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FINANCIAL SECURITY REPORT: HALF OF CANADIANS CAN’T MAKE ENDS MEET

Financial security Introduction

Brand-New Ipsos study findings were released on April 22, 2019, simply 2 days prior to the next Bank of Canada interest rate announcement. This brand-new survey shows exactly how Canadians really feel about their financial security or its absence. Ipsos claims almost fifty percent of Canadians cannot make ends meet on a monthly basis.

Fifty percent of Canada is worried about the effect of increasing rates of interest on their financial resources.  They feel even worse about their debt load from just a couple of months back.

Canadians maxed out on debt

Canadians are maxed out on debt with 48% of Canadians on the edge of bankruptcy. They claim that they go by the end of every month to within  $200 or less far from financial insolvency.

In regards to Canadians and their beliefs, people are worried about their debt levels and financial security. Forty-eight percent of those questioned claim they cannot make ends meet. They understand that they are most likely to take on even more debt at the end of each month to pay all of their expenditures. So practically fifty percent of all Canadians need to handle even more debt to satisfy their current expenses, which in part includes existing debt repayments!

It’s no longer about purchases – that ship has already sailed!

It ends up from the survey that this isn’t about the fact that we’re in a low-interest-rate atmosphere any longer. It also isn’t about people making high-end or lifestyle new purchases that are considered unnecessary.

They have actually already done all that. Especially people in Toronto and Vancouver that have stretched to buy costly houses, home furnishings and appliances. They used the low-interest rate mortgages and home equity credit lines to do it.

New debt on top of old debt

So now they understand that they better not take on even more debt. However, guess what? It is currently far too late for almost half of Canada. People are claiming they currently just cannot make ends meet. Therefore, they have no choice but to take on even more debt.

Brand-new debt to make old debt repayments! Undoubtedly, these individuals stay in a hazardous downward spiral.  People are questioning whether can continue in this way and are thinking about personal bankruptcy.

It is true that the survey has a small sample size. This Ipsos survey reveals growing tension and grief. Nevertheless, personal bankruptcies remain historically low in this nation. Undoubtedly, there are local distinctions. Albertans are experiencing far more personal insolvencies as a result of the slowness in the energy market.

I think there are 2 really basic reasons for almost half of Canadians dealing with financial insolvency yet personally bankruptcy levels are down. First, financially troubled Canadians are utilizing the consumer proposal arrangements section of the Bankruptcy and Insolvency Act (Canada) (BIA).  This is a good thing because they are avoiding bankruptcy.  

Second, people still have adequate equity in their houses. So, they are still able to borrow for brand-new debt to satisfy old debt payments other living costs.  This is not a good thing. The thing Canadians do not seem to be doing yet is tightening their belts and lowering month-to-month expenses.

Bank of Canada

The Bank of Canada (BOC) increased its overnight interest rate 5 times since mid-2017. At the end of 2018, everyone, including the BOC assumed that fad was most likely to continue. Nevertheless, in its first 2019 interest rate announcement, the Bank altered its signals and currently appears completely satisfied to hold steady on the interest rate for what might be for the rest of 2019.

On April 24, 2019, the BOC announced that it was maintaining the overnight bank rate target at 1 ¾ percent.  The BOC did so based on its observations of the Canadian and global economies.

Their statement included, that in Canada:

  • economic development throughout the very first half of 2019 is anticipated to be slower than was forecast for in January 2019.
  • The oil price decrease and recurring transport restrictions have actually suppressed financial investment and exports in the oil industry.
  • Financial investment and exports outside the oil market, at the same time, have been adversely impacted by unpredictability and the global downturn.
  • Beyond the oil and gas market, the financial investment will be sustained by high prices of other commodities and exports will broaden with reinforcing international need.

As far as the global market, the BOC stated:

  • The global economy reduced by greater than the Bank projected in its January Monetary Policy Report.
  • Continuous unpredictability connected to trade disputes has weakened business views.
  • Stagnation throughout many countries has resulted.
  • In reaction, several reserve banks have reported a slower speed of monetary plan normalization.

As a result, the BOC kept its target for the overnight rate at 1 3/4 percent.

Financial questions for Canadians

Virtually fifty percent of Canadians currently are sorry for the debt they have. I believe what this does is brings recognition for you to have a serious discussion in your home. The discussion requires to be about:

  • Exactly how near the margin are you living?
  • What household costs could you drop?
  • Could you survive if one of you were to lose your job?  
  • If not, what can you do now to prepare for that if it were to one day happen?
  • Have you filed all your income tax returns and paid all your tax obligations?
  • Did you get a tax refund and what are you most likely to do with that cash to help with your situation?
  • Are your Christmas gifts expenses all paid or are you still rolling those costs on your credit card bill every month?

Despite that the job market has seen wage strength, the Canadian economic situation has not produced great financial signals. There are spots that seem to be a little murkier. Our rising cost of living is nearing 2% on an annualized basis and we’re paying much more for gas at the pump. We’re paying a lot more for produce. So there are things that are costing us even more simple to manage. So if income is increasing a bit, costs are climbing much more.

So Canadians are currently really feeling a little sweaty. They aren’t certain what is most likely to take place. Currently, there appears to be a little bit of a rest on the interest rates.

Canadians need to set up a proper household budget

I would certainly suggest that not everybody has taken a hard look at their financial situation. There’s plenty of presumptions that can take place due to the fact that you just do not understand your numbers. I see that occurring all the time.

So perhaps people really feel a little even worse off than they actually are due to the fact that they do not understand their numbers. They understand they stay in difficulty, however, do not have the capability to assemble a roadmap for saving themselves.

A truth check is needed instantly. Most likely fifty percent of those that claim they cannot make ends meet can save themselves without turning to an insolvency process. If they just recognized their realities about their very own money situation.  The other half of the half, or 25% of Canadians, probably do meet the financial insolvency definition and need professional help.

The trick might just be that Canadians need to promptly get a good handle on what their month-to-month income and expenses truly are. Share that info with the entire household and make and follow a household budget that has everybody’s agreement.  Your financial security in retirement may depend upon it.

Readers of my Brandon’s Blog will know that I always state the advantages of correct budgeting. To check out this budgeting topic you can look as far back as my collection of blogs that began late in 2014 with A BALANCED BUDGET IS TO FINANCIAL HEALTH WHAT A BALANCED DIET IS TO PHYSICAL HEALTH. You can additionally check my more recent 2019 blogs, USEFUL TIPS FOR SAVING MONEY CANADA: THIS PRO ATHLETE TEACHES US and also MY BILLS ARE HIGH: 6 THINGS TO IMMEDIATELY DO.

What about you or your company?

Do you have way too much debt? Are you having difficulty making your month-to-month expenses? Is your company having a hard time handling its economic difficulties that you cannot figure how to get out of?

If so, call the Ira Smith Team today. We have decades and generations of experience assisting people and companies looking for financial restructuring or a debt settlement plan. As a licensed insolvency trustee, we are the only experts recognized, accredited and supervised by the federal government to provide insolvency advice and carry out alternatives to aid you to stay clear of bankruptcy.

Call the Ira Smith Team today so you can end your tension, stress and anxiety that your financial problems have triggered. With the special roadmap, we develop unique for you, we will right away return you right into a healthy and well-balanced hassle-free life.

