ever declared bankruptcy. But there is another, and in my view, deeper reason, which all plaintiffs finding themselves in the position of BMO and seeking the same kind of two-phase relief must keep in mind.

The court should not issue hypothetical decisions even with deceitful conduct

The court did not doubt that the defendant made the false statement. What the court said, following the decision of the trial judge in Royal Bank of Canada v. Elsioufi, the Honourable Mr. Justice Dunphy, that there was not an essential legal basis to determine fraud to approve the civil monetary judgment requested. Justice Kurz followed the thinking of Justice Dunphy by stating that even if a positive finding of fraud were called for to release a judgment, he would certainly refrain from doing so.

That is because it would stand for a theoretical declaration applicable to a bankruptcy case before that proceeding beginning. Justice Kurz also concurred with Justice Dunphy that courts ought to make decisions based on examined evidence and not only based on admissions or even on consent.

So the old-fashioned method in Ontario of bringing to court the request for not only a civil monetary judgment, but also a declaration that the debt falls under s.178(1) of the BIA and therefore not discharged upon the discharge of the bankrupt is over. In the words of Justice Dunphy:

“I am moved to issue this brief endorsement for publication purposes as I have noticed a growing practice of some to request such declarations on a routine basis. I may even have signed one or two before giving the matter further thought and research and I have concluded that the practice is to be discouraged.”

Justice Kurz refused to grant BMO any sort of special costs in its motion, as it did not need to make that kind of motion merely to get the civil monetary claim in a judgment.

***False pretences*: A new creditor blueprint is needed**

Now that at least in Ontario, if the old way will not work anymore, what is a creditor to do now? It is not only for a claim falling under false pretenses or fraudulent misrepresentation but potentially many other of the classes of debts falling under section 178(1) of the BIA including false pretences or fraudulent misrepresentation.

The above-noted court decisions can be instructive. First, if a plaintiff believes that the debt was incurred because of a type of fraud, including false pretences or fraudulent misrepresentation, hard evidence should be provided to the court. Proof using genuine documents, a copy of original documents proving breach of trust, is evidence that should be included.

It should not merely be a deponent’s or plaintiff’s conclusion given the known facts being deposed. It should support a finding of the fraud, even though the court may refrain from making a finding of fraud to deliver a civil monetary judgment in favour of the plaintiff. Providing this evidence will be important later on.

Next, there must be an actual bankruptcy. Either the person must have recognized their financial condition of insolvency and filed an assignment in bankruptcy or a creditor have the court issue a Bankruptcy Order against the person. It could even be the judgment creditor able to prove that the person ought to be adjudged bankrupt.

Third, once bankrupt, the judgment creditor should file a proof of claim with the licensed insolvency trustee administering the bankruptcy estate. Proof of the debt would be the judgment which would be attached to the proof of claim and marked as “Schedule A”.

Fourth, does the plaintiff continue to believe that the claim falls under one of section 178(1) of the BIA exclusions and would survive the person’s discharge from bankruptcy, such as false pretences? If so, then the creditor can make an application to the bankruptcy court to lift the stay of proceedings against the bankrupt, for the creditor to attempt to obtain a judgment from the court that the claim of that creditor is not released by the discharge of the bankrupt.

Fifth and final, the creditor having obtained such leave, can then make a new application to the court for the specific finding that the court refused to make in both of the cases I discussed above. The original evidence supplied by the creditor in its original application will now become very important for the court to review. That is why I said it should be pleaded, with evidence when the civil monetary judgment was sought so that it could be relied upon now.

False pretences summary

I hope you enjoyed the false pretences 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.

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.

Tags Bank of Montreal v. Mathivannan, bankruptcy and insolvency act canada, common law offence, crimes of dishonesty, false pretence, false pretences, false pretences and bankruptcy, false statements, form 31 proof of claim, fraudulent intent, fraudulent misrepresentationi, licensed insolvency trustee, personal property, proof of claim, Royal Bank of Canada v. Elsioufi, Section 178 (1), what is a false pretence, what is the criminal offence of false pretences

Brandon Blog Post

CANADA HOUSEHOLD DEBT: HOW COVID-19 AFFECTED HOUSEHOLD DEBT AND IS THERE A LOOMING CORONAVIRUS DEBT CRISIS?

Post author By Brandon Smith
Post date April 7, 2021

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.

canada household debt

Canada household debt: Pre-pandemic debt pressures

Pre-pandemic, Canada household debt was continually increasing. The number of homes carrying debt has increased significantly over the last decade. In 2012, Statistics Canada reported that for the average household, Canadian households’ debt-to-income (DTI) ratio was 150%. That means that debt was rising at a rate of $1.50 for every dollar of income. This was up from $1.10 or 110% the year before. In the first quarter of 2020, the DTI ratio hit 175.4%. The ratio had been stuck at that level since about 2016.

This increase in debt can have a negative effect on a household’s bottom line — and the larger the debt, the greater the negative effect. In this Brandon’s Blog, I discuss what has happened to Canada household debt during the COVID-19 pandemic.

How COVID-19 Affected Household Debt in 2020: Canada household debt well supported by a temporary income surge

Whether you consider the federal and provincial financial assistance given to Canadians primarily through Canada’s COVID-19 Economic Response Plan as an income surge or not, findings released by Canada Mortgage and Housing Corporation (CMHC) in November 2020 show that the government assistance did help Canadians cope with Canada household debt.

