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CONSUMER PROPOSAL STORY 4 – TRUE STORIES

Introduction

This consumer proposal story 4 Brandon’s Blog is about how four of our clients were able to enter into a government approved debt settlement program, shed their debt and restart their lives.

As I have written in previous blogs, a consumer proposal is the only government approved debt settlement plan. It is designed for people who have $250,000 or less in total debt, other than for any debts secured against their home such as a mortgage or secured home equity line of credit.

If the consumer proposal receives the (deemed) acceptance by the required majority of creditors and it also receives (deemed) court approval, then the consumer proposal is approved. The insolvent person must now make the payments to the licensed insolvency trustee who is the consumer proposal administrator.

The following four real client consumer proposal story situations of mine I believe are representative of the kind of person we help end the pain and anxiety their debts are causing them. I have changed the names of the people for this Brandon’s Blog.

Buzz

This client is a 56-year-old married male. I will call him Buzz. He has annual income, net of income tax of $100,000. He has assets with a net realizable value of $1,000. His consumer debt totalled $71,000.

In reviewing his budget and affairs, we calculated that in personal bankruptcy, he would be required to contribute surplus income for 36 months as he was previously bankrupt. His surplus income obligation in bankruptcy was just over $34,000 in equal monthly instalments of $944.44.

We advised him that since his budget had room for him to make monthly payments, he should consider a consumer proposal. We drafted and filed his consumer proposal requiring him to pay $40,000 in total over 5 years. This resulted in equal monthly payments each of $667.

Buzz’s creditors accepted his consumer proposal and he is making the payments. This way he avoided bankruptcy and ended up with an approved debt settlement plan with monthly payments he can afford.

Woody

This client is a 65-year-old single male. I will call him Woody. He has annual income, net of income tax of $27,600. He has assets with a net realizable value of $500. His consumer debt totalled $108,000.

In reviewing his budget and affairs, we calculated that in personal bankruptcy, he would be required to contribute surplus income for 9 months as he was never previously bankrupt. His surplus income obligation in bankruptcy was just over $1,880 in equal monthly instalments of $208.89.

We advised him that since his budget had room for him to make monthly payments, he should consider a consumer proposal. We drafted and filed his consumer proposal requiring him to pay $24,000 in total over 5 years. This resulted in equal monthly payments each of $400.

Woody’s creditors accepted his consumer proposal and he is making his payments. This way he avoided bankruptcy and ended up with an approved debt settlement plan with monthly payments he can afford.

Mr. & Mrs. Potato Head

Our 3rd client is a 47-year-old married man and his 43-year-old wife. I will call them Mr. & Mrs. Potato Head. Their yearly income, net of tax obligations was $51,996. Their assets had a realizable value of $953. They are collectively responsible for the exact same consumer financial debts amounting to $31,820.

In assessing their budget, we computed that in a bankruptcy, they would need to pay surplus income for 9 months as neither were bankrupt before. Their surplus income responsibility in a joint bankruptcy was $5,271 in regular monthly instalments of $585.67.

We encouraged them that given their budget plan had room to make month-to-month payments, they must take into consideration the possibility of making a consumer proposal. We prepared and filed their consumer proposal needing them to pay $7,020 over 3 years. This led to regular monthly payments each of $195.

Mr. & Mrs. Potato Head’s creditors approved the consumer proposal and they are making their payments. In this manner, they will not go bankrupt and wound up with an accepted debt negotiation strategy with month-to-month payments they can manage.

Jessie

This client is a 67-year-old married female. I will call her Jessie. She has annual income, net of income tax of $58,416. She has assets with a net realizable value of $250. Her consumer debt totalled $67,000.

In examining her budget plan, we determined that in bankruptcy, she would be called for surplus income payments for 36 months as she was once a bankrupt. Her surplus income commitment in a bankruptcy would be $17,465 in regular monthly instalments of $485.13.

Considering that her spending plan had space to make month-to-month repayments, we encouraged her to seriously think about making a consumer proposal. We composed and submitted her consumer proposal needing her to pay $21,500 over a 40 month period. This would be regular monthly payments each of $537.50.

Jessie’s creditors approved her consumer proposal and she is making her repayments. By doing this she stayed clear of bankruptcy and wound up with an approved debt negotiation strategy with regular monthly repayments she can manage.

Consumer proposal story summary

I hope these real-life consumer proposal story 4 examples gives you a better idea of the kind of people this debt settlement program strategy is meant to help. It is a way for people to shed their debt and get back on a proper footing.

Are you in financial distress? Do you not have adequate funds to pay your financial obligations as they come due?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people looking for financial restructuring, a debt settlement plan and to AVOID bankruptcy.

As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government approved debt settlement plan to do that. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

consumer proposal story

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WILL CRA CONTACT ME IF I DO NOT PAY?

cra contact

If you would prefer to listen to the Brandon’s Blog CRA contact audio version, please scroll down to the bottom of the page and click on the podcast

Introduction

It seems that more often than not, the Canada Revenue Agency (CRA) is a creditor in the personal or corporate insolvency matters that I get involved with. Many times the person, be they just an individual, an unincorporated business owner or the President of the company, will ask, “will CRA contact me if I do not pay?”.

In this Brandon’s Blog, I discuss the various ways CRA will contact the responsible individual, be they the taxpayer or the authorized representative of the taxpayer company.

Types of CRA debt

The following types of tax debt are the usual ones that a person in Ontario might owe:

The following types of tax debt are the usual ones that an Ontario corporation might owe:

Most likely CRA has already contacted the insolvent person or company before they come to see me for a free consultation. The reality is that when someone owes money to Revenue Canada and gets one of those unique brown envelopes in the mail, they tend to feel sick in the stomach. So, although they may keep the envelope and its contents, they certainly don’t wish to look inside it.

Let’s look at the various ways CRA has to contact a taxpayer and for CRA payment arrangements to be made.

Ways you and the taxman can communicate

Notice of Assessment or Reassessment

The first way CRA will contact you is by sending a notice of assessment or reassessment to the individual or corporate taxpayer. This is a notice that explains the reason for the (re)assessment, the calculation and the amount owing. There is no need to talk about the situation where the taxpayer pays the balance in full on time. I am talking about the situation when the taxpayer cannot afford to pay the amount owing.

Be proactive

If you cannot pay the total you owe, be proactive by getting in touch with the CRA as soon as possible. Overlooking your debt does not make it vanish. As a matter of fact, ignoring it might make things worse. This is the same whether it is a personal debt or a corporate debt.

The CRA tacks on interest at the prescribed rate compounded daily. You can’t avoid this because whether you realize it or not, CRA has become your lender for any unpaid amounts. By taking action first, you can at least ward off a much worse result. So you contacting CRA is the first and best way to make the connection.

I will discuss below what your options are concerning amounts you cannot pay off immediately, but first, I want to discuss other ways that the CRA will contact you if you first don’t contact them.

Telephone or letter

If the taxpayer does not contact CRA to work out a payment arrangement (discussed below), CRA will then communicate with the taxpayer. The amount owing is assigned to a collections officer who will contact the taxpayer by telephone, letter or both.

If the taxpayer responds to that outreach, the collections officer will attempt to obtain payment. The collections officer will also ask many more questions. If the taxpayer is a company, the collections officer may also make an appointment to go visit the company to review its financial records.

The purpose of asking the questions and reviewing corporate financial records is to attempt to determine if any money is owed to the taxpayer by third parties and where does the taxpayer maintain bank accounts.