You can have a no-cost evaluation so we can help you repair your debt difficulties. Call the Ira Smith Team today. This will most certainly permit you to return to a brand new healthy life, Starting Over Starting Now.financial security

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THE HONEST TO GOODNESS TRUTH ON BANKRUPTING A CORPORATION

bankrupting a corporation

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

Bankrupting a corporation:  Introduction

I have blogged on personal and corporate insolvency matters for just over 6 years now.  I have covered many topics. During a recent corporate bankruptcy consultation, I realized that I have never written about what the steps are for bankrupting a corporation.  An important issue arising from this topic would be what the Directors of a corporation going into bankruptcy should know.

There are 3 ways for a company to be bankrupt

Like in all bankruptcy matters, there are three methods that result in bankrupting a corporation in Canada.  The first way is being pushed, and the second way is jumping in with both feet voluntarily (I know, corporations don’t have feet!).  The third way is to have the company’s creditors vote down a corporation’s attempt to restructure under a Proposal under the Bankruptcy and Insolvency Act (Canada) (BIA).  In this Brandon’s Blog, I will focus on describing the first two methods.

Bankruptcy application – an involuntary bankruptcy

Being pushed means that one or more unsecured creditors, owed in total at least $1,000, has made a motion before the Court asking that a Bankruptcy Order be made against the company.  The motion is called a Bankruptcy Application.  

In order to do so, the unsecured creditor(s) have to:

  • retain a bankruptcy lawyer.
  • gotten the consent of a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee) to administer the corporate bankruptcy.
  • In addition to proving the debt owing, the applicant(s) also have to prove that at least one act of bankruptcy was committed by the company within the 6 months before the filing of the bankruptcy application.

There are various acts of bankruptcy listed in Section 42(1) of the BIA.  Commonly seen acts of bankruptcy are fraudulent transfers of property, allowing a lawful seizure of some or all of their property by a creditor under a lawful process, and the catch-all ceasing to meet many liabilities as they come due.

Jumping in with both feet – a voluntary bankruptcy

By this term, I mean filing an Assignment in Bankruptcy.  In this case, rather than someone going to Court, the Directors call a Directors’ meeting.  At the meeting, the Directors resolve that the company is experiencing financial difficulty and cannot continue to run.  The Directors also reserve that the company should file an assignment in bankruptcy and it gives authority to one Director to sign all the necessary documents.

The Director who has the authority to sign the bankruptcy documents is called the Designated Officer.  Before the documents are ready for signing, the Trustee who is selected must get enough information to prepare the documentation.

Whether bankrupting a corporation in Ontario or elsewhere in Canada and regardless if it is a result of a Bankruptcy Order or an Assignment in Bankruptcy, the information the Trustee requires is the same.

Information and documents a Trustee needs

The Trustee requires a great deal of information before being able to properly administer a voluntary or involuntary corporate bankruptcy. Sometimes company officials can provide it and in other cases, the Trustee has to dig through the books and records of the company.

Here is the lengthy list of what is needed:

  • Exact corporate name and address of head office, details of any other locations, copy of any premises leases.
  • Minute book and corporate seal.
  • Bankruptcy Order or the resolution of the Directors.
  • Full description of the nature of the business.
  • Names of Officers and Directors and their addresses.
  • Date of incorporation of the company.
  • The date the company ceased operations, if prior to the date of bankruptcy.
  • The greatest number of employees employed in the last 12 months.
  • All employees – listing of names, addresses, social insurance number, amounts owing for each of severance, termination, wages, vacation pay, commissions and expenses.
  • Employee T4’s & ROE’s for current year employees (employer should issue to all employees for the year of bankruptcy and earlier if unissued).
  • Creditors’ listing (accounts payable) – details consisting of name, address, account number(s), and respective amounts owing classified as follows:
    • Secured – banks, leasing company, source deductions, etc.
    • Preferred – wages owing, rent to landlords, government remittances outstanding:
    • Workers Compensation Board, if applicable.
    • Municipal authorities: e.g. business taxes and realty taxes.
    • Employer’s health tax.
    • Unsecured – trade suppliers; Hydro; Bell Canada (quote telephone number(s); gas, etc.
    • Details of any unsecured private party loans, shareholder loans or advances due to the company.
  • Details of any unions, if applicable, including name, address, account number.
  • Details of contingent liabilities and pending legal action, if any.
  • Accounts receivable – aged trial balance and detailed backup documentation (invoices, delivery slips, purchase orders, etc.) to support collection efforts. From the aged trial balance, classify the accounts as good, doubtful, bad to equal the total balance.
  • Inventory – detailed information on inventory cost and the company’s assessment of estimated realizable values.
  • Machinery, equipment and plant – detailed listing providing original cost, if possible and estimated realizable value.
  • Office furniture & fixtures – detailed listing providing original cost, if possible and estimated realizable value.
  • Real estate – all details of real estate owned, including deeds, legal descriptions, original costs, appraisals (if any), an estimated fair market value.
  • Vehicles – provide descriptions including year, model, VIN, kilometres, original costs and estimated realizable value. Note if any vehicles are leased/financed and provide copies of the lease/finance documentation.
  • Other assets – details of other assets such as prepaid expenses, deposits, goodwill, intangibles, shares or any investments, patents, trademarks.
  • Bank accounts – details of all bank accounts, including name, address, account number and approximate balance in the accounts.
  • Last 12 months of accounting records, bank statements and cancelled cheques (for all accounts maintained).
  • Financial statements – most recent.
  • Corporate solicitor – name and address.
  • Listing of leased equipment (copy of leases) – vehicles, office and any other equipment.
  • Insurance policy(ies).
  • A brief narrative of management’s opinion as to cause(s) of insolvency.
  • Disclosure of any sale or disposition of assets, outside of the ordinary course of business, in the last year.

The Trustee’s job

In a corporate bankruptcy, the Trustee, with certain exceptions, takes possession of the assets of the company. If the Trustee is aware that there are deemed trust claims against the assets, or there is a secured creditor, like a Chartered Bank, the Trustee must be careful.  If there are, the Trustee should have already had a conversation with those parties prior to the bankruptcy, to decide what rights, if any, the Trustee may have against such property.

Assuming there are assets not subject to the valid claim of third parties, the Trustee must at least:

  1. Establish whether the value of the assets will be enhanced if the Trustee operates the company’s business.
  2. Take into account what obstacles exist in running the business and how to reduce risk if it is beneficial or necessary to run the business.
  3. Decide what are the very best means to sell the properties? En bloc as one parcel or individually or at least several parcels?
  4. Determine if there are any 3rd party owned assets on the company’s premises?
  5. Identify if there are any company assets on the property of 3rd parties?
  6. Prepare the required reporting to Service Canada so that the former employees will be able to make their Wage Earner Protection Plan Act claims.
  7. See if there are proper insurance coverage and proper physical security over the assets?
  8. Identify any inventory been delivered in the 30 days prior to the date of bankruptcy?  What rights of revindication might exist?
  9. Circularize the creditors requesting claims to be filed to understand what the depth and breadth of claims against the company are.  This way, the Trustee can formulate a distribution to creditors, in priority, with the net funds available from the sale of assets.

What the Directors should be concerned about

Directors should have two concerns when contemplating bankrupting a corporation.  First, they should be concerned about any decisions they have made or senior management actions they have ratified.  