The key findings in Canada in the CMHC report were:

Q2 2020 Canada household debt ratio is 17% down from the Q1 ratio at 158%.
The DTI ratio for home mortgage debt was also down, falling from 115% to 105%.
These declines were a straight outcome of a boost in household disposable income.
The degree of outstanding Canada household debt had not changed.
On average, Canadian household disposable income grew by almost 11% between the Q1 and Q2 of 2020 and by 15% year over year.
The government’s temporary transfer of money to Canadian families had the effect of decreasing the Canada household DTI ratio to a ratio not seen since 2010.
canada household debt

COVID-19: The second wave brought uncertainty on household debt

How Has COVID-19 Affected Canada Household Debt? Around the time of the second wave, the COVID-19 pandemic had actually changed the family financial picture. The DTI ratio is a crucial indication of financial obligations as a vulnerability for primarily the financial real estate industries.

The Canada household debt-to-income ratio decreased in all significant Canadian cities in the second quarter of 2021. Under regular scenarios, such a decline would certainly indicate a general strengthening in families’ capacity to pay off financial debt. Federal government subsidies effectively supported the household lost income. This more than likely helped Canadians with lowering their non-mortgage debt throughout those months. Nonetheless, the mortgage part of Canada household debt has increased in the majority of metropolitan areas while employment has contracted.

At the same time, mortgage deferrals on mortgage payments offered by Canadian financial institutions stopped. This of course leads to worries about the ability of Canadians to stay current on their mortgage payments, even with the current extremely low-interest rates. Other government assistance programs have already ended or are coming to an end. The end of the government support programs leading to the temporary boosting of household income now brings uncertainty as to how Canadians will be able to manage to carry and pay down their household debt levels.

Canada household debt: Higher-income increases drive DTI ratios down

Statistics Canada also came out with an interesting report about the economic impacts of how COVID-19 affected household debt in 2020. The key findings of the Statistics Canada report are:

The gap between the lowest and highest income groups declined in 2020. As you might expect, the reason was that lower-income families received a greater share of government COVID-19 funds than higher-income households. Therefore, lower-income households saw more growth in household income than high-income earners, so, the gap closed.
There was a more powerful rebound in disposable income for lower-income households as well as younger households. Again, government coronavirus pandemic-related funds transfers are the reason why.
Lowest-income and youngest families experience the biggest decline in wages and salaries. As mobility restrictions, shutdowns and lockdowns took place across Canada, travel, food and beverage and the hospitality industries were hard hit because of closings for an extended period. These industries provided employment for many lower-income people. Layoffs resulted in declines in wages and salaries.
The dollars of COVID-19 assistance doled out by the federal government surpassed the losses in employment and self-employment incomes suffered.
COVID-19 support procedures have the biggest impact on lower-income and more youthful households.
Families were able to reduce monthly expenses to the point where it was less than their monthly income from all sources to boost their savings and cash balances on hand in 2020.
Lowest-income and youngest families saw the largest wealth gains.
Low lending rates facilitated home buying for lower-income and younger Canadians.
Lower-income families restricted their consumer debt balances on credit cards and other non-mortgage debt.
Younger homes restricted consumer credit (non-mortgage) borrowing in spite of higher consumer spending.
The biggest changes in DTI ratios occurred in lower-income and also younger families as opposed to higher-income households.
canada household debt

Canada household debt: How will COVID-19 affect financial assets, delinquency and bankruptcy?

The Canada Emergency Response Benefit (CERB) supplied financial support to Canadians who experienced negative financial impact by the COVID-19 pandemic. Eligible Canadians obtained $2,000 for a 4-week period (the same as $500 a week), between March 15 and September 26, 2020. Roughly $82 billion was paid to about 8.9 million Canadians through the CERB program which ended in September 2020.

The Canada Recover Benefit (CRB) sustains Canadians that have actually not returned to work as a result of COVID-19 or whose earnings have actually been reduced at the very least by 50%, and who are not eligible for Employment Insurance (EI). Eligible Canadians should be searching for work and accepting a job where it is reasonable to do so. The CRB gives $500 a week for up to 38 weeks. It is available only for 1 year. You make an application for the CRB for 2 weeks a time through your online CRA MyAccount. You have to wait until after you’ve missed out on 2 weeks of work to apply.

So the CERB is over. The CRB will get kicked to the CRB by this Fall. The Canada Emergency Wage Subsidy for support businesses continuing to employ people is supposed to end this June. Mortgage payment deferrals are over. Although during the first wave courts were closed so lawsuits were not advancing and at the same time collection agencies were not hounding people.

The courts have been open and litigation continuing for some time now. Over the last few weeks, people calling in to inquire about consumer proposals and personal bankruptcy have been saying they are getting calls from collection agencies looking for money, including, credit card debt payments. So pretty soon we should be back to business as usual as far as debt collection is concerned.

To date, as indicated above, COVID-19 has allowed Canadians in general to increase their financial assets and their rise in household net worth. As already described, for those lower-income families, the government support measures have actually had an increase in household income.

Delinquencies in Canada household debt have been ignored to a large extent in 2020 and bankruptcy filings were the lowest on record in 2020 in two decades. I expect that to change, as nobody is currently addressing any form of debt hangover. That is debts that people had pre-pandemic where no principal has yet been paid down and lenders have been understanding and therefore not pressing for collection. As collection calls increase, I expect that personal insolvency filings will also.

I expect that there will also be an increase in corporate insolvency filings. So far in Canada, most of the filings have been large retailers, certain cannabis companies and Laurentian University seeking bankruptcy protection in order to restructure under the Companies’ Creditors Arrangement Act (CCAA). As the economy gets better, companies will need to restart, hire more staff and generally gear up for an increase in business.