Garnishment by a Requirement To Pay

Armed with the information obtained from the taxpayer’s tax filings and any additional information collected through discussions or reviews, the next level of CRA contact to get the taxpayer’s attention is not with the taxpayer, but rather with third parties. A Requirement To Pay (RTP) is a lawful notification that the CRA sends out to a 3rd party when:

  • the CRA thinks that the 3rd party owes or will owe money in the future to the taxpayer that has not paid their tax obligation; and
  • the CRA has not been able to collect the taxpayer’s debt or make an appropriate settlement plan with the taxpayer.

The RTP advises the 3rd party to send the money the third party owes to the taxpayer to the CRA, rather than the taxpayer. The RTP reveals the taxpayer’s name, address, and the CRA account number.

The RTP is the way the CRA uses to garnishee bank accounts, wages or any other amount owing by a third party to the taxpayer. An RTP can garnishee all sorts of repayments a 3rd party might make to a taxpayer. The more common ones are:

  • income, earnings, payments, bonus offers, or various other amounts owing by an employer to an employee;
  • repayment of expenses owed to an employee;
  • amounts due to a professional or contractor for work performed, products, or services;
  • lease or rent payments;
  • loan payments;
  • interest or dividend payments;
  • insurance claim settlements
  • amounts on deposit at a financial institution

Seizing your assets

A garnishee through an RTP is to intercept and seize payments from a third party to the taxpayer. But what if there is no such third party that exists or can be found but the taxpayer has assets?

In that situation, the CRA has the power to seize assets found registered in the name of the taxpayer. This is how CRA goes about doing it. The CRA can lawfully register your debt with the Federal Court of Canada. By doing so they get a certificate validating the amount you owe to the Crown. As soon as it is issued, this certification, called a memorial, has the same or even greater impact as a judgment if someone sued you.

Now that the CRA has the memorial, they can register it against any assets in your name. This includes your home and its possessions owned by the taxpayer. The CRA rarely actually takes physical possession of the assets, but in most cases, they don’t need to. It will be impossible to sell or refinance your assets with the CRA memorial registered against it under provincial law. So when that time comes, the taxpayer will have no choice but to deal with the CRA on the outstanding debt, one way or the other.

Here are different ways that you can deal with the CRA on your tax debt if you cannot pay it now in full.

Payment arrangement

This is the first and most hassle-free way of paying off your tax debt. A payment arrangement is a settlement plan you make with the CRA. It enables you to make smaller regular payments over time until you have paid your whole tax debt plus interest.

Prior to agreeing to the settlement plan, the CRA collections officer will want to know that you are paying the maximum amount you can afford. Hopefully, the amount you can pay is at least the same as the minimum monthly amount the collections officer is willing to accept.

So, the collections officer will ask you all sorts of questions and may even want you to complete a questionnaire, so that they understand your monthly budget as part of any debt settlement plan.

As part of making a payment arrangement, you should also be working with your accountant to see if any of the taxpayer relief provisions are available to you. This blog isn’t meant to be a discussion of the income tax act or taxpayer relief, so, I won’t go into any more detail than that.

Any payment arrangement has to deal with 100% of the principal amount of tax owing plus interest. Unfortunately, the collections officer does not have the authority to make a deal to accept less than full payment, absent an insolvency proceeding (further discussed below).

Insolvency proceeding

If you cannot reach a satisfactory payment arrangement with the CRA, or you have one but can no longer keep up with the payments, then, the taxpayer can consider an insolvency filing. In the case of an individual, it would be either bankruptcy or a consumer proposal. For a corporation, it would be either a Division I Proposal or bankruptcy.

Either bankruptcy or a proposal will stop CRA’s ability to issue a requirement to pay or obtain a memorial. However, if CRA has obtained and registered a memorial before the taxpayer files for either a restructuring proposal or bankruptcy, the memorial cannot be eliminated.

Similarly, for a corporation, unremitted source deductions form a deemed trust claim against the company’s assets. So in either a bankruptcy or financial restructuring proposal, this trust claim cannot be eliminated or reduced. However, for both individuals and companies, the income tax debt can be eliminated. For companies, the HST arrears will not be a trust claim in bankruptcy. Unlike a bankruptcy, HST arrears are not automatically made unsecured by the wording of the Bankruptcy and Insolvency Act (Canada). However, current CRA policy in financial restructuring proposals results in the HST arrears being treated as an unsecured claim.

Personal or corporate income tax is an unsecured debt. As soon as you’ve declared bankruptcy or filed the financial restructuring proposal, the CRA cannot begin or continue any action against you, including wage garnishment or freezing your assets, including your bank account. Your licensed insolvency trustee (formerly called a bankruptcy trustee) will alert CRA as soon as you submit your filing and advise it to quit any type of enforcement activity through any RTP. As I stated above, unfortunately, any memorial already registered will remain against your assets.

Do you have too much debt?

I hope you have found this CRA contact Brandon’s Blog to have useful information for you. Do you have too much debt? Are you in financial distress? Do you not have adequate funds to pay your financial obligations as they come due?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people looking for financial restructuring, a debt settlement plan and to AVOID bankruptcy.

As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government approved debt settlement plan to do that. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

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OSAP BANKRUPTCY IS NOT AS SIMPLE AS YOU MIGHT THINK

OSAP bankruptcy Introduction

I have written before on the issue of the difficulty in discharging student loans through bankruptcy. Bankruptcy will certainly not release your student loans debt until you’ve been out of full or part-time studies for 7 years. It is also question and answer #8 in our TOP 20 PERSONAL BANKRUPTCY FAQS found on our main website. In Brandon’s Blog, I want to drill down into the issue of an OSAP bankruptcy.

What is OSAP?

The Ontario Student Assistance Program (OSAP) is a financial assistance program that can assist students in spending for college or university.

OSAP provides money via:

  • Grant: cash you do not need to repay
  • Loan: a loan you are required to pay off when you’re done college or university

OSAP can assist your spending for:

  • tuition
  • books and supplies/equipment
  • student fees billed by an institution
  • living expenditures
  • childcare

Amongst the various categories of people who are not eligible for OSAP, one is those people who have filed for either personal bankruptcy or a consumer proposal. As you might imagine, the rules surrounding OSAP bankruptcy are not simple. Let’s do some drilling down now!

Students that did not get student loans before the day they declared bankruptcy or filed a consumer proposal

If the student has been discharged from bankruptcy or fully completed a consumer proposal, she or he does not require to offer any type of supporting paperwork in order for their OSAP application to be reviewed.

If the student is an undischarged bankrupt or has not completed the consumer proposal, the student must supply a letter from their licensed insolvency trustee (formerly called a bankruptcy trustee) or consumer proposal administrator. The document must show the day the student filed for either bankruptcy or the consumer proposal and that these 2 matters have actually been or will be satisfied:

  • Ontario and Canada is not a creditor in the bankruptcy or consumer proposal as an outcome of monetary help provided via OSAP; and
  • no monetary help offered to the student via OSAP during the current OSAP year will be taken in the insolvency proceedings to pay back the creditors

Discharged and the student is not presently enrolled in studies

If the student is discharged from bankruptcy or has successfully completed a consumer proposal, his/her OSAP application will not be decided upon until the student gives evidence that they have no amount owing on any student loans.

Alternatively, if applicable, the student can show that he/she received relief in their bankruptcy by way of a court order stating that section 178(1)(g) of the Bankruptcy and Insolvency Act (Canada) (BIA) no longer applies to the student loans.