For example, Sears in the United States recently lodged a claim versus its previous CEO Eddie Lampert and a string of its top-level previous Directors.  This includes Eddie Lampert’s previous Yale roomie Treasury Secretary Steven Mnuchin. The allegation is that the Directors condoned and approved Eddie Lampert’s actions for presumably swiping billions of dollars from the once-storied merchant.

Second, there are various types of claims against the corporation that are also personal claims against Directors.  The list includes Director liability for unpaid:

  • Wages
  • HST
  • Source deductions
  • Certain environmental offences
  • Cybersecurity risks

In general, there is a relatively short list of things Directors can be personally liable for.  In many cases, there will be Director and Officer Insurance to be relied upon. Directors may also have a due diligence defence.

A Director resigning their position will not protect them against any liability that would be a personal Director liability prior to their resignation.

Are you a Corporate Director?

Are you a Director of a corporation that has too much debt? Is your company’s capital insufficient to fulfill every one of its economic responsibilities and may be insolvent? Are you worried that your firm’s major secured lender will soon pull its financing completely and demand repayment in full which the company will not be able to do?

If you responded yes to any of these questions, call the Ira Smith Team today so we can kill off the stress and anxiety that these financial troubles have activated. We will create a strategy for the Directors unique for your company’s problems so that it can avoid bankruptcy and become profitable and continue to employ many people.

Call the Ira Smith Team today. We have decades and generations of experience restructuring and turning around companies seeking financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee, we are the only specialists recognized, certified and monitored by the federal government to offer insolvency guidance to save businesses.

You can have a no-cost assessment so we can fix your company’s debt problems. Call the Ira Smith Team today. This will absolutely allow you to return to being efficient, healthy and balanced, Starting Over Starting Now.

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Brandon Blog Post

MOVE FAST TO OBJECT TO AN ONTARIO RECEIVERSHIP COURT ORDER

What is a receiver in insolvency?

A recent case heard in the Court of Appeal for Ontario clarifies what the time limit is to object to an order made in a Court-appointed receivership of a company in Ontario. The bottom line is you better move fast.  Before I describe this very interesting decision, I should first remind newer readers on some receiver 101 basics.

What is it?

A receivership is a remedy for secured creditors to enforce their security.  In the event, the company defaults on its loan agreement, normally by non-payment, the secured creditor. There are two types of these proceedings in Canada;  1) privately appointed or; 2)  court appointed.  A receiver might additionally be selected in an investor dispute to complete a task, liquidate assets or market a business.

Typically, the process begins with the secured creditor consulting with a Receiver.  If it is decided that there should be a receiver appointed, the secured creditor then makes a choice.  They can either appoint the receiver by written appointment letter (privately appointed) or make a motion to the Court for an Order appointing the receiver (court-appointed).

The Bankruptcy and Insolvency Act (Canada) (BIA) states that only a licensed insolvency trustee (formerly called a bankruptcy trustee) can act as a receiver.  A privately appointed receiver acts on behalf of the appointing secured creditor.  A court-appointed receiver has a duty of care to all creditors.

What are the duties of a receiver?

The receiver’s first duty is to take possession and control of the assets covered by the secured creditor’s security in a private appointment, or all the assets indicated in the court order in a court appointment.  The receiver must decide whether it can get a higher value for the assets if it operates the business. Alternatively, the receiver may decide that the risk of operating the business is not worth it in terms of any meaningful increase in the value of the assets.

The receiver then develops a plan to on the running of the business and for the eventual sale of the assets.  The type of business and the nature of the assets will dictate what approach the receiver will take.  In the meantime, the receiver must inventory all the assets, protect them and make sure there is adequate insurance in place for what the receiver wishes to do in terms of running the business and selling the assets.

In a private appointment, the receiver needs to get the approval of the secured creditor before embarking on the business and asset plan.  In a court appointment, the receiver requires the approval of the court.

What happens when a company goes into receivership?

When the company goes into receivership, senior management and the Directors lose most of their authority for decision making.  The Directors’ general corporate duty of maintaining corporate records continues, but any decision-making about the running of the business or its assets will not be effective.  This is especially true in a court appointment. The subject of Director liability is too broad to start mentioning in this Brandon’s Blog. i am planning to soon write a blog on that topic.

Management’s and employees’ responsibilities about the business in a practical sense will stop upon the appointment of the receiver.  Their advice and help are only required if requested by the receiver. They certainly will not be paid for any efforts unless the receiver agrees in writing to make money available for their pay.

Court of Appeal for Ontario says you better move fast

Why the confusion?  Isn’t the process for an appeal of a court order straightforward?  The confusion comes about because, in the standard model Appointment Order of the Commercial List of the Ontario Superior Court of Justice, the court-appointed receiver is appointed under two statutes:

  1. Section 101 of the provincial Ontario Courts of Justice Act, RSO 1990, c C.43 (CJA).
  2. The federal BIA, section 243(1).

The applicant, in this case, was the purchaser of assets from a court-appointed receiver of a company.  One of the standard provisions in the Appointment Order is that anyone wishing to take legal action against the receiver must first get the approval of the court to do so.

They brought an application for authorization to sue the receiver over a disagreement arising from the purchase of the assets from the receiver under the asset purchase agreement. On May 17, 2018, the lower court judge dismissed the application, finding that their allegations were not supported by the evidence. On November 8, 2018, the same judge refused their demand to resume the application based on new evidence.

The applicant filed appeals from both decisions. Its notices of appeal were on time under the provincial CJA, under which there is a 30-day time limit for commencing an appeal. They were late under the federal BIA, which imposes a 10-day time limit.  

The lower court judge dismissed the appeals. He held that the BIA was the governing authority for the appeal, not the CJA.  He stated that the origin of authority under which the receiver was appointed was section 243( 1) of the BIA and therefore appeals are governed by the BIA, not the CJA.  He further went on to say that the appointment also under the CJA did not have the result of ousting the BIA as the source of authority. He further held that it also cannot supersede the federal BIA holds paramountcy over the provincial CJA.

receivership

Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269

The Court of Appeal for Ontario decision was released on April 8, 2019.  The appeal court found that this was a very narrow issue to decide so that it did not have to get into the merits of the case of the purchaser wanting to sue the receiver over a disagreement arising from the purchase of the assets from the receiver under the asset purchase agreement.

The Court of Appeal rejected the applicant’s appeal and did not find that the chambers judge made any errors. They said that when the order sought to be appealed was made in reliance on jurisdiction under the BIA, the proper appeal path is the BIA.

The lower court, the Ontario Superior Court Justice Commercial List, rejected the purchaser’s demand to sue the receiver, which is the decision the applicant wishes to appeal.  The requirement to get leave of the court to sue the receiver comes from the Appointment Order. The court’s authority to include that arrangement order comes from the statutory power to appoint a receiver under s. 243( 1) of the BIA.

The Court of Appeal agreed that the legal power to appoint a receiver is also found in s. 101 of the CJA. But considering that authority for the leave to take legal action against the receiver comes from the BIA in spite of that the receiver was appointed under both laws, the appeal is governed by the BIA as a matter of paramountcy.

Therefore the Court of Appeal for Ontario dismissed the applicant’s appeal and awarded costs against them.

Does your company need to move fast?