Companies will need capital to do so. Unless a company is sitting with a large cash balance, which for the majority is unlikely, they will need to tap into available lines of credit or do fresh borrowing. Lenders who have been understanding to date, may not wish to increase their exposure to certain companies or industries. If companies do not have the cash to operate, they will fail.

How will COVID-19 affect financial assets, delinquency and bankruptcy? I will now provide you with some thoughts to consider.

Canada household debt: Predictions and financial challenges for 2021

Canadians will be facing a great financial challenge as the economy rebounds from the economic impacts of the coronavirus. Canada’s economy pretty well made a sudden stop due to the COVID‑19 pandemic crisis.

This has actually caused extensive income losses, producing a tough scenario for many Canadian families. This is especially true for those that are highly indebted. From a financial stability point of view, a key worry is whether homes can stay up to date with their financial obligation payments. Highly indebted Canadians may very well end up in a financial crisis.

The COVID‑19 pandemic has a worldwide reach, and its aftermath is a lot more uncertain than how we recover from a normal recession. Economic activity will most certainly rebound as mandated lockdowns are gradually relieved. However, this will likely be a slow process, implying some of the macro-financial results of the pandemic might linger.

The Bank of Canada is worried about the 2021 financial challenges for all Canadians. To what degree can homes weather the storm? Canada’s central bank says that this eventually depends on:

the financial wellness of households last February 2020;
the efficiency of Canadian government support measures and policy activities targeted at the recovery; and
the rate at which the labour market recuperates.

The Bank of Canada will be looking at many Canada household debt factors as the economy recovers. Specifically concerning are the more financially vulnerable households. Things that will give the Bank of Canada concern about household liabilities are:

Mortgagors (the homeowners) with not many financial guardrails.
Home equity credit lines can supply a financial reserve however at the expense of increased borrowing.
Will government fiscal policy aid in supporting Canadians until household income can get back to or exceed pre-pandemic levels?
Unemployment rates may not be a fully accurate indicator of household revenue losses.

Only time will tell how 2021 unfolds for Canadians and the economy.

Canada household debt summary

I hope you enjoyed this Canada household debt 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.

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.

Tags affected household debt in 2020, bank of canada, canada household debt, Canada household debt well supported by a temporary income surge, Canada's COVID-19 Economic Response Plan, Canadian households' debt-to-income, credit card debt payments, delinquency and bankruptcy?, government support programs, Higher-income increases drive DTI ratios down, How COVID-19 Affected Household Debt in 2020, How Has COVID-19 Affected Canada Household Debt?, How will COVID-19 affect financial assets, Ira Smith Trustee, mortgage deferrals, pre-pandemic debt pressures, Statistics Canada, The second wave brought uncertainty on household debt

Brandon Blog Post

How Much Does A Consumer Proposal Cost: We Show You Our Rules To Make It FREE

Post author By Brandon Smith
Post date April 5, 2021

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.

How much does a consumer proposal cost: Only pay a Trustee for consumer proposal services

This Brandon Blog answers the question “how much does a consumer proposal cost?”. There is one thing that I want to get out of the way first, that directly impacts the cost of a consumer proposal. The only party authorized by law to administer a consumer proposal in Canada are licensed insolvency trustees (formerly called bankruptcy trustees).

There are many firms that advertise that they will settle your debts without you having to see a licensed insolvency trustee (formerly called a trustee in bankruptcy). They sell you on the sizzle of staying away from a licensed trustee implying that visiting a reputable bankruptcy trustee will immediately mean that bankruptcy will be your only option.

These firms promise a lot but deliver little or nothing. In return, you need to pay the high fees. Then, when they have charged you everything they can, they walk you down the street to a licensed insolvency trustee (Trustee) to administer a consumer proposal for you. So they end up taking you to the exact professional they first told you to avoid when they cannot charge you any more fees. Why can’t they charge you any more fees? Because by then, you have wised up to their game!

So do yourself a favour. The easiest way to know how much does a consumer proposal cost is to make an initial Trustee visit for a no-cost initial consultation to learn all your debt relief options and forget about the non-licensed debt management company.

How much does a consumer proposal cost: Getting rid of debt

When you are buried in debt, things like saving for the future can seem impossible. This is because you are trying to climb up a hill with a heavy backpack on your back, making it hard to take a step forward. You may even be tempted to stop trying when you hear everyone else talking about how they are able to save so much, but you wonder why you can’t.

If you’re looking at a pile of unpaid bills and thinking, “I just can’t afford to make those payments” or “I can’t believe I’m falling so far behind,” you’re not alone. But you’re not hopeless. It is possible to get out from under crushing debt and start getting ahead. The first step is to stop making the situation worse with missed payments and late fees. To do this, you need to make a plan.

Managing your debt is a lot like dieting – it looks easy and straightforward on the commercials, but when you get down to doing it, it’s a whole different story. There are hundreds of books and websites out there, each with different tips and techniques that you can follow to help you get a handle on your debt. Here are a few things to consider:

As I have written in several blogs before, a self-help remedy is always the best. First look at all your monthly income sources and all your expenses for a typical month. Create a budget showing what it all is so that you can figure out how much more you are spending each month than you earn. Now, look critically at all your behaviours during a typical month that leads to that spending. What can you cut out?

Also, look at your total monthly income. Do you have the time for and ability to either get a second part-time job or create a side hustle for yourself in order to earn more income? Based on all this reflection, what is the best budget you can come up with to try to spend no more than you earn, after-tax? This will let you see if you can work yourself out of your financial challenges by having excess money each month to pay off your debts or not.

If yes, terrific. Put your plan into play and pay down your debts. Curb your credit card spending so that you only charge what you can pay off by the due date. If not, then perhaps you need to visit a Trustee.