In this situation, the student needs to supply:

  • evidence that an order of discharge or full completion of the consumer proposal has been achieved and that 3 years have expired since that date
  • a copy of the notice of bankruptcy/consumer proposal
  • letter from the student’s bank and/or the National Student Loans Service Centre confirming there is no outstanding balance
  • any relevant court order

Discharged and continuing a program of study

If the student is discharged from bankruptcy or has successfully completed a consumer proposal, his/her OSAP application will not be decided upon until the student gives evidence that they have no amount owing on any student loans.

Alternatively, if applicable, the student can show that he/she received relief in their bankruptcy by way of a court order stating that section 178(1)(g) of the BIA no longer applies to the student loans.

In this situation, the student needs to prove that he/she meets all of the following criteria:

  • at the time the student declared bankruptcy or filed the consumer proposal, they were enrolled in an accepted program of study at an accepted school and taking the minimum called for course load
  • the student remains in the same accepted program they were in on the date of bankruptcy/consumer proposal filing date
  • the student has not had a break in studies longer than 6 months since the date of bankruptcy/consumer proposal filing date
  • it has not been greater than 3 fiscal years since the date of bankruptcy/consumer proposal filing date

In this situation, the student needs to supply:

  • evidence that an order of discharge or full completion of the consumer proposal has been achieved and that 3 years have expired since that date
  • a copy of the notice of bankruptcy/consumer proposal
  • letter from the student’s bank and/or the National Student Loans Service Centre confirming there is no outstanding balance
  • any relevant court order
  • letter from the student’s Financial Aid Office verifying that the program of study in which the student was registered at the time of the bankruptcy/consumer proposal filing, is the same as the program the student is now applying for

Undischarged bankrupt or has not yet fully completed the consumer proposal

If the student is an undischarged bankrupt or has not successfully completed a consumer proposal, the processing of the student’s OSAP application will not be completed until the student gives evidence that they have no amount owing on any student loans.

In this situation, the student needs to prove that he/she meets all of the following criteria:

  • at the time the student declared bankruptcy or filed the consumer proposal, they were enrolled in an accepted program of study at an accepted school and taking the minimum called for course load
  • the student remains in the same accepted program the were in on the date of bankruptcy/consumer proposal filing date
  • the student has not had a break in studies longer than 6 months since the date of bankruptcy/consumer proposal filing date
  • it has not been greater than 3 fiscal years since the date of bankruptcy/consumer proposal filing date

In this situation, the student needs to supply a letter from their licensed insolvency trustee or consumer proposal administrator. The document must show the day the student filed for either bankruptcy or the consumer proposal and that these 2 matters have actually been or will be satisfied:

  • Ontario and Canada is not a creditor in the bankruptcy or consumer proposal as an outcome of monetary help provided via OSAP; and
  • no monetary help offered to the student via OSAP during the current OSAP year will be taken in the insolvency proceedings to pay back the creditors

The student will also need to supply a:

  • letter from the student’s bank and/or the National Student Loans Service Centre confirming there is no outstanding balance
  • any relevant court order
  • letter from the student’s Financial Aid Office verifying that the program of study in which the student was registered at the time of the bankruptcy/consumer proposal filing, is the same as the program the student is now applying for

Summary

I hope you now understand that the whole area of OSAP bankruptcy and student loans in either a bankruptcy or consumer proposal is not as simple as you might have originally thought. This is especially the case if the student is continuing his or her studies.

Do you have too much debt? Are you in financial distress? Do you not have adequate funds to pay your financial obligations as they come due?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people looking for financial restructuring, a debt settlement plan and to AVOID bankruptcy.

As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government approved debt settlement plan to do that. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

osap bankruptcy

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CONSUMER PROPOSAL CANADA: A BLUEPRINT TO STOP BILL COLLECTORS

consumer proposal canada

If you would prefer to listen to the audio version of this Consumer proposal Canada Brandon’s Blog, please scroll down to the bottom and click on the podcast.

Introduction

I have written before on the concept of how a bankruptcy filing puts into place a stay of proceedings. A section of the Bankruptcy and Insolvency Act (Canada) (BIA) states that creditors are not allowed to take or continue any collection or enforcement activity against a bankrupt person or company. But what about a consumer proposal Canada? I will discuss this concept for a consumer proposal and highlight a recent case on this issue.

The federal law

Under section 69.2 (1) of the BIA, with certain limited exceptions, when a consumer proposal is filed, “…no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy…”.

So if the claim is one that is provable in a bankruptcy, and therefore in a consumer proposal Canada, then the creditor cannot begin or continue a lawsuit or try to enforce a judgment for the amount owed.

A recent decision from the Ontario Court confirms this law where a consumer proposal Canada will stop creditors and bill collectors from starting or continuing legal action against you.

The facts of this case

The case is Yigzaw v. Ashagrie, 2019 ONSC 2474. It is about a motion to lift the stay of proceedings to permit enforcement of an order issued against the debtors who have filed a consumer proposal.

The applicants, Philipos Yigzaw and Aster Abraham, seek to appeal an order issued by the Court on February 21, 2017 (the 2017 order). The 2017 order was gotten on the basis of summary judgment on an application started by the applicants. In their application, they sought repayment of $102,500 that they had advanced to the respondents Anaketch Ashagrie and Yilma Gari to fund a business operating under the name “Telling Roses”. They also seek an accounting of how the funds had actually been spent.

The 2017 order required Ashagrie and Gari to pay $102,500 to Yigzaw and Abraham in addition to costs of $6,250. The respondents were likewise required to provide an accounting. The Court declined to issue a certificate of pending litigation against the respondents’ residence, although a writ of execution was issued. The respondents submitted a consumer proposal the very next day.

In this enforcement motion, the applicants state that the respondents have failed to adhere to the 2017 order. They look for relief that would require Ashagrie and Gari to be examined and to pay the amount of the judgment. They also want a finding that the respondents are in contempt.

The issues for the Court to consider

The Court first considered section 69.2 (1) of the BIA I spoke about above. The Court then looked at the exception I alluded to, being Section 69.4 of the BIA.

That section says that a Court may, in certain circumstances, raise the stay to allow a creditor to pursue its rights against a debtor who has filed consumer proposal. To obtain a lifting of the stay, the creditor must persuade the Court that it is most likely to be materially prejudiced by the ongoing stay, or that lifting the stay is equitable on other grounds.

Canadian courts have held that the criteria in s. 69.4 might be fulfilled where the creditor’s debt will not be released as an outcome of the insolvency process. The types of financial obligations that are not discharged are provided in s. 178( 1) of the BIA.

They consist of a debt or obligation arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity as well as a debt or obligation resulting from obtaining property or services by false pretenses or fraudulent misrepresentation. Lifting of a stay is not a routine matter.

To succeed, the applicants have to show how they are most likely to be materially prejudiced by the stay, or that there are various other equitable grounds to raise it.

In a typical motion under s. 69.4, the applicant looking to lift the stay says that it needs to have the opportunity to prove that its accusations come from an activity provided in s. 178( 1) to ensure that it may obtain a judgment against the bankrupt or insolvent person. If successful, then that claim would survive the insolvency process.

In that normal case, the Court examines the creditor’s claims to identify if the debt, if confirmed, would be released as an outcome of the bankruptcy or proposal. Sometimes, the Court may also consider evidence submitted by the creditor.

This case is uncommon because the applicants have already gotten a judgment on their claim. They are not seeking to show their claim. They are looking to enforce the Order. So the concern the Court must think about is whether that Order was made according to a cause of action listed in s. 178( 1 ). The Judge did this by reviewing the claims and evidence before the Judge who gave judgment, his analysis, and the evidence filed in this motion.