Does your company have way too much debt? Is your company’s cash flow not enough to meet all of its financial obligations? Are you afraid that your company’s main secured creditor is about to demand repayment of its loan in full and you just can’t move fast enough to save your company?

If you answered yes, call the Ira Smith Team today so we can end the tension and anxiousness that these financial problems have triggered. We will develop a plan special for your company, to save it from extinction.

Call the Ira Smith Team today. We have years and generations of experience restructuring and saving companies looking for financial restructuring or a debt settlement approach. As a licensed insolvency trustee, we are the only professionals acknowledged, accredited and supervised by the federal government to provide insolvency advice to save companies.

You can have a no-cost analysis to aid you so we can repair your company’s debt problems. Call the Ira Smith Team today. This will certainly allow you to get back to Starting Over Starting Now.

receivership

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WILL JULIAN ASSANGE FACE CANADIAN BANKRUPTCY LAWS?

canadian bankruptcy laws

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

Canadian bankruptcy laws Introduction

I got your attention with this silly Brandon’s Blog title, didn’t I?  The answer to the question “will Julian Assange face Canadian bankruptcy laws?” is of course, no.  He may face the justice systems of Britain, Sweden or the United States, or all three.  But as far as I know, he isn’t wanted by the Canadian authorities.

However, there are many Canadians having problems paying all of their debts.  Many have actually quit satisfying their financial commitments.  If this is where you find yourself, then you are in financial difficulty and may even be insolvent.

I tell everyone that bankruptcy should be your last option.  There are many ways to avoid bankruptcy. It really depends on how early on in your situation you consult a professional for advice and guidance.

The purpose of this Brandon’s Blog is to answer what seems to be the 10 essential problems bothering people thus far in 2019 for people facing financial challenges and considering filing for bankruptcy.

What happens if I declare bankruptcy in Canada?

When you declare bankruptcy, you must assign or hand over your assets to the licensed insolvency trustee (previously called a bankruptcy trustee) (Trustee).  Each province regulates what assets are exempt from seizure.  

So in bankruptcy, you will not lose all your assets. There is a listing of things that are excluded from seizure in Ontario:

  • Necessary clothing for you and your dependents.
  • Home furnishings and appliances that are of a worth not more than $13,150.
  • Tools and various other personal effects not worth more than $11,300, made use to earn revenue from your business.  If you are an Ontario farmer, this amount increases to $29,100 for everything, including your livestock.
  • One car or truck that is worth not more than $6,600.
  • The cash surrender value of life insurance if your beneficiary is what is called a “Designated Beneficiary”.
  • Your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or Deferred Profit Sharing Plan (DPSP) other than for any amounts contributed in the 12 months immediately preceding your date of bankruptcy.
  • $10,000 of equity in your home but only if your share of the equity is less than $10,000 in total.

Earnings are not impacted by bankruptcy yet you will need to submit a monthly Income and Expense Form providing your household revenue and expenditures; this becomes part of your budgeting procedure. If your earnings go beyond specific criteria developed by the Office of the Superintendent of Bankruptcy (OSB), you will certainly have to pay part of the excess into the bankruptcy estate via the Trustee.  This is called surplus income.

When you declare bankruptcy, the assets that are not exempt from seizure must be turned over to your Trustee. Those assets will be offered for sale and the cash gained from the sale of your possessions will be available for the Trustee to pay a dividend to your creditors.

Also, see below the discussion of will you lose your house and car in bankruptcy, as these assets may be handled differently.

How much does it cost to file bankruptcy in Canada?

The irony is that it does cost money for an insolvent person to file bankruptcy in Canada.  The cost of a no asset, no surplus income administration is in the $1,800 to $2,000 range. If you have neither assets nor income, then you or someone on your behalf will have to make satisfactory arrangements with the Trustee for payment of this cost.

If there are assets and/or surplus income, this will most likely change the calculation of the amount the Trustee is entitled to charge for administering your insolvency file. However, the Trustee is entitled to take the Court approved fee from the funds obtained through the sale of assets and/or the surplus income payments received.  In this case, the cost of your proceeding to you may very well be no extra charge!

Will I lose my house and car if I file bankruptcy in Canada?

A complete discussion of the issues involved can be found in my April 2019 blogs:

The Trustee is entitled to your equity in your home and car when you file for bankruptcy.  As these other blogs of mine discuss, if someone can purchase the value of your equity, subject to the Ontario exemptions, then the Trustee will not have to take possession of your house and car.

Can you file bankruptcy and keep your credit cards?

The issue of a bankrupt keeping his or her credit cards is governed by Section 158(a. 1) of the Bankruptcy and Insolvency Act (Canada) (BIA) and Directive No. 3 issued by the Superintendent of Bankruptcy (OSB). The title of Directive No. 3 is, “Duties of the Bankrupt to Deliver Credit Cards to the Trustee”.  It is provided to define under what conditions a bankrupt shall supply to the Trustee, for cancellation, all charge cards issued to and in the ownership or control of the bankrupt.

In all conditions, the Trustee shall require that the bankrupt supply to the Trustee, for termination, all credit cards issued to and in the ownership or control of the insolvent person with one exception.  Except for those bank cards discussed in the next paragraph, in a bankruptcy, all credit cards must be given to the Trustee.  This is regardless that there may be a zero balance on that charge card.

There is only one exception to this requirement.  The insolvent person need not supply to the Trustee a credit card in the possession and control of the bankrupt where the primary cardholder is a third party (e.g., employer, spouse, friend, parent) and the primary cardholder has obtained a supplementary card in the name of the insolvent and about to be bankrupt person.

How long does bankruptcy last Canada?

The length of time you will be an undischarged bankrupt will rely on mainly three factors:

  1. Is this is your first time or is it your 2nd or more time in bankruptcy?
  2. Do you have a surplus income amount?
  3. Have you given one or more of your creditors, or your Trustee, reason to oppose your discharge?

If this is your 1st filing with no surplus income and nobody opposes your discharge application, your bankruptcy will last for 9 months.  If this is your 1st time and you do have surplus income and no one opposes your discharge, it will last 21 months.

If this is your 2nd time and you do not have any surplus income, you are not eligible for a bankruptcy discharge for 24 months.  However, you should consider if there is something in your pre-filing affairs that will give rise to someone opposing your discharge.  For example, if the reason for your 2nd time is the same as your 1st time, your Trustee will be bound to oppose your discharge.

If you are a 2nd timer and you do have surplus income, then you will not be eligible for a discharge for at least 36 months.  Again, consider your pre-filing conduct to estimate the likelihood of opposition.

In the case of an opposition, either by one or more of your creditors or by your Trustee, then it becomes a Court process.  A discharge hearing will be scheduled in Court. The timing is then driven by the Court process. If your discharge is being opposed, you would be wise to consult with a bankruptcy lawyer.

Does bankruptcy ruin your credit forever?

A person that declares bankruptcy is given the lowest possible credit score. For a first time bankrupt, the information that negatively impacts your credit rating is inevitably gotten rid of approximately 6 years after your discharge from bankruptcy.

One of the purposes of the Canadian bankruptcy system is financial rehabilitation.  Once you are discharged from bankruptcy, you can begin to repair and rebuild your credit.  