How much does a consumer proposal cost: Get a personalized debt free plan

When people talk about getting out of debt, it can sometimes be hard to know where to start. If you’re stressed about your financial situation, the last thing you want is to be confused by too many options and not know what to do. Thankfully, there’s a way to get a personalized debt-free plan that will help you figure out what to do and how to get out of debt. We can help you develop a debt relief plan that will put you on the path to a debt-free life.

If you have overdue consumer financial debts, you are receiving telephone calls from financial debt collectors. Although personal bankruptcy gives a fresh start for those that are drowning in debt, in my view, it is the last resort for those that have maxed out their credit cards. If you require an financial clean slate, a consumer proposal is an excellent way to relieve yourself of the stress and anxiety of too much debt. It is the only federal government-approved method for debt settlement.

In an initial no-cost consultation with a Trustee, all possible debt relief options will be discussed. At the end of the consultation, you will have a clear understanding of what personalized debt-free plan is best for you. Let us know dive deeper into how much does a consumer proposal cost.

How much does a consumer proposal cost: A negotiated debt settlement

You can easily look back on some of my earlier blogs to refresh yourself on all the details of what a consumer proposal is and how it works, including my Brandon Blog CONSUMER PROPOSAL FAQ: ANSWERS TO 10 TANTALIZING CONSUMER PROPOSAL QUESTIONS. To save you time, the important points to remember are that in the consumer proposal process:

You can settle your unsecured debts totalling a level of debt of $250,000 or less, not including any mortgages or lines of credit secured by way of a mortgage or other charge against your personal residence.
The settlement of debts will be at a total dollar settlement value much less than the total outstanding debt you owe.
The amount you will have to pay in a consumer proposal is based on what your creditors can expect from your bankruptcy. The bankruptcy statute in Canada states that your offer in the consumer proposal must be better than what your unsecured creditors would receive in your bankruptcy. Although there is no guarantee as to what the final amount will be, as a general rule of thumb, you can consider a consumer proposal totalling 25% of the total amount you owe as a good rule of thumb.
You can take a period of time up to 5 years to make monthly consumer proposal payments to the Trustee, who acts as the Administrator of your proposal, to pay the entire consumer proposal fund. The Trustee then makes the required creditor distributions to your unsecured creditors on a pro-rata basis.
A Trustee is the only debt professional in Canada who is licensed and supervised by the Canadian government, through the Office of the Superintendent of Bankruptcy Canada. A Trustee is the only professional that can offer consumer proposals services.
how much does a consumer proposal cost

The Cost of a Consumer Proposal in Ontario

In Canada, the term consumer proposal refers to a formal, legally binding arrangement between a debtor and creditors, involving a lump sum payment spread over equal monthly payments to the Trustee but taking no more than 60 months.

This money is then used by the Trustee to make the necessary creditor distributions in return for a consumer proposal discharge. The creditors agree to accept a portion of the outstanding debt in full settlement. A consumer proposal is a viable option for those who are having trouble paying their debts because they are disabled, unemployed, or have suffered a loss of income.

How much does a consumer proposal cost is on everyone’s mind when they contemplate filing one. When we think of cost, our minds first go to “how much will the licensed trustee charge me for all this?”. The reality is that the amount the insolvent debtor will have to pay to the Trustee who is called the Administrator in a consumer proposal to create the proposal fund is a direct result of what the unsecured creditors could expect to receive in the debtor’s bankruptcy filing. The statute says that the offer to the unsecured creditors has to be better than what they could expect to receive in the debtor’s bankruptcy.

Let’s look at a real example so I can better illustrate this. Assume we have an insolvent debtor who would be a first-time bankrupt. Assume that their personal situation in their filing for bankruptcy is as follows:

Surplus income payments of NIL.
Assets realization of $20,000 and non-exempt assets therefore not sold by the Trustee.
Total liabilities of $173,000.

So in this bankruptcy process, the total fund that would provide for the payments to creditors would be $20,000 in the bankruptcy. The fee and disbursements allowed for the Trustee in this bankruptcy example are governed by the bankruptcy statute. The fee is therefore called a tariff fee. For purposes of figuring out what kind of consumer proposal would be required, the tariff fee of the Trustee in this bankruptcy is irrelevant.

Assuming the person in this example did not commit any sort of bankruptcy offence, there is nothing more to discuss as to what each creditor could expect out of the bankruptcy. They would receive their pro-rata share of the distribution.

In order for a consumer proposal to be a better alternative for the unsecured creditors, I suggest that a consumer proposal filing offering a total payment of $25,000 payable in regular monthly payments over a maximum five-year period would be appropriate.

This is the cost of this consumer proposal in Ontario, $25,000. As this example shows, how much does a consumer proposal cost has zero relationship to what my Firm would earn as the Administrator.

How much does a consumer proposal cost: Consumer proposal costs in Ontario

As the Administrator of a consumer proposal, I am entitled to a tariff fee stipulated in the Rules to the Bankruptcy and Insolvency Act (Canada). There are also some administrative expenses and taxes to be paid. What the tariff allows, to be paid from the consumer proposal fund, is as follows:

$750 payable on filing a copy of the consumer proposal with the Official Receiver;
$750 payable on the approval or deemed approval of the consumer proposal by the court;
20% of the money distributed to creditors under the consumer proposal, payable on the distribution of the money;
the costs of counselling at $85 per session, payable after each session, to a maximum of two sessions;
the fee payable to the official receiver in the amount of $100, payable at the time of filing a copy of the consumer proposal;
the fee payable to the registrar in the amount of $50, but only if you have to go to Court; and
all applicable taxes for GST/HST.