The Court’s analysis

The Court quite properly pointed out that in order to be successful for the lifting of the stay, the applicants had to show that their debt was more than just one of a contract to lend money that was not repaid.

The Court said that looking at the application in the most charitable method possible, the claims could not support a finding that the respondents obtained property from the applicants by false pretenses or fraudulent misrepresentation. The applicants state that their loan was conditional on the money being used for “Telling Roses”. They do not declare that they were induced to loan money to “Telling Roses” as an outcome of any type of illegal misstatement by the respondents. Likewise, the applicants do not allege that the respondents took part in any kind of deceitful acts that induced them to loan the funds. Therefore, the exception from the discharge of the debt in s. 178( 1 )( e) of the BIA was not advanced in the applicants’ claim.

The allegations in the application also do not support a finding that the participants engaged in fraudulence, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. To meet that standard it is not nearly enough for a debt to have actually been brought on by fraud, embezzlement, misappropriation or defalcation. That form of criminal activity had to have occurred in the context of a fiduciary relationship.

The applicants do not declare that the respondents had a fiduciary obligation towards them. The relationship they explain with the respondents would not follow such a claim. Fiduciary relationships are unusual in arms’ length business transaction. The applicants additionally do not clearly affirm that the respondents participated in any type of scam at any point.

In reviewing the reasons given by the Judge who made the 2017 order, and in looking at all the other evidence in this motion, the Court found that it was anything more than one party loaning funds to another to start a business. The business never made a profit, it failed and therefore, could not repay the money.

The decision

Given these facts and the Court’s analysis, the Court found that the applicants could not succeed on their motion to lift the stay. Rather, the Court confirmed that the 2017 judgment could only be used as the basis for the applicants to file a proof of claim in the consumer proposal filed.

The basis for the 2017 order was a finding that the applicants lent the respondents the amount of $102,500. There is absolutely nothing in the underlying decision, or in the accusations in the application on which judgment was obtained, or in any evidence submitted in this motion, that puts the applicants’ claim in the classification of financial debts that are not released under s. 178( 1) of the BIA.

Therefore, the applicants’ motion to lift the stay under s. 69.4 of the BIA was rejected. They failed to show that they are likely to be materially prejudiced by the ongoing operation of the stay or that there are various other equitable factors that would lead to a conclusion to lift the stay.

Do you have too much debt?

Are you in financial distress? Do you not have adequate funds to pay your financial obligations as they come due?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people looking for financial restructuring, a debt settlement plan and to AVOID bankruptcy.

As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a government-approved debt settlement plan to do that. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

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BANK OF CANADA NEW STUDY ON CANADIAN HOUSEHOLD DEBT

Bank of Canada: Introduction

There has been talking for many years now about the Canadian housing market and more particularly about the Toronto and Vancouver markets. The Bank of Canada (BOC) recently published a staff analytical note titled: Reassessing the Growth of HELOCs in Canada Using New Regulatory Data. This Brandon’s Blog discusses this new study which shows Canadians have been tapping into the equity in their homes using them as automated teller machines (ATM).

Recent Bank of Canada Staff Analytical Note

The BOC staff warned that home equity may be concealing financial distress. They go on to warn that Canadian real estate owners may be hiding financial vulnerability using complex debt products.

BOC staff published this analytical note examining new home equity data. The new data gives more insight into home equity borrowing. The home equity line of credit (HELOC) borrowing has now been formally analyzed. HELOCs are usually advertised as a component of combined plans, provided with a mortgage and often, other credit items, such as personal lending and credit cards. Such a mixed plan can generally be broken down into a HELOC element, which is non-amortizing, as well as a home mortgage component, which is amortizing. Additionally, a part of the home mortgage component in such a combined strategy might be readvanceable, even though it is amortized.

The borrowing limit in combined plans is commonly tied to regional house prices. As market value increases, households can borrow much more. In the last few years, integrated mortgage-HELOC plans have actually expanded in importance. The BOC’s new analysis shows that it currently accounts for close to 40 percent of household residential debt owing to the chartered banks. In this way, Canadians are using their homes like debit cards at an ATM, but without having to go to the Bank to take out the money.

New reporting requirement for HELOCs

A new reporting standard has now been developed. A brand-new reporting form has been established to systematize the reporting on HELOCs. This new reporting is the end result of a years-long collective effort between the BOC, the Office of the Superintendent of Financial Institutions (OSFI) and the Canadian financial institutions. It is designed to improve the surveillance of financial stability concerns. The new reporting classifies household secured lending into:

  • stand-alone HELOCs
  • conventional home mortgages
  • integrated mortgage-HELOC plans

Also, it supplies a reporting on the consolidated plans into individual HELOC (non-amortizing) and mortgage (amortizing) parts. This will allow a better understanding of home equity debt.

I am sure that readers of my Brandon’s Blog are already familiar with the traditional segments of personal residential debt; first mortgage, second mortgage and secured line of credit. As the BOC statistics show, the less familiar combined mortgage HELOC product has become increasingly popular. No doubt some of that new popularity has been due to the heavy marketing of this new hybrid product by the chartered banks.

The readvanceable mortgage

I think in the future it will be better known by a name reflecting what it really is, such as readvanceable mortgages. They combine the fixed-rate mortgage with a variable rate HELOC. The amount of HELOC credit extended automatically increases with payments against the mortgage portion. So, borrowers can immediately replace the traditional mortgage debt with a new HELOC debt in exchange for the monthly payment against the mortgage principal.

Canadian homeowners can use the funds advanced by the HELOC portion for basically any use they want, including, home renovations, paying down higher interest rate debt or for investment. Under the readvanceable mortgage, borrowers, of course, will pay more interest on their total residential debt. The reason being that as you pay down the mortgage principal, the HELOC element availability increases.

It will be very tempting for Canadians to use this extra credit to pay down higher interest household debt they may be falling behind on, or at least, now be able to make the monthly payments on that higher interest rate debt, such as credit cards. So, the chartered banks, of course, will love this readvanceable mortgage credit product. More interest will be paid on the debt secured against the home while the higher interest rate payments continue to be made. A win-win for the bank, but not so much for Canadian household debt.

Canadian household debt can now replace higher rate debt with perpetual debt. There will be no incentive for Canadian households to reduce overall debt as long as interest rates stay low. It is great for the banks but not exactly a reason for households to celebrate.

Canadian household debt has a new love of these more complex loans

Let us go over Canada’s new love of these more complex loans. The BOC analysis confirms an increase in consolidated mortgage-HELOC plans, at 6.7 percent year over year. These plans appear to be taking market share from the conventional stand-alone mortgages and also traditional HELOCs; stand-alone home mortgages grew by a modest 2.0 percent,

While stand-alone HELOCs contracted by 7.6 percent during this time period. Furthermore, the new information on elements of combined plans shows that the growth of these plans is driven by the amortizing home mortgage element, which grew by 7.7 percent while the non-amortizing portion grew by 3.3 percent. These are all the same year over year statistics.

The balance of HELOCs (both stand-alone HELOCs and the non-amortizing part of the integrated mortgage-HELOC plans) is $173 billion as at the fourth quarter of 2018, $70 billion less than the previous amount of $243 billion. The overall balance of HELOCs reduced by 1 percent year over year. The overall balance of home mortgages (both stand-alone home loans and the amortizing element of mixed plans) increased by 3.8 percent.

So what does this Bank of Canada study really mean?