Two easy ways are:

  1. Get a secured credit card.  This is one where you put funds on deposit to equal your credit limit.  The secured credit card issuer reports your activity to the two Canadian credit agencies monthly.  By paying the balance off every month, you start to rebuild and repair your credit.
  2. Take out an RRSP loan and invest the money in your RRSP.  Pay the loan off over the next 12 months and then rinse and repeat.  By borrowing money in a manner the Bank will lend to you through the RRSP loan and paying the loan off in a year, you are rebuilding and repairing your credit.  By the way, you also enjoy the tax benefit of the RRSP deduction and you are starting to build your retirement savings.

Do you have to declare your bankruptcy after 7 years?

This question was recently asked of me.  At first, I didn’t quite understand what the person meant.  After some further discussion, it became clear that what the person was really asking was two questions as follows:

  1. Will my bankruptcy filing show up on my credit report after 7 years?
  2. After 7 years, do I have to report the fact that I was bankrupt?

The first question is answered both above and below.  As far as reporting the fact that you filed for bankruptcy, there are several issues.  First, you don’t need to tell anyone unless you are specifically asked. Second, you will only be asked on an application for a loan or credit card, a job where handling cash and/or bonding is required, on an insurance application or in connection with a professional license that you hold. Sometimes the question may be limited, such as, “in the last 5 years”. You have to read the question carefully and answer truthfully.

Does a bankruptcy automatically come off?

When you file bankruptcy, Canadian bankruptcy laws require your Trustee to inform your creditors, the Canada Revenue Agency (CRA), credit rating coverage firms and the OSB. The OSB maintains a database of insolvency filings that anyone can search.  So the fact you filed for bankruptcy is public. That information exists forever.

Your filing will also show up in your credit report. For personal bankruptcy, as indicated above, it will remain on your credit report for about 6 years after you get your bankruptcy discharge.

Additionally, specific insolvencies, both for personal and corporate bankruptcy call for a legal notice to be placed in a local newspaper.

What are the disadvantages of filing for bankruptcy?

There are certain disadvantages of filing for bankruptcy.  In no particular order:

  • Your non-exempt assets will be handed over to the Trustee to be sold in order to obtain the value in cash so that a distribution can be paid to your creditors.
  • As indicated above, your bankruptcy will certainly show up on your credit report for about 6 years after you get your discharge from bankruptcy.  This could be for as much as 7-10 years from your date of bankruptcy.
  • A bankruptcy drops you to the lowest possible credit score rating.
  • You have to turn over all of the credit cards in your control or possession where you are the primary cardholder.  The credit card companies will also cancel any card you may have forgotten to give to your Trustee.
  • A bankruptcy might impede your capacity to get a home mortgage or a loan for several years.
  • If you did not have adequate life insurance before you filed for bankruptcy, your ability to obtain life insurance without being rated will be difficult.
  • If your employment requires you to be bonded, a bankruptcy could affect your job.
  • Although your discharge from bankruptcy operates to discharge you from your debts, there is a list of debts that are not discharged.  

They are:

    • secured loans – home mortgage or vehicle loan;
    • certain student loans (remember the 7-year rule I just mentioned?);
    • penalties or fines enforced by the court;
    • spousal support and alimony you have to make in your separation agreement or divorce proceedings; and
    • any debts from fraud.

It is for these reasons that I always advise people that filing for bankruptcy should be a last resort.  There are many options to avoid bankruptcy. Which ones might work, depends on how long you have waited to see me and how severe your situation has become.  Various options to avoid bankruptcy are:

Do I need to retain a bankruptcy lawyer near me?

In simple situations, I would say it is not necessary.  When you have an initial free consultation with a Trustee, he or she can tell you whether or not they believe it would be in your best interest to consult with a bankruptcy lawyer.

Remember that there is no such thing as Trustee-bankrupt confidentiality.  In fact, as part of the documentation for an insolvency filing, you will have to acknowledge your understanding that under the  Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5), certain information will be disclosed and will be public.

So, if your situation is complicated, or if you require advice on a matter you need to be kept confidential, you should retain a bankruptcy lawyer.  That way you can discuss those issues and obtain the advice you need and be assured of confidentiality.

BONUS ISSUE:  Can I get a credit card during bankruptcy?

I thank you for getting this far along in my blog.  So here is an 11th bonus question that I am asked from time to time – can I get a credit card during bankruptcy?

Applying for a credit card is just like applying for a loan.  You are asking a lender to advance you money that you promise to repay.  Under Section 199 of the BIA, it is a bankruptcy offense to obtain a credit of $1,000 or more from any person without telling the lender that you are an undischarged bankrupt.  

Once you make that disclosure, or they find out otherwise, I highly doubt they will approve of you.  There may be some companies that will give a car loan to an undischarged bankrupt, but, the amount you can borrow will result in your not getting a very good car.  Also, the fees and interest rate that they will charge you will be extremely high.

The only exception is that you could apply for a secured credit card.  As I noted above, a secured credit card is a good way to start rebuilding your credit.

Canadian bankruptcy laws summary

If you have too much debt and are facing financial challenges, I hope this Brandon’s Blog has provided some insight for you.  The above questions are what I have found to be the 10 essential problems bothering people thus far in 2019 when facing financial challenges and considering Canadian bankruptcies laws.

If you are one of the many Canadians facing debt problems and not knowing what to do about them, call the Ira Smith Team today. We have decades and generations of experience aiding people and companies trying to find and work through a successful financial restructuring or debt settlement approach. As a licensed insolvency trustee, we are the only experts recognized, approved and supervised by the Federal government to provide insolvency help and solutions to help you to avoid bankruptcy.

Call the Ira Smith Team today so you can do away with the stress and nervousness debt concerns produce. With the distinct roadmap we develop special to you, we will rapidly return you right into a balanced, healthy and carefree life.

You can have a no-cost evaluation to aid you so we can repair your debt issues. Call the Ira Smith Team today. This will definitely enable you to go back to being productive, healthy and balanced, Starting Over Starting Now.

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CAN YOU FILE BANKRUPTCY AND KEEP YOUR HOME AND CAR? [2019 CAR EDITION]

Can you file bankruptcy and keep your home and car?  Introduction

We are often asked the question, can you file bankruptcy and keep your home and car?  In my last Brandon’s Blog, I described the circumstances to answer the question can you keep your house if you file bankruptcy in Canada.  Here is the link to the blog, IF I FILE FOR BANKRUPTCY ONTARIO WILL I LOSE MY HOME? [2019 EDITION].  In this blog, I will tell you what happens to your automobile when you file bankruptcy.

Can you file bankruptcy and keep your home and car? Do they take your car if you file bankruptcy?

Can I keep my car if I file bankruptcy in Ontario is also a common question.  The answer is if you need to or want to and can afford to, then yes. Let me explain.  The most common range of situations involving a person filing for bankruptcy and their car are:

If the wheels are owned by an employer, then there is no issue.  If you file for bankruptcy, the employment continues and access to the company automobile also does.

If the auto is owned by your spouse, then it is not your asset and is not directly impacted by your bankruptcy.  In the case of a leased automobile, the vehicle is owned by the lessor, not you. So again, a leased car is not directly impacted by your bankruptcy.

However, if the car is leased, do you really need that specific car? Can you keep up with your lease payments?  If you fall behind in payments, the lessor can retrieve its vehicle, bankruptcy or no bankruptcy.  

In the case of where your car is financed, whether it is owned by you or your spouse, the same question remains.  Can you afford to keep up the payments as part of the household budget? Do you need that specific vehicle?