The final amount payable not listed above is the levy payable to the federal government calculated at 5% of any distribution made to the creditors. This payment to the government is what pays for the administration of the Canadian bankruptcy system.

So taking the above example of the $25,000 consumer proposal, the consumer proposal calculation assuming everything went smoothly and there was no need to go to Court would go as follows:

Category	$
Payment under proposal	25,000.00
Counselling fees (2 x $85) for Administrator	170.00
The fee paid to the Official Receiver	100.00
Administrator’s fees	1,500.00
HST on above fees ($2,250)	292.50
The amount available for distribution	22,937.50
Administrator fee of 20% of the money distributed to creditors	4,587.50
Applicable HST	596.37
5% Levy payable	887.68
Total amount to be distributed to the unsecured creditors	16,865.95

So in this example, out of the total consumer proposal fund of $25,000:

- The amount paid for the consumer proposal is $25,000.
- This represents 14.5% of the total liabilities.
- The Administrator earned fees (net of HST) totalling $6,257.50.
- The Administrator earned fees are paid for by the unsecured creditors as it is deducted from the amount they would otherwise receive.

Therefore, how much does a consumer proposal cost the insolvent debtor? The cost to the debtor for the Administrator’s services is FREE!
how much does a consumer proposal cost

How much does a consumer proposal cost: Get a personalized debt free plan today

I hope you enjoyed this how much does a consumer proposal cost 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.

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 much does a consumer proposal cost

Tags bankruptcy statute, Consumer Proposal, consumer proposal filing, consumer proposal payments, crushing debt, debt professional, debt relief options, debt settlement, Get a personalized debt free plan, getting rid of debt, how much does a consumer proposal cost, licensed insolvency trustee, monthly income, negotiated debt settlement, only pay a trustee for consumer proposal services, personal bankruptcy, settlement of debts, the cost of a consumer proposal in ontario, trustee in bankruptcy

Brandon Blog Post

WHY CHOOSING THE EXECUTOR OF THE WILL CAN BE SO INTENSE: NECESSARY INGREDIENTS FOR CHOOSING THE RIGHT EXECUTOR

Post author By Brandon Smith
Post date March 31, 2021

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

Smith Estate Trustee Ontario and 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.

Choice of an executor of the Will: Choosing the right executor for your estate

When a person dies, that is not the time to begin preparing for who will carry out the wishes of the dead person in connection with their assets. Without a properly drafted Will, your family could be in for a long and uncomfortable legal battle. This is why it is so essential to obtain the right advice early on and naming the appropriate person or persons as the executor of the Will.

Whether you’re single, married, or have a blended family, there’s a good chance that you will certainly need to select an executor of the Will of your estate. This is the person who will supervise accomplishing your desires after you die. The executor will make certain your wishes are accomplished in such a way that is fair to your heirs under Ontario laws. However, without proper paperwork, this may not go as efficiently as you may really hope. To avoid this, you need to carefully think about and then pick who or whom should be your executor(s).

Who can be an executor of the Will in Ontario?

Have you ever heard of the term “executor”? You will come across it when you or a loved one create a Will. In Ontario, the executor is now called an Estate Trustee. However, in this Brandon Blog, I will continue to use the old name. It is normal that one of your closest friends or family members will be named in your Will as an executor, meaning they’re responsible for carrying out the instructions in your Will.

There are really no requirements in Ontario for someone to be an executor of the Will. To be an executor of someone’s Will, you must be at least 18 years old and have the ability to comprehend what is expected of you in that role. Hopefully, the person or people selected also have no record of fraud!

The executor is essentially the person holding the purse strings when it comes to your estate. They’re to see the will through from beginning to end: paying off bills, selling off any excess belongings, and distributing the rest to your beneficiaries.

The role of executor is an extremely important fiduciary role. Performing the duties of an executor of the Will incorrectly can have a profoundly serious effect on the beneficiaries and families involved for generations to come. So by now, it should be obvious to you that not everyone who can be an executor should be chosen to be THE executor. Having the right executor best suited for your estate should be the cornerstone of estate planning.

Choosing the ideal executor of the Will for your estate

The best estate trustee for your estate will depend upon the complexity of your estate, your specific wishes and needs. You and your lawyer ought to think about several elements when choosing an executor, consisting of:

Given your assets and beneficiaries, what skills should the executor possess and how active will their involvement be in the estate?
Whether they will need to make financial decisions.
Do they have the necessary skill set and financial acumen to properly administer your estate?
Whether they have a good and trusted relationship with your heir and with various other relatives.
Do they have good conflict-resolution skills?

You also must be mindful as to how normal life events may have changed your needs when considering an executor of the Will. The person or people you chose under your first Will when your family was young and your biggest asset might have been the proceeds under your life insurance policy may no longer be the right choice years later when your children have their own families and your estate assets look much different. Complex estates also require executors to have different skill sets than what is needed to administer simpler estates.

The executor of the Will: Consider people in good financial standing

Becoming a good executor of the will requires time and effort. To act as executor means you will have legal responsibilities and you’ll be making crucial choices regarding the deceased’s properties, including:

Paying off debts.
Taking the estate through probate and calculating and paying the Ontario probate fees called the Estate Administration Tax.
Completing one or more income tax returns that the deceased may have not filed and paying the taxes.
Managing and perhaps selling assets such as real estate.
Distributing assets to beneficiaries.
Filing the estate tax returns and paying the necessary tax.

You will want to make sure that whoever you pick as executor under the Will, will be able to properly administer your estate through the entire estate administration process.