Against the background of the fear of climbing interest rates, tighter home mortgage qualification requirements and the stagnation in household spending throughout 2018, the information from existing regulatory filings reveals that HELOC balances expanded much faster than home mortgages. This suggests that families were had not stopped to borrow against the value of their residences even as borrowing tightened.

The convenience of accessibility to rotating credit supplied by standalone HELOCs and the new combined plans might help with the buildup of Canadian household debt. It will come at the cost of building equity in one’s home. Canadians collecting huge amounts of debt secured by their real estate may find themselves with marginal (or even negative) real estate equity if the value of their home falls.

These complex loan products may likewise be hiding emerging financial distress if Canadians are taking equity out of their homes to manage various other financial debt obligations or to fund their everyday expenses because they lack other cash resources. These are all factors to consider when tracking and analyzing both stand-alone HELOCs and the strategies of the combined plan.

Do you have too much debt?

Are you or your business in financial distress? Do you not have adequate funds to pay your debts as they come due?

If so, call the Ira Smith Team today. We have years and generations of experience aiding individuals and companies searching for financial restructuring or a debt settlement arrangement. As a licensed insolvency trustee (previously called a bankruptcy trustee), we are the only experts certified, acknowledged as well as overseen by the federal government to provide bankruptcy and insolvency guidance as well as execute methods to assist you to remain free from bankruptcy and your debts.

Call the Ira Smith Team today so you can reduce the tension, anxiety, and discomfort from your life that your financial problems have triggered. With the unique roadmap, we develop simply for you, we will promptly return you right into a healthy and balanced problem-free life.

You can have a no-cost evaluation so we can assist you to repair your credit and your debt problems. Call the Ira Smith Team today. This will certainly enable you to return to a brand-new healthy and balanced life, Starting Over Starting Now.bank of canada

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Brandon Blog Post

RBC ONLINE BANKING: DID WE NOT LEARN FROM THE RUTHLESS EQUIFAX DATA HACK?

rbc online banking sign in
rbc online banking

RBC online banking introduction

I have a story to tell you about how a Royal Bank of Canada online (RBC) customer is out of pocket after a fraud perpetrated on her. The fraud occurred after she used her RBC online banking sign in.

It is something that everybody does and possibly everyone thinks is a secure transaction. It has to do with the system to move money online made use of over a million times a day in Canada. By telling this tale of the RBC online banking hack, I wish you understand 2 points; 1. it might not be as secure as advertised; 2. you need to be alert in doing whatever you can to shield yourself from the cyberpunks.

RBC online banking: What happened

The woman had gone on vacation with a close friend. A couple of days after they got home she sends her close friend some money she owed her from the journey. Her good friend called the following early morning to claim she could not deposit the transfer. When she tried to deposit the cash, a message showed up claiming that the cash had already been transferred! The sender’s initial thought was what a funny friend she had. She cannot get an easy e-transfer and does not know how to use the system. They also laughed about it.

Her pal consistently sends out and gets money by e-transfer. She understands what she is doing. The e-transfer did not work. The lady quickly examined her savings account. The cash was gone.

rbc online banking sign in
rbc online banking

RBC online banking fraud department

They rapidly met with each other and called the RBC online banking fraud division on speakerphone. The women advised of the situation. The fraud department informed them they know the cash really did not go to the good friend. As a matter of fact, they provided the name of the person that got the cash and his email address!

They were stunned by 3 points. First, they never came across anyone with that name or email address. Second, they could not understand that over the telephone, the RBC online banking people would divulge that information. Third, the RBC online banking system did not let the Bank know the name and email address of the friend who was supposed to receive the money.

The woman then said to the RBC online banking fraud department, alright, please reimburse my account. However, RBC would not do that. They told her they couldn’t yet decide who was hacked – the RBC customer or her friend. They suggested she quickly get to her branch to sort it out. As you will read further, she quickly learned that being defrauded in a digital money transfer is not the same as if someone stole and cashed a cheque you wrote that was intercepted in the mail.

RBC online banking: Going to the Bank

She went to the Bank. Her friend went home. She reached the branch within 5 minutes of hanging up the phone. After half-an-hour of talking with the Bank people, they told her that it had not been her that was hacked. Rather, it was her good friend.

So she told her close friend what RBC said. They went together to the local police station and filed a report. She gave a duplicate of the cops’ report to both the RBC online banking fraud group and the RCMP Commercial Crime division.

RBC continues to contend that it was not their customer’s computer or email that was hacked either as part of the RBC online banking sign in or otherwise. Rather, it was her friend’s computer system and email that was hacked. To date, RBC has refunded their customer only half of the amount lost. They stated that it was only as a goodwill gesture and they are not taking any responsibility for the RBC online banking hack.

How we can protect ourselves from an RBC online banking hack?

There are a few more facts that I have saved for this section of the blog. The reason I did that is that it will show us what additional things we can do ourselves to better protect all of us. Hopefully, can all learn from this RBC online banking sign-in and Interac e-money transfer debacle.

The obvious first step is having up to date and proper anti-virus security on all of our computers. This security must also extend to our mobile devices, as so much of banking is now done that way. Many people use the RBC online banking mobile banking app. If you are not an RBC customer, I am sure that you use your Bank’s mobile banking app. For mobile, this would require us to be using a virtual private network (VPN). Consumer VPN systems are so easy to set up and inexpensive. They protect our private and sensitive information from hackers.

When someone sends an e-transfer of money, you are sending it either to someone on your approved list and therefore the money is automatically deposited. If it is to an email address not on your approved list, then you have to set a security question. The security question is either something only the person you are sending the money to would know or, you have to provide them with the answer. Without the proper answer, they cannot obtain their money.

In this case, the woman’s security question was something that her friend knew. The security question was “who is my favourite Beatle?”. Sounds simple, right? Well not if you have been hacked, there are only 4 possible answers and the e-transfer system gives you 4 tries to get it right!

So it was very simple for the hacker. The whole universe of possible correct answers was 4 and the system gives you 4 tries. The woman would not have known that the system gives you 4 attempts to answer properly. What this shows us is we need to establish a more complicated question and answer that a stranger hacker could not possibly know.

Cybercrime is an ongoing problem. The Equifax data hack is a case of a large corporation being hacked. The reality is that our home computers are so simple to protect. It is the large complicated systems that are more vulnerable. That is unless you have done nothing to protect your home computer from hackers.

RBC online banking conclusion

I hope this sad story has helped you gain a better understanding of what to do to better protect ourselves from cybercrime. Question: Have you or your company been the victim of a hacker, including identity theft? Has something like the RBC online banking data breach ever caused you to lose money and now you have trouble making your monthly payments? Is your business dealing with financial challenges that require to be addressed immediately?

Call the Ira Smith Team today if so. We have years and generations of experience helping people and businesses seeking financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee (formerly known as a bankruptcy trustee), we are the only specialists acknowledged, accredited and overseen by the federal government to supply insolvency advice and implement solutions to help you to remain free from bankruptcy.

Call the Ira Smith Team today so you can end your anxiety, anxiousness, and discomfort today. With the roadmap we establish one-of-a-kind to your scenario, we will promptly return you right into a well balanced, healthy and carefree life.

You can have a no-cost evaluation to help you to fix your credit and debt difficulties. With you, we will discover your monetary pain factors and make use of an approach to free them from your life. This will definitely enable you to start with a clean slate, Starting Over Starting Now.