Can you file bankruptcy and keep your home and car?  Can you file bankruptcy on car loans?

This may seem like an odd question, but in a way of speaking, the answer is yes. The same is true if the car is leased by you.

If you have decided that you can no longer afford the financing or lease payments and you don’t need that specific vehicle, it is possible to return the car to the lessor or lender and have the fallout from that termination count in the debts caught in the bankruptcy proceedings.  That is what I call filing bankruptcy on car loans.  However, to do so, you must follow certain steps very carefully.

What I always advise people who cannot afford to keep the car payments and are going to lose it anyway, is to return the car BEFORE they file either a consumer proposal or for bankruptcy.  Then you must wait to receive notice of default from the lessor or lender and that they are accelerating their claim for the breach of the lease or the shortfall from the sale of the vehicle.  

The reason you have to wait is if you file a consumer proposal or for bankruptcy before they make this demand on you, they could take the position that their debt crystallized after you filed.  The last thing you want is for their debt to be a post-filing claim. A post-filing claim is payable in full by you. So with some planning and patience, it can be a pre-filing claim, caught in your consumer proposal or bankruptcy.

If your spouse has guaranteed payment of the car lease or car loan, then this strategy may not be the best for you.  The lessor or lender, in this case, would have the right to demand full payment from the guarantor.  So, you may not have accomplished anything by doing this.  

If you choose to do this, but you do require a car, then you, your spouse, a good friend or your employer will have to arrange for a new auto for you that your family budget shows you can afford to pay for.  As you can see, the decision is not a simple one. You must very carefully analyze this situation before taking any action.

Will I lose my car if I declare bankruptcy if I want to keep the car I own?

Not automatically.  In bankruptcy, like with your home, the Trustee is not entitled to the car.  What the Trustee is really entitled to is the equity in the auto.  The Trustee would rather receive cash representing the car’s equity, and not taking possession of your car.

Think about it.  By taking possession the Trustee has to store and insure the car and then sell the used car.  It is much easier for a Trustee to just accept cash; either a one-time payment or in regular monthly installments.

The equity in a car is calculated as follows:

  1. Find the car’s current market or black book value. The price you paid for the car is not the current value of the auto.  A Trustee always runs a black book desktop appraisal of a car and can tell you what that number is.
  2. If you have a car loan and the lender registered security against the auto, you have to deduct the current amount outstanding on that loan.  If you don’t have any such financing, then you would not deduct anything. After performing this part of the calculation, move on to step 3 below.
  3. In Ontario, under the regulations to the Ontario Execution Act, RSO 1990, c. E.24, a person is entitled to an exemption of $6,600 for one vehicle.  So you need to deduct $6,600 from the amount you arrived at in your calculation in number 2 above.  If you end up with a negative number, there is no equity. If you get a positive number, that is the equity you have in the car.

As I mentioned before, the Trustee would rather make arrangements with you to get that value in cash during your bankruptcy administration, rather than taking possession of your auto.  Don’t get me wrong.  If you have a high-end valuable car, or you can’t come up with the cash over time to pay the Trustee your equity, the Trustee will have no hesitation to take possession of your car.  It just isn’t the Trustee’s first choice to do so.

So I hope that by now you understand why I say the answer to the question, will I lose my car if I declare bankruptcy, is if you need to or want to and can afford to, then yes!

What Will filing for bankruptcy do?

As I have written many times in earlier Brandon’s Blog articles, bankruptcy should be the last choice.  Bankruptcy will allow the honest but unfortunate person to get financial rehabilitation.  It will allow that insolvent person to reenter society as a person free from their debts.

Do you have way too much debt? Are you having trouble making your month-to-month expenses? Is your business having a difficult time managing its financial challenges that you simply can not figure the escape of?

Call the Ira Smith Team today so you can end your stress and anxiety that your monetary troubles have caused. With the unique roadmap, we establish special for you, we will immediately return you right into a healthy and balanced trouble-free life.

If so, call the Ira Smith Team today. We have years and generations of experience helping people and companies searching for financial restructuring or a debt settlement strategy. As a licensed insolvency trustee, we are the only specialists acknowledged, certified and supervised by the federal government to offer insolvency advice and options to assist you to avoid bankruptcy.

You can have a no-cost assessment now to assist you so we can fix your debt troubles. Call the Ira Smith Team today. This will most definitely allow you to get back to Starting Over Starting Now.

can you file bankruptcy and keep your home and car

 

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IF I FILE FOR BANKRUPTCY ONTARIO WILL I LOSE MY ADORABLE HOME?

file for bankruptcy ontario
file for bankruptcy ontario

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.

File for bankruptcy Ontario:  Introduction

Many individuals experience financial difficulty eventually in their lives. There are times you require to rely upon credit lines and credit cards to make ends meet. Frequently these bank cards and credit lines can come to be a prop. It helps you to avoid preparing a family budget plan and taking a difficult look at your expenses and lifestyle. Eventually, you realize that you are beneath a heap of debt you can not climb up out of.  In this Brandon’s Blog, we respond to a concern we are often asked – file for bankruptcy Ontario will I lose my house?

An additional usual concern is can I keep my car if I file for bankruptcy Ontario. Today I will concentrate on the far more valuable possession, the house.   However, I will give a hint below the answer to the vehicle question.

File for bankruptcy Ontario:  Bankruptcy and your home

I will first give the answer to this specific question about bankruptcy and your home.  After that, I will discuss all the things that you should be thinking of before considering bankruptcy.  Whether you know it or not, you do have various options that are alternatives to bankruptcy in Ontario.  The short answer is that if you go bankrupt, there are various ways and conditions in bankruptcy that you will NOT lose your home.  Let me explain why.

Everyone who owns a home and experiences financial problems is concerned about losing their home.  Losing your home is probably one of the more traumatic fears people facing a large debt load that is crushing them is losing the home.  This is how it works if you file for bankruptcy Ontario.

Just to make sure that we are all starting off with the same basic knowledge, I will quickly go over what bankruptcy is.  Bankruptcy is the legal state of assigning all of your assets, with certain exceptions discussed below, to a licensed insolvency trustee (formerly called a bankruptcy trustee).  Insolvency is the financial state of not being able to pay your debts as they come due.  Bankruptcy is one available legal process to deal with your insolvency.

In Ontario, the provincial legislation that outlines what is exempt from seizure is called the Execution Act, R.S.O. 1990, c. E.24.  For a complete list of all bankruptcy Ontario exemptions, please read my Brandon’s Blog, BANKRUPTCY IN ONTARIO CANADA SECRETS REVEALED.  For the purpose of this blog, the exemption in Ontario for your home is $10,000 of equity.  The current thinking is that if your equity is $10,000 or less, if you go bankrupt, then your entire equity is exempt from seizure by a licensed insolvency trustee.  However, if your equity is $10,001 or higher, then your entire equity in your home is NOT exempt and is available to your licensed insolvency trustee for your creditors.

HERE IS THE HINT I PROMISED:  The exemption in Ontario for one car or truck is one that is worth not more than $6,600.