So as a starting point, you will want to make sure that the estate trustee that you pick as your personal representative who will be dealing with your personal finances, should be someone trustworthy who has both the necessary skills to handle the financial matters and has a good financial standing. In Ontario, an undischarged bankrupt cannot be an estate trustee.

How much power does an executor of the Will have over the estate?

An executor of the Will is a person who has been named to administer an estate when someone dies, but what does that involve? The executor’s responsibilities include:

making sure that funeral arrangements have been properly made and funeral costs are paid;
gathering up important documents;
getting official copies of the death certificate;
paying off any debts;
wrapping up any loose ends like liaising with government agencies;
gathering up the funds and then closing out the deceased’s bank accounts; and
figuring out how to handle any property.

In other words, an executor has a lot of responsibility and a lot of power. So much power that an executor may be required to post a bond with the province of Ontario to cover any potential losses.

It’s a common misconception that the executor of an estate has complete control over the assets and can freely distribute them to whomever they choose. In reality, that’s not the case. When someone passes away, their estate becomes a separate legal entity, and once the executor has finished settling the estate’s affairs, the estate’s assets must pass to the designated beneficiaries. However, the executor has many powers that can help them better manage the estate.

The powers of an executor of the Will, come from the wording of the Will. If the executor finds that they do not have sufficient powers to properly carry out their duties, then the executor would have to retain a lawyer, get legal advice and then make an application to the court to get those additional powers. Since an executor has personal liability, they should not overstep their authority by taking actions they do not have the power to under the Will.

How do I make sure an executor of the Will is honest?

Succession preparation includes the estate planning documents. As part of that process, there needs to be a properly thought out procedure of picking a proficient, responsible, and trustworthy individual to handle an estate, trust, or business, upon the death of the creator of that wealth.

It is extremely essential to have a detailed succession plan in your estate and to make certain that your executor recognizes his/her duty, has the necessary skills and is willing to carry out what they will be called upon to do.

A well-known saying is “you get what you pay for” which is more often true when it involves choosing your executor. The executor is the person responsible to execute the terms of a Will or Trust. If they are not up to the task, your estate can get involved in a great deal of trouble.

At the end of the day, you have hopefully chosen someone to be the executor of the Will that not only has the ability to perform all necessary tasks but also someone who out of respect for their relationship with you and your wishes will carry them out honestly and efficiently.

Can there be 2 executors of a Will?

There are numerous concerns that emerge when a loved one passes away. One that is usually asked is can there can be more than one executor of the Will? In short, yes, there can be more than one executor, but there are some instances when that may not be the very best course of action.

So what are the realistic options? There can be a sole executor, an alternate executor or co-executors. Each one has its pluses and minuses. As the name suggests, a sole executor is 1 person only who has full responsibility to take all the necessary actions involved in settling the estate and then turn the money or specifically designated property over to the beneficiaries.

What is and why have an alternate executor? Just because someone is named as an executor of the Will, it may be the case that when the time comes, the person named is either unwilling or unable to act. Perhaps the Will was drawn up one or two decades ago and now the circumstances of the named executor have changed. So just in case, an alternate executor can be named in case the primary executor cannot act.

The Ontario Trustee Act contemplated such a situation. Examples of reasons why the primary executor may be unwilling or unable to act are because they are now:

Having a change of heart and is now unwilling to act. An executor can recuse themselves before they start to take any action as executor. Once they start acting though, the only way they can be removed is through a court order.
Is now is unfit to act.
Predeceased the one who just died.
Have been convicted of an indictable offence.
An undischarged bankrupt or insolvent and trying to settle their debts under the Proposal provisions of the Bankruptcy and Insolvency Act (Canada).

Our sister business, Smith Estate Trustee Ontario, acts as a substitute executor when an executor of the Will needs to be replaced by the court.

In any of these situations, the alternate executor hopefully can and is still willing to act. The alternate executor would have the estate’s lawyer make an application to the court, provide proof for the reason why the named executor cannot act and the court can appoint the alternate executor (or any other party the beneficiaries may wish to nominate if proven that the alternate is unfit to act).

As the name implies, co-executors means that two or more people have been appointed to act together as an executor of the Will. This can help ensure that your estate is divided up as you intended and the co-executors can both split the work between them and also be a check on each other’s work.

They have someone they can confer with when unsure about something, rather than putting the estate to expense by consulting first with one of the professional advisors. The main disadvantage of having co-executors is that if you have an even number of executors and there is a major disagreement right down the middle, it will probably take the intervention of the court to have the decision made. This creates otherwise unnecessary cost and delay.

It is probably one of the most serious decisions in estate planning. Yu do not want to pick the wrong executor.

Choice of the executor of the Will: Using a trust company

Should you consider naming an estates professional as your executor? A trust company is such a professional executor. If you named an estate professional to oversee the distribution of your estate as executor, this approach typically results in less conflict and fewer disagreements between family members than naming a family member to be executor.

However, you should know that in naming an estate professional trust company, you are naming a corporate executor with well-established and unwavering policies and procedures to handle the estate administration process. The person at the trust company handling your relative’s estate is not going to care about the relationship issues between the beneficiaries and other family members.

They also are not going to worry about hurting someone’s feelings. The cost of using a trust company is cut and dry where a close friend or family member may waive any fee they may be entitled to as executor.

In some situations choosing a trust company as your corporate executor of the Will can be a smart option. A trust company is a company authorized to act as a trustee for a trust. The trust company is not the creator of the trust, nor is it the owner of the trust property.

The trust company is an independent third party, which is chosen by the now-deceased person to act as the executor of the Will. A trust company is an excellent choice as executor when the estate is very large and complex.