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Brandon Blog Post

ONTARIO COMMERCIAL LEASE AGREEMENT: INSOLVENT COMMERCIAL TENANT

 

Introduction

I reviewed a Court decision out of Alberta that was rendered on April 4, 2019. The case is Royal Bank of Canada v. Parkland Properties Ltd., [2019] A.J. No. 412, from the Alberta Court of Queen’s Bench. In reviewing this case about an insolvent tenant, who later became a bankrupt commercial tenant, the same would hold true in Ontario. I thought it would be helpful to review the principles in this decision, and how it would relate to an Ontario Commercial Lease Agreement.

Background

Unlike Ontario, there is no commercial tenancy act in Alberta. However, there are various other provincial statutes and a Supreme Court of Canada decision, that provides guidance for commercial landlords and tenants in Alberta.

If a commercial lessee breaches a business lease in Alberta, similar to Ontario law, a landlord has various alternatives. For a properly worded commercial tenancy agreement, the main alternatives include distraining on the tenant’s assets located on the leased commercial premises or terminating the commercial tenant’s lease. Suing for any damages, including rent arrears and for the unexpired duration of the lease, may also be part of the landlord’s rights.

Distraint or distress is the seizure of the commercial tenant’s property in order to acquire the repayment of rent arrears and various other amounts owed. Distraint normally includes the seizure of goods belonging to the lessee on the premises by the landlord to market them for the settlement of the amount owing at that point in time under the lease.

In a properly conducted distraint, no Court order is required. The landlord must also be careful when advising the tenant of the distraint, to also notify the lessee that the lease is not being ended. This way, the landlord may recoup further unpaid amounts or other damages in the future. On a practical basis, if the tenant does not bring the lease into good standing and allows the distraint to be completed, the business is probably over anyway.

Under the Alberta Civil Enforcement Regulation, the landlord would hire a bailiff to carry out the distraint and sale of the assets. This is what happened in the Royal Bank of Canada v. Parkland Properties Ltd. case I recently reviewed.

The facts and decision of the case

The facts are pretty simple. The landlord began and completed distraint proceedings against its tenant. At the time of the seizure, the insolvent tenant was $79,586 behind in rent. The landlord’s bailiff completed the sale of the assets. After taking its fee, the bailiff paid over to the landlord the amount of $223,990. The tenant became a bankrupt company after the funds were paid to the landlord.

Royal Bank of Canada (RBC) was a secured creditor of the tenant. At the date of bankruptcy, RBC was owed $498,799. RBC took an action that originally was an action that could be taken by the licensed insolvency trustee (formerly known as a bankruptcy trustee). It did so under section 38 of the Bankruptcy and Insolvency Act (Canada) (BIA). The Trustee was either unwilling or unable to launch the action. The action RBC launched was for the repayment of the amount realized by the landlord as a preferential payment under section 95 of the BIA.

The Court ruled partly in favour of RBC. It ordered that the landlord could retain the amount of $79,586. The balance of $144,404 could not be kept by the landlord and had to be paid over to RBC.

Ontario commercial lease agreement: The same decision would be reached in Ontario

I am satisfied that the same decision would be reached in Ontario. As I mentioned above, distraint is not a termination of the lease. Although the practical effect would be to end the tenant’s business, the lease continues and so does the tenant’s obligations to the landlord. The commercial tenant’s rights under its Ontario commercial lease agreement also remain. Distraint is a mutually exclusive remedy from termination of the lease.

The Court determined that Section 95 of the BIA does not apply to set aside distraint proceedings by a landlord under a commercial tenancy agreement in arrears. That section just included payments made by an insolvent party. The Court also stated that Section 70 of the BIA protects the landlord’s distraint because the distraint was fully completed by payment to the landlord.

However, the Court did find that the payment to the landlord was extreme. As you will recall, the distraint is based on the arrears at the time of effecting the distraint. In this case, the amount outstanding at that time was $79,586. However, the amount paid to the landlord, after the costs of distraint, was $223,990. Commercial lease landlord responsibilities include providing proper accounting. Therefore, the Court ordered that the excess over what the landlord was owed, $144,404, had to be paid to the plaintiff, RBC.

If there were no secured creditors and the Trustee launched the application, the result would have been the same. The only difference would be that the excess funds would have to be paid over to the Trustee. The result in Ontario would be the same as in this Alberta case.

Is your company insolvent?

Is your company behind in its rent payments under its Ontario commercial lease agreement? Does it not have enough cash to continue its operations?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people and companies trying to find financial restructuring or a financial debt negotiation strategy. As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only professionals licensed, recognized and supervised by the federal government to supply bankruptcy and insolvency advice and carry out strategies to aid you to stay clear of bankruptcy.

Call the Ira Smith Team today so you can cut the stress, anxiousness and pain from your life that your financial issues have caused. With the special roadmap, we establish just for you, we will immediately return you right into a healthy and hassle-free life.

You can have a no-cost analysis so we can help you fix your company’s debt troubles. Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.ontario commercial lease agreement

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Brandon Blog Post

BORROW WELL REVIEW GUIDE: BORROWELL REVIEW FREE CREDIT SCORE METHOD

borrow well review

If you would prefer to listen to the audio version of this Brandon’s Blog Borrow Well Review please scroll to the bottom and click on the podcast

Introduction

Have you ever before wondered what your credit score is and what your credit history looks like? I’m certain if you ever before looked for a home mortgage, a loan, to rent a home or apartment or applied for an insurance policy, you recognize that your credit rating ends up being crucial. The loan provider, landlord or insurance provider will certainly decide on you based upon your credit history. This Brandon’s Blog is about the totally free credit report system of Borrowell Inc.; a Borrow Well review.

Inspecting your credit rating has actually generally been a really laborious job and nobody really liked to do it. With the surge of consumer FinTech over the last couple of years, two businesses have actually seen a method to produce an on the internet industry for personal loans in Canada; 1. Credit Karma Canada; and 2. Borrowell Inc. Credit Karma Canada is owned by its United States parent. Borrowell is a 100% Canadian owned firm.

Borrow Well review

I have previously blogged about Credit Karma Canada. Borrowell runs in a comparable way. Borrowell’s goal is quite straightforward. They wish to assist Canadians to make fantastic choices concerning credit and debt. They began life as a consumer lender. Borrowell thought that customers wanted personal loans. They started the firm making loans for people with excellent credit.

Borrowell discovered that it was pricey to obtain customers. Their customer acquisition cost was very high. It was a tough issue to fix. What they did was come to be the 1st business in Canada to supply credit scores absolutely free. They assumed this would be a wonderful method to obtain clients and promote what Borrowell did. They thought that it would certainly be an excellent method to make loans.

How it works

The trouble was that they were thousands of people a week inspecting their credit report, however, few of them either desired or fit the Borrowell standards for, loans. Borrowell found that people desired various financial products and not everyone had good credit. So they invested most of 2017 in developing a marketplace.

They developed an online forum for around 40 various financial institutions and other lenders. That enabled a person to get their credit score with Borrowell, and then they can after that be taken into the sales funnel. Borrowell would after that advise of products, solutions, and pointers customized for every person from their forum of lender members. Borrowell earns a fee on loans made and other financial product sales.

They wound up discovering a high level of product market fit for roughly half a million direct customers that first examine their credit report with Borrowell. Canadians now had a very easy way to regularly see their credit score and inspect their credit history.

Utilizing the Borrowell system does not influence your credit report, unlike when you apply for a loan and the potential lender performs a credit check on you. In order to ask you the setup questions, and to have the ability to provide you with your cost-free credit report and record, Borrowell acquires information from one of our two credit reporting companies, Equifax.