File for bankruptcy Ontario:  Bankruptcy factors and your home

So the first important detail for you to remember is that in bankruptcy, the Trustee is only interested in your equity in the home.  To calculate the equity in your home, you would:

  1. Find your home’s current market value. The price you paid for your home may not be the current value of your home.
  2. Subtract your mortgage balance. Once you have the current market value of your home, subtract the amount you still owe on your home mortgage and any other loans registered against the title of your home from the estimate.
  3. Apply the proper percentage representing your share of the ownership of the home against the number you came up with from point 2 above.  So if you are the sole owner of the home, the right percentage to apply is 100%. If you own the home jointly with your spouse or partner, then the correct percentage to apply is 50%.

Now the question becomes, can you afford to keep your home?  Can you afford to keep up all the mortgage payments, any other loan payments where security registered against your home has been granted (just like a mortgage) and the other costs of homeownership?  There are various factors to consider to answer this question. Some of the factors are:

  1. You need to have a good handle on what all the real costs of owning the home are.  It is more than just mortgage payments. Insurance, repairs and maintenance and property tax come to mind as obvious additional costs of homeownership.
  2. Now that you know all the annual costs of owning your home, could you rent suitable accommodations for less or more money?  If less, then it may not be worth hanging onto the home, especially if you cannot afford all the required costs of owning that home.  If more, then you are not saving any money by selling the home. In fact, you would be worse off, because you would also incur moving costs.
  3. If renting is roughly equal to the cost of owning, or only slightly less, will there be disruption to the family that is not worth it?  For example, if the children can walk to a very good school in your neighbourhood, but to move, you would have to drive them to and from school every day because of the distance, or the local school in the new area is not as good, that could tip the scales.

If you decide as a family that you cannot keep the home, then the only options are to either sell it yourself or abandon it to the first mortgagee.  A lived-in home will always sell for more than a vacant one. Perhaps your mortgagee(s) would allow you to stay in the home without making any further mortgage payments while it is listed for sale because it helps them.  This is especially true if there are more loans registered after the first mortgage.

By “playing ball” with you in this way, the first mortgagee is showing the lenders behind the first that it is doing everything possible to maximize the sale price.  The later lenders will be pleased because you are cooperating. So, in return for this win-win situation, your offer is to save the cash by not paying those loans in return.  Keep in mind that if any mortgagee/lender registered against the home suffers a shortfall on the sale, they have the right to sue the borrower(s) and any guarantor(s) of the loan for the shortfall.

file for bankruptcy ontario
file for bankruptcy ontario

File for bankruptcy Ontario:  How to keep your home in bankruptcy

If you decide that your family can afford the cost of owning this home, then in bankruptcy, the Trustee will need to recover the bankrupt person’s equity in the home.  There are various ways this can be accomplished. The most common ones are:

  1. Refinancing the home when one or more of the owners are bankrupt will prove impossible.  However, if only one of the owners is bankrupt, perhaps the other owner can purchase the Trustee’s interest in the equity of the bankrupt owner.  If the non-bankrupt owner has good enough credit to borrow enough money to pay the bankrupt’s equity to the Trustee. If this can be accomplished, and the non-bankrupt person can afford the new loan payments, then the Trustee has realized the value of the bankrupt’s equity in the home and your family can keep the home.
  2. If this cannot be done, then maybe there is a relative or very good friend who is willing to purchase the bankrupt owner’s equity in the home.  Again, once the value of the equity has been paid to the Trustee, the Trustee no longer has any interest and the family can keep the home.
  3. If neither of the first two options is realistic for your situation, there is a third way.  As long as you could afford the payments, the non-bankrupt owner could offer to purchase the bankrupt owner’s equity from the Trustee by giving the Trustee a mortgage against the home for the full value of the equity.  This is all a matter of negotiation.

The mortgage could either be interest-bearing or have zero interest.  That is to be negotiated. The only caution is that the Trustee’s role is to administer the bankruptcy estate as efficiently as possible.  This means that the Trustee is not going to want to keep the file open for 5 years. However, there is nothing unreasonable about requesting the Trustee take back a mortgage for a 2 or 3 year period.  

Keep in mind that the bankrupt’s discharge is different from the Trustee’s discharge.  So, by doing this, it does not mean that the bankrupt’s discharge is held up for this reason.  If this can be accomplished, then again, the family can keep the home.

That is the analysis anyone who owns a home and believes they need to go bankrupt must go through.  There are other options that affect the decision of whether or not to go bankrupt. I always discuss all the issues with everyone who comes to my office for their free consultation.  Some other issues affecting the bankruptcy decision are:

  • Would this be the person’s second time (or more) file for bankruptcy Ontario?
  • How long does bankruptcy last in Ontario?  This depends on whether this is your first bankruptcy or not.  I would also need to assess if your file for bankruptcy Ontario would produce surplus income.

File for bankruptcy Ontario:  Keep your home and avoid bankruptcy

There are various options that you should consider before going bankrupt.  There may be alternatives to bankruptcy and you need to consider them all carefully.

If there is equity in the home, before jumping straight to the conclusion that you need to go bankrupt, here is the advice I have given many people:

  1. Go through the analysis of calculating the equity and does it make sense to stay in that home that I discussed above.
  2. Once you have those answers, you will know if you are selling the home and downsizing both your home and living costs or if you are trying to stay in the home.
  3. If you are trying to keep the home, can you refinance it to pay off your debts, either in whole or in part?
  4. We have worked with many people and mortgage brokers to get the home refinanced.
  5. If the refinancing provides enough cash to pay off all or enough of the debts to get you back on the road to financial stability, then do so and there is no need to discuss the bankruptcy option.
  6. If that is not possible, it may be that the refinancing produces enough cash for the non-insolvent owner to fund a successful government-approved Debt Consolidation Canada Program (DCP).  We have administered many DCP’s.

This is how it works.  We review with you all the issues, including, what sort of DCP we believe your creditors would accept.  You then enter into the formal DCP and we tell your creditors. Your creditors then vote on the DCP. If accepted, then if required, we get Court approval for it also and it is now binding on all your creditors.  The DCP stops all garnishee actions, collection calls, and lawsuits.

If the refinancing provides sufficient cash to pay out the DCP in full, then you will be in and out of it very quickly.  If there is not enough cash from the refinancing, then we need to find room in your household budget to make up the difference with regular monthly payments.   You would have up to 5 years to complete paying off the balance. The balance under the DCP does not cost you any interest. The balance is fixed and that is it.

Why would your creditors go for this type of DCP?  Getting a lot of cash today is a huge incentive for your creditors to agree to receive a reasonable amount of money, but less than what you owe them in total.

With a successful DCP, you get to keep all of your assets.  The DCP must offer your creditors a better alternative than what they would get in your bankruptcy.  If successful, losing your home is never an issue.

File for bankruptcy Ontario:  Conclusion

I hope you enjoyed this file for bankruptcy Ontario Brandon Blog.  Do you have excessive debt? Are you having trouble making your month-to-month payments? Is your business not taking care of financial challenges that you simply cannot figure out how to escape from?

If so, call the Ira Smith Team today. We have years and generations of experience assisting people and companies trying to find a financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee, we are the only professionals identified, accredited and monitored by the Federal government to give insolvency help and services to assist you to avoid bankruptcy.

Call the Ira Smith Team today so you can finish with the tension and anxiousness debt issues produce. With the unique roadmap, we establish special to you, we will quickly return you right into a healthy and balanced worry-free life.