Whether one or more people or a trust company is a better choice to be the executor really depends on the size and complexity of the estate and the relationships of all the family members involved.

The executor of the Will summary

I hope you enjoyed the executor of the Will Brandon Blog post. If you are concerned because it is now time to act under the Will, but the named executor is unwilling or incapable of acting, that is where Smith Estate Trustee Ontario can be of assistance. We act as substitute trustees appointed by the court in such situations.

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.

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.

Smith Estate Trustee Ontario and 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.

Brandon Blog Post

FINANCIAL WELLNESS: IMPROVE YOUR RELATIONSHIP WITH MONEY

Post author By Brandon Smith
Post date March 29, 2021

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 this Brandon Blog’s audio version, please scroll to the very bottom of this page and click play on the podcast.

What Is Financial Wellness?

Financial wellness is the state of being free from financial stress or worry. By managing your financial health you can avoid the feelings of anxiety and despair that come from worrying about money. When you are financially well you have the ability to focus your energy on the things that really matter to you.

The phrase is everywhere these days. It’s a buzzword that’s getting a lot of attention. But what does it actually mean? When you boil it down, financial wellness is simply about being responsible with money. It’s about paying attention to how you spend, saving for the future, and making sure you can take care of yourself and your family.

Why is financial wellness important?

Financial wellness is important because it’s the first step to planning and achieving your goals. If you don’t know where your money goes, how can you ever be sure that there is enough for the things you want and need? Your ability to pay bills and avoid debt can determine whether or not you have a good credit score, and whether or not you can apply for a mortgage or a loan for a house or a car. This creates unnecessary financial stress.

In this Brandon Blog, I discuss the aspects of financial wellness and what it means for your overall enjoyment of life.

This blog is an expansion of a recent blog titled: “Take Care of Yourself, Take Care of Your Money” I wrote for our national association that we are a member of, the Canadian Association of Insolvency and Restructuring Professionals.

Financial wellness & stigma

It’s difficult to remember a time when the word “debt” didn’t have a negative connotation. Whether you’re talking about consumer debt, medical debt, or debt related to other services, the ominous word is never far from its less than attractive cousins “recession” and “bankruptcy“.

Yet even in the midst of a pandemic, in September 2020, credit reporting firm Equifax Canada stated increasing mortgage balances pressed average financial debt per Canadian consumer up to $73,532. This is up 2.2% from the prior year and despite the financial impact of the COVID-19 pandemic.

Financial health can be part of an overall health wellness program which will certainly aid in decreasing any kind of stigma. The Financial Consumer Agency of Canada stated that “mental, physical and financial wellness are three pillars of good health”. They say this with great certainty as almost fifty percent of Canadians have financial tension in their lives. Virtually as many, according to a 2018 survey carried out by the Canadian Payroll Association, would certainly have economic pressure and financial shock if a paycheque came late.

Financial wellness & productivity

The number one reason people will credit with helping them make and save money and make proper financial decisions is their parents. So why not make the home for your entire family the number one place to learn about money and manage it? Look for personal finance articles, books and courses that can teach you everything from general money management to specific techniques for saving money on groceries to investing. This is also known as improving your financial literacy.

Also, look for advice on your overall well-being so you can have a healthy relationship with money and your family that will last all of you a lifetime. Overall good health, taking the stressors out of your life as much as possible and financial well-being will lead to increased productivity and overall enjoyment of life.

The principles of physical health are well promoted through health institutions. It consists of a well-balanced diet regimen, exercise, and healthy life selections. The importance of psychological well-being in the form of self-care and mindfulness is obtaining awareness through networks beyond medical care specialists. Its value has been highlighted a lot more throughout the pandemic.

In my experience as a Licensed Insolvency Trustee (“Trustee”), the principles of financial well-being and financial wellness still challenge Canadians. I never see it included as a component of overall health in discussions over awareness of physical and mental health wellness. Perhaps because in our consumption-driven world, saving cash through excellent money management abilities isn’t as “awesome” a subject to brag about or to become a social media influencer in!

Nonetheless, establishing monetary objectives and achieving them is extremely rewarding. Self-control today will certainly pay dividends in the future. So just how do we get there to a nirvana state of financial well-being? The same way as we do with a physical health and wellness goal – with self-control and good habits, forming new behaviours.

I recommend that as a first step, draw up a checklist of financial planning objectives and a timeline. Take stock of your financial obligations, rates of interest you are paying, monthly payment amounts and days of the month that payments are due. Understand your assets, liabilities, income and all of your expenses.

Goals: Financial wellness programs need realistic goals

The biggest mistake people make when trying to establish financial wellness is setting financial goals they have no realistic chance of achieving. This is not an achievable goal if it is too high, or too grand. If necessary, break a larger objective into smaller-sized objectives that can be attained in a reasonable period of time to stay clear of discouragement. If you set out to lose 100 pounds, you might be scared off because of how much time that would certainly take. Going for a few pounds a week or month would certainly help keep you motivated.

If all you do is have the idea of being debt-free or have $100,000 in your bank account, that goal is probably unattainable. There is no roadmap of steps to take to get there and there is no timeline attached to such a goal. However, aiming to pay all your monthly bills on time, conserving 5% of every paycheque to have some emergency funds on hand or paying off your highest interest rate financial debts at the rate of $50 a week is reasonable and measurable.

***Financial wellness*: Nutrition**

Barring any serious medical concerns, conventional weight loss wisdom focuses on calories. If you burn more calories than you ingest, you will certainly slim down. Budgeting takes the same approach. As long as your monthly spending is less than your monthly income, you will achieve your financial well-being monthly goals. In tracking your monthly spending you need to look at all the ways you spend in any month: cash, cheque, debit card and credit cards.