Borowell additionally browses particular public document data sources to try to find various other details such as:

  • Bankruptcy: A legal process used by people and companies looking for particular relief from all or some their debt.
  • Civil Judgment: A non-criminal judgment in a court, calling for the person or company to make full or partial restitution.
  • Registered Items: Other things found in public documents, like a lien against your car or truck or a home mortgage or other loan registered against your house.

Know that you are in the Borrowell sales funnel

In order to stay top of mind, Borrowell updates you on your credit rating on a monthly basis and if it has actually changed for better or for worse. This is, obviously, advantageous for any person trying to enhance their credit history. Borrowell will inform you monthly the result of the activities you are taking to boost your credit score.

Borrowell will also help you recognize what variables are affecting your credit score. In this way, they inform you what you need to do to boost your credit rating. This is particularly great for anybody trying to learn about finances and general money matters. Borrowell also provides recommendations on just how to improve your credit rating.

So their system helps you to learn about:

  • payment history
  • credit usage
  • bad comments on your credit report
  • account inquiries
  • your credit score and report
  • tips for improvement

Borrowell offers you a very easy way to see just how you’re doing financially, just how much money you have invested between credit cards and automobile and various other loans. It likewise

To learn what goes into calculating your credit score and what it all means, check out my blog, WHAT IS A GOOD CREDIT SCORE IN CANADA? THE UNTOLD CREDIT SCORE SECRETS.

Is there any drawback to the Borrowell app?

The positive side is that this is a very easy and effective method of looking into yourself in a reliable way none of our Canadian banks have actually done. Nonetheless, I likewise have some worries.

The financial partners in the Borrowell financial marketplace have to pay a fee. That charge needs to be accounted for in the price of the financial products sold. If there is competition amongst marketplace financial members, this may keep pricing consistent and competitive within the various credit score buckets. Perhaps this marketplace also gives people access to financial products they otherwise may not be able to find or get on their own.

It is safe to presume that people using this system are working on boosting their credit score. The financial partners might be costing their products for those that have actually not attained sufficient credit strength to go and negotiate the price they will be paying with any Bank. So for those with a good credit rating, this may mean that the cost of any kind of financial product via the Borrowell portal could be greater than otherwise readily available to them if they spent the time investigating.

My main concern is more generic. It would be the same as with any system like this. They maintain a great deal of highly personal and sensitive information on Canadians which they regularly update.

There are many criminals around the world who would like nothing better than to hack the Borrowell database in order to get at this information to further their devious and illegal schemes. Stealing your identity, or identity theft is, of course, the big one.

Think no further than September 7, 2017, when Equifax announced that months-long illegitimate access to its credit-report databases had led to the breach of personally identifiable information of over 148 million people, nearly all in the USA. That is the real danger I am talking about. As I mentioned, that is a danger with any computerized system storing highly sensitive information, not just a Borrowell issue.

Borrow Well Review: Do you have a negative credit report?

I hope this Borrowell review has helped you gain a better understanding. Question: Have you lost the ability to borrow because of a bad credit score? Are you having trouble making your monthly payments? Is your business dealing with financial challenges that require to be addressed immediately?

Call the Ira Smith Team today if so. We have years and generations of experience helping people and businesses seeking financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee, we are the only specialists acknowledged, accredited and overseen by the federal government to supply insolvency advice and implement solutions to help you to remain free from bankruptcy.

Call the Ira Smith Team today so you can end your anxiety, anxiousness, and discomfort today. With the roadmap we establish one-of-a-kind to your scenario, we will promptly return you right into a well balanced, healthy and carefree life.

You can have a no-cost evaluation to help you to fix your credit and debt difficulties. With you, we will discover your monetary pain factors and make use of an approach to free them from your life. This will definitely enable you to start with a clean slate, Starting Over Starting Now.

 

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Brandon Blog Post

BANKRUPTCY CANADA NEW EVENTS (2019)

Introduction

There has been two recent bankruptcy Canada new events that I believe are important to discuss. I believe you will hear more about it over the next few months. The two are unrelated.

One deals with the insolvency of oil and gas companies. The other with the rights of retired people and their company pensions and health benefits when their former employer goes into insolvency proceedings.

Bankruptcy Canada – The Redwater decision fallout

I have previously written about the Supreme Court of Canada decision in the Redwater Energy Corporation matter. On January 31, 2019, the top Federal Court released its decision in the case of Orphan Well Association v. Grant Thornton Ltd. The Supreme Court reversed 2 Alberta lower Court decisions. It is now the law of the land that, prior to lenders or creditors getting any type of repayment, the receiver or trustee will need to invest the funds from the sale of assets on the environmental remediation costs on all orphaned wells, that provincial legislation may need.

The decision made it clear that the receiver or trustee does not need to spend cash it does not have from the sale of assets or other recoveries. However, whatever amount it recoups from the sale of assets, on a net basis, will initially need to go to provincially mandated clean-up costs of the financially troubled company’s wells. This is before secured or unsecured creditors see a penny.

Trident Exploration Corp.

Now for the fallout. Natural gas producer Trident Exploration Corp. (Trident) ceased operations on April 30, 2019. On May 3 on application to the Court by the Alberta Energy Regulator’s Orphan Well Association, Trident was placed in receivership.

Its staff and contractors have been terminated and its 3,600+ wells are being transitioned to the Alberta regulator.

The company claimed it had functioned openly and collaboratively with its lenders and the regulator since February. It further reported that it was unable to see that a successful restructuring could be accomplished in a timely fashion. Therefore, Trident’s lender stopped supporting the business. Due to this, Trident does not have the funds to run its infrastructure or enter into insolvency proceedings. Consequently, they have determined to walk away, leaving greater than 3,600 sites, a number of them active, without an operator.

The regulator then issued its order for the sites to be properly decommissioned and capped off. On April 30, Trident, without replying to the regulator’s order or addressing their environmental obligations, the Directors ceased operations, terminated its staff and contractors. The Board then resigned. Trident’s wells will soon be transferred to the Orphan Well Association.

The Redwater effect

Trident blamed the recent Redwater Supreme Court decision which ruled that capping of orphan oil and gas wells and environmental remediation should take priority over lenders when a business goes bankrupt and leaves behind orphan wells.

Trident also said that the Redwater decision, regulatory uncertainty and current low pricing has developed a treacherous setting for energy companies that dare to risk their capital in Canada.

Trident estimates that its total abandonment and improvement obligations are about $329 million. They estimate that with those costs, any recovery by secured lenders is unsure and there would be no funds for either unsecured creditors or shareholders.

The Redwater effect is that the Court’s decision has had the unintended result of increasing Trident’s financial distress and accelerating the abandonment of its wells, has it had no funds to live up to its obligations.

Only time will tell if other insolvent energy producers take the route of Trident by just shutting down and abandoning its business and leaving its wells for the regulator to deal with.

Bankruptcy Canada – Retiree pension and health benefit rights protection in insolvency proceedings

Another topic I have previously written about is the lack of protection for retirees for pension and health benefit payments when the former employer enters insolvency proceedings. Rank-and-file members of the United Steelworkers (USW) from across Canada were on Parliament Hill to consult with MPs and requesting a commitment to legislate protection for retired workers. The USW very much want to make this a 2019 federal election issue.

The 2019 federal budget plan was very quiet on any type of commitment to shield workers and retirees by treating them as protected or priority creditors in our insolvency laws.

As a result of high-profile cases such as Nortel in Ottawa, Stelco in Hamilton and Sears, the USW is committed to campaigning for retirees to have a safe future.