You can have a no-cost assessment to help you so we can fix your debt issues. Call the Ira Smith Team today. This will certainly allow you to return to being productive and healthy, Starting Over Starting Now.


file for bankruptcy ontario

 

 

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WILL BANKRUPTCY VS CONSUMER PROPOSAL EVER GO TO THE DOGS?

Bankruptcy vs consumer proposal:  Introduction

In this Brandon’s Blog, we discuss the issues about bankruptcy vs consumer proposal. We will use a real-life case study involving a woman and her pet, to show the reasons why consumer proposals are better than bankruptcies.

First, I should provide a very brief outline of how a dog or cat pet medical insurance works.  A pet medical insurance policy runs just like those for humans. They typically have a yearly insurance deductible, need you to pay regular monthly costs and include you filing a claim for benefits after paying your vet for pet care.

When a family pet isn’t acting normal, the last thing you need is to be fretting over is just how you’re most likely be spending a lot of money for their emergency treatment. That’s why pet medical insurance coverage intends to exist.  They cover your pet’s treatment when it comes to an unforeseen illness.  This way you do not need to select between your pet’s health and wellbeing and your savings.

With pet medical insurance, you are financially in charge of paying your vet for all services and treatments. Like human medical insurance coverage, you then file a claim with the insurance company.  They pay your claim for all eligible expenses, subject to any deductible in your policy.

Bankruptcy vs consumer proposal:  Case study dog facts

When our potential client came to our office for a free first consultation, she provided us with a list of all of her assets, including her pet dog.  Her dog was not a “Best in Show” winner of any prestigious dog shows.  Therefore, the dog’s value was emotional to the owner but had no real financial value.  Therefore, under Ontario law, technically speaking, the dog, along with her other personal property, was exempt from seizure by a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee) in a bankruptcy!

She also listed as an asset, a health benefit claim.  In our discussion, she advised that this was a pet medical insurance claim she filed for vet services for her dog and she was awaiting payment.  The amount was significant to this woman and it got me thinking.

If the woman was insolvent, how did she pay the vet?  Did she use a credit card that had room on it that will never be repaid?  The woman told me that she is single. Did a friend or relative pay the vet on her behalf and when the insurance claim comes in, she will give them the money?

Bankruptcy vs consumer proposal:  Case study issues

These seemingly innocuous facts contain various issues in bankruptcy versus a consumer proposal.  Here are the various issues that I was pawing around with.

Paid by credit card and DID RECEIVE insurance claim proceeds before filing

If she paid by credit card and received the insurance claim payment before filing for bankruptcy, that is not a problem.  This was actually the case. Any amount received not used to live on would presumably be a balance in her bank account. That cash balance would have to be accounted for in her bankruptcy.

In her case, based on the information she told me, there was a very small amount of cash on hand and no other non-exempt assets for a Trustee to seize.  The surplus income calculation also showed that she had none.  Therefore, in that case, there would not be any dividend paid from her bankruptcy estate to the unsecured creditors.  

As you will recall from earlier Brandon’s Blogs, other than for exempt assets, upon bankruptcy, the assets of the insolvent person vest in the Trustee.  The Trustee then sells the assets and distributes the money in the order established by the Bankruptcy and Insolvency Act (Canada) (BIA).  Surplus income, is a calculation set by the Superintendent of Bankruptcy that a Trustee must do, to decide what amount of an insolvent person’s income they must contribute to their bankruptcy estate if any.

You may have a moral issue with the fact that she was repaid for the vet cost she put on her credit card and the credit card company will not receive a payment.  However, in bankruptcy, there is no legal issue. The credit card company may choose to oppose her discharge from bankruptcy for this or other reasons.  If they did, she could not receive an automatic discharge from bankruptcy.  The matter would go to Court for a discharge hearing.

In a consumer proposal, it is a non-issue.  The creditors must vote either in favour of or oppose the consumer proposal.  The consumer proposal, by definition, has to be a better offer to the creditors than what they would receive in bankruptcy.  In this case, in bankruptcy, they would receive nothing. In a consumer proposal, the creditors would receive a payment. If the required majority of creditors voted or were deemed to have voted in favour of the consumer proposal, the Court (was deemed to have) approved it and the insolvent person fully paid the entire amount promised, the creditors are better off with their choice.

Paid by credit card and DID NOT receive insurance claim proceeds before filing

If this was the situation, and the woman filed for bankruptcy, then it is really simple.  The amount receivable from the insurance company under her claim would be an asset of the bankruptcy estate, payable to the Trustee.  The Trustee would have to put the insurance company on notice of the bankruptcy, and demand that the insurance company pay the claim to the Trustee.  When paid, those funds become part of the Bankruptcy Estate.

In a consumer proposal, the value of this asset must be taken into account when formulating the offer to creditors.  As previously mentioned, a consumer proposal must offer a better alternative for the creditors.

A friend or relative pay the vet on her behalf and she DID NOT REPAY the person before filing

In this situation, the person who paid the vet bill is an unsecured creditor of the woman.  In either a bankruptcy or a consumer proposal, the person would have the right to file a proof of claim in the insolvency proceeding.  If the claim was approved by the Trustee, which it would be if submitted with proper proof of payment, the person would be entitled to any dividend to be paid.  This is a very simple situation.

A friend or relative pay the vet on her behalf and she DID REPAY the person before filing

In the bankruptcy of the woman, this is a big problem for the friend or relative.  The reason the repayment would have been made prior to filing is simple. The money was owed, and the insolvent woman did not want to see her friend or relative go unpaid before filing.  The issue is that there are other creditors too, and they are being treated differently than this friend or relative.

Section 141 of the BIA states “…all claims proved in bankruptcy shall be paid rateably”.  The corollary is that all ordinary unsecured creditors should be treated equally. The friend or relative who made the payment to the vet on behalf of the insolvent woman, who is an ordinary unsecured creditor, must be treated the same as the rest of them.  So how is this to be done?

Sections 95 and 96 of the BIA are the sections which deal with how to enforce this principle of the BIA.  Section 95 deals with Preferences. Section 96 deals with any transfer of property by the insolvent person at undervalue (Transfer at undervalue).  In this example, the preference section comes into play.

A preference is defined as the transfer of any property, including a cash payment, made by the insolvent person to any creditor who is dealing either at arms’ length or non-arms’ length with the insolvent person.  The transaction must be one that has the intention of preferring that creditor over the others. In this example, the definition certainly fits.

Such transactions, limited only in time, are attackable by the Trustee in bankruptcy.  If the friend or relative is dealing at arms’ length with the insolvent person, then the Trustee can challenge any transactions which occurred within the 3 months before the date of the first bankruptcy event and ending on the date of the bankruptcy.  If the friend or relative was deemed to not be dealing at arms’ length with the woman, then the time period is extended from 3 months to 12 months.

An initial bankruptcy event for a person is essentially the first day an insolvency proceeding started.  For a person, the most likely initial bankruptcy events would be the date on which one of the following filings occurred:

How would the Trustee challenge it?  The challenge starts with a letter to and a conversation with the bankrupt person and the friend or relative.  The Trustee would outline the powers of the Trustee to get a Court order against the friend or relative for the repayment to the Trustee of the insurance repayment in question.  The Trustee would make a demand for payment on the friend or relative. There should be evidence of the payment being demanded in the Trustee’s files. We wouldn’t want the Trustee to be barking up the wrong tree.

If the friend or relative pays the