Don’t make the mistake that many people do in forgetting that the only amount you have to spend is your net monthly income, net of the income tax you need to pay to the Canada Revenue Agency. You need to look at your last year’s income tax return to see the total amount of income tax you paid, not just the amount deducted at source. If you received a refund, then you should not have to save extra to pay that income tax bill in April. If you had to pay more than what was deducted at source, you better plan to save that amount of money during the year so you will have it the following April.

Analyze every expenditure and determine just how well it aligns with your financial health goals for a better financial life. What is more important? The expenditure or the sensation of financial wellness that will be accomplished if you had that much more cash to put in the direction of paying down debt, building up an emergency savings fund or starting or adding to a retirement savings plan.

***Financial wellness*: Exercising**

Running on a treadmill is excellent for your physical health and wellness. Yet unless that treadmill is powering your home, when it comes to your financial well-being you will require a different type of exercise. That is an exercise in discipline. Understanding just how a “need” is different from a “want”.

After covering the requirements of life, you need to focus on what spending will certainly get you closer to attaining your goals, and which do the opposite. I am not recommending that you lead a reclusive life yet search for financial savings and effectiveness to get you closer to the financial well-being you are striving for. Is there a less costly cafe? Can I get that same fashion look for much less? Don’t deny yourself, but at the same time do not overreach.

My grandfather’s depression-era wisdom is still appropriate today: if you pinch pennies hard, you will get nickels.

Financial wellness in the workplace

Most people have financial stress in their lives, whether they realize it or not. For some, the stress may be simply a question of meeting their bills. For others, it may be more complex such as how to:

reduce the stress of dealing with creditors;
set up a savings account to handle an unexpected financial blow; or
achieve financial security.

Regardless of the type of financial stress people face, a financial wellness program can help them find solutions and create a plan to reduce their stress over money. Employees that have their stress reduced will be more productive. So it is in the employer’s best interests to institute a financial wellness program in the workplace.

It all starts with a financial wellness assessment

The idea of a financial wellness assessment might seem a bit like financial group therapy. A professional looks at your situation, from your income to your debts, and asks questions about your financial goals. It can be stressful to open up about your financial situation, but it’s an important step toward taking control of your money. It’s also an opportunity to learn about products and services that may help you achieve your financial goals.

The result of the financial wellness survey will be written up in a financial wellness report. A financial wellness report is a tool that helps you identify the state of your finances, your level of financial distress and the main source of stress. It is a tool that you can use, which provides you with objective information about your financial situation and what steps you can take to improve it.

Measure the success of your financial wellness program

If you’re a company concerned about the financial wellness of your employees, don’t just rely on gut feeling to measure your program’s effectiveness. Instead, use a quantitative approach to measuring the success of your financial wellness program, as this will help you better understand where your employees are at financially and what works and what doesn’t in your program.

If you’re seeking a successful financial wellness program, you need to assess yours. You may feel as if your program is successful, but have you measured it to be sure? Any employee financial wellness program aims to improve each employee’s financial position and to reduce the amount of financial stress in their lives. The best way to measure your financial wellness program’s success would be to measure how your employees have advanced in achieving their financial goals established in the financial wellness assessment.

After an appropriate length of time, depending on each unique set of goals, another financial wellness assessment should be conducted and the results of the newer one compared to the prior one. What an employee has achieved and how they feel about it is an extremely important measure. New goals can be set, old goals can continue to be worked on or recalibrated. All this is intending to keep your employees on track to achieve their financial goals, improve the level of financial wellness peers experience and reduce the stress in their lives.

Financial wellness guide information for employees

This listing is not meant to be exhaustive. Some of the things that your employees might need to learn about in financial wellness workshops to improve their every day finances might be how to:

Track your finances
best manage assets, liabilities, income and expenses
Improve your relationship with money
Create, track and adjust your personal budget
Money management skills
Have control over day to day spending
Set up and maintain positive money habits to reduce your money worries
Understand the key elements behind your spending habits and how to fix what needs fixing
Know how much life insurance you may need and how to choose the best for you from the different types of insurance
Maintain a good credit score
Fix your credit
Deal with Canada Revenue Agency and income taxes
Create goals for when you have extra money
Deal with unexpected expenses
Create the financial resources to meet your household’s needs

What are the financial consequences of debt?

I hope you enjoyed this financial wellness Brandon Blog post. Sometimes financial literacy and financial education have to take a back seat to fix an immediate financial problem. Education can come both as part of the solution as well as continuing after debt problems have been solved. Student debt, bad debt, Canada Revenue Agency income tax debt, other personal debt and corporate debt, credit card debt and an unmanageable debt load are all examples of financial problems we have solved for other individuals and entrepreneurs and their companies.

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.

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.

Tags Canada Revenue Agency, credit cards, financial decisions, financial goals, financial literacy, financial security, financial stress, financial well-being, financial wellness, financial wellness & productivity, financial wellness & stigma, financial wellness assessment, financial wellness report, financial wellness survey, money management skills, relationship with money, what is financial wellness, why is financial wellness important

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The executor of the Will summary

What Is Financial Wellness?

Why is financial wellness important?

Financial wellness & stigma

Financial wellness & productivity

Goals: Financial wellness programs need realistic goals

Financial wellness: Nutrition

The most recent false pretences released decision in Ontario – *Bank of Montreal v. Mathivannan, 2021 ONSC 2538***

***False pretences*: A new creditor blueprint is needed**

***Financial wellness*: Nutrition**

***Financial wellness*: Exercising**