Retirees understand just how unsecure their pension plans and benefits might be if a firm gets into restructuring under the Companies’ Creditors Arrangement Act (CCAA) or any proceeding under the Bankruptcy and Insolvency Act (Canada) (BIA).

Pensions are delayed earnings and, by the time financial institutions as well as various other creditors are paid, there is nothing left for workers for any shortfall or benefit payments. The USW feels that all Canadians ought to be outraged by the treatment of retired Canadians in corporate insolvency matters.

This is why they met with MPs Senators. They want to focus on a collection of recent Bills presently before the House of Commons and the Senate. Two are before the House of Commons but they have not progressed. One is sponsored by the New Democratic Party, and the other by the Bloc Québecois. They are focused on reforming the CCAA and the BIA to offer top priority to claims by workers arising out of an underfunded pension plan and the removal of benefits.

An additional Bill, presented in the Senate late last year by now-retired Senator Art Eggleton, likewise aims to grant secured standing for pension claims.

It will be interesting to see if the Conservative Party picks up on this important debate and turns it into an election issue. The Liberal Party had promised to deal with this issue in the last four years, but alas, they have not delivered.

Bankruptcy Canada – Summary

Corporations that cannot afford to properly shut down their business and retirees losing out on benefits they worked their whole life for are important issues in insolvency. Does your company not have enough cash to continue its operations? Did you not receive all amounts you are entitled to and now are facing personal financial problems?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people and companies trying to find financial restructuring or a financial debt negotiation strategy. As a licensed insolvency trustee, we are the only professionals licensed, recognized and supervised by the federal government to supply insolvency advice and carry out strategies to aid you to stay clear of personal bankruptcy.

Call the Ira Smith Team today so you can cut the stress, anxiousness and pain from your life that your financial issues have caused. With the special roadmap, we establish just for you, we will immediately return you right into a healthy and hassle-free life.

You can have a no-cost analysis so we can help you fix your debt troubles. Call the Ira Smith Team today. This will most certainly allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

 

bankruptcy canada

 

 

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ESTATE TRUSTEE ONTARIO REMOVAL ISSUES

Estate trustee

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

Estate trustee Introduction

One of the most popular Brandon’s Blog article is:

WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT

That led me to start looking more deeply into deceased estate matters, past the insolvency issues. So a few months ago I wrote a series of blogs on estate trustee matters. The series of blogs are:

In one blog I wrote how the duties and responsibilities of an estate trustee (formerly called either an executor or executrix) are very similar to the fiduciary duties and activities are undertaken all the time by a licensed insolvency trustee. In another, I wrote about the Court’s ability to remove and replace the estate trustee. In a third blog, I wrote about how all children are not fit to be an estate trustee.

A recent Court decision

I recently became aware of an Ontario Court decision about the removal and replacement of an estate trustee. The decision was handed down a couple of weeks after I wrote my blogs.

The recent decision is a very interesting case. Many of the issues I wrote about are all there. So, I thought it would be interesting to provide the information to you as it is a real-life example that actually took place, of many of the things I previously wrote about that could take place.

The case citation is Lanari V. Kay, 2019 ONSC 1506. It was heard in the Ontario Superior Court of Justice. The deceased was Patricia Anne Kay. She had eight children. Tragically, one daughter predeceased her. Of the seven remaining, in her will, three were appointed trustees. Along with the remaining four children, Ms. Kay’s granddaughter, the child of her dead daughter, was asserting that she was entitled to be a beneficiary.

The Applicant

The applicant insists five reasons to get rid of the estate trustees: (1) conflict of interest; (2) misbehaviour, violation of trust fund as well as violation of fiduciary responsibility; (3) animosity between the trustees; (4) conflicts between the trustees and the beneficiaries; and (5) delay and wastage of the assets.

The respondents

The trustees insist that:

  1. Any kind of conflict of interest can be relieved by guaranteeing the trustee with a conflict will not take part in any decision making in connection with the matter or thing where there is that conflict.
  2. There is no displeasure between the trustees, and there never was.
  3. Any bitterness between trustees and beneficiaries is not a sufficient ground to get rid of trustees.
  4. There has been no significant hold-up in the management of the estate and they have properly provided the necessary disclosure.
  5. From a functional viewpoint, the elimination of current trustees will increase expenses in this modest estate.

The Trustee Act

As I discussed in my earlier blogs, under the Trustee Act, R.S.O. 1990, c. T. 23 (the Act), the court can remove trustees and select brand-new trustees.

The basic concept adhered to in an estate and trust matter by the Court for removal applications like this one is that a Court will not easily remove an estate executor, executrix or trustee picked by the testator. Nevertheless, where there is a clear instance of conflict of interest, elimination is a suitable course of action. The well-being of the beneficiaries has to be an important factor to consider. Also, conduct by the trustee that jeopardizes the estate property or that reveals a lack of honesty or absence of proper ability to carry out the trustee’s duties and obligations are a basis for removal.

The Judge and his ruling

Therefore, the Judge kept in mind that the estate trustees have actually insisted in written documents that the estate might lack sufficient property to disperse if estate litigation continues. He found that the trustees’ activities have actually resulted in unnecessary litigation. The significant legal costs which have actually been sustained are partly due to the unreasonable positions taken by the trustees. This was a major variable to think about.

The Judge stated that:

  1. Bitterness between a beneficiary and a trustee might not be sufficient to cut a trustee.
  2. When that displeasure influences the management of the estate, it is a significant problem.
  3. If the animosity has actually been created by the failure to supply disclosure, it increased the time spent by the respective lawyers on behalf of the trustees and the beneficiaries.
  4. The additional time spent as a result of the lack of disclosure is matched by a matching boost in legal costs which might be the obligation of the estate.

The Judge felt that the problems in this situation have and remains to raise the costs associated with the estate management. He additionally stated that bitterness between the trustees might also exist.

Ultimately, the Judge determined that he was satisfied that the estate trustees have to be removed and he ordered that. The Judge assigned an independent person as the alternative estate trustee and approved a specific hourly rate to be billed by the brand-new trustee. Trustee compensation, just like that of a licensed insolvency trustee acting in Court matters, is subject to taxation by the Court.

Finally, the Judge referred to the various other disputes between the parties back to the Judge seized with this estate litigation.

Our role in estate matters

As I mentioned in one of the earlier blogs, my Firm had successfully completed a mandate as Court-appointed Estate Asset Manager. In that file we had to find common ground between two beneficiaries who could not agree on anything. We were able to do that. So, on consent, our plan to prepare for sale and then sell the assets and distribute the cash to the beneficiaries, on consent, was done. Our fee and that of our lawyer was also approved by the Court without any objection from the beneficiaries.

We were recently appointed by the Court in another estate matter. We will be receiving funds from a party purchasing the only real asset in the estate and attempting to find a missing beneficiary. Based on the results of our hunting, we will then prepare a distribution plan for the Court to approve.

As I have previously written and state above, a licensed insolvency trustee is an officer of the Court. We have the necessary skill set to act as either an estate trustee or perform many potential roles in estate matters. This is in addition to our normal work in the insolvency field.

If you are involved in a messy estate matter, call the Ira Smith Team today. We work cooperatively with lawyers and other professionals.

As a licensed insolvency trustee, we are natural problem solvers. We will be able to create a plan unique to your circumstances so that we can end the pain, stress and anxiety that you are feeling. This will allow you to reduce your overall costs and return to living a stress-free life.

Call the Ira Smith Team today for your free consultation. We will reduce your overall costs and end your pain points, Starting over Starting Now.

 

 

 

 

 

 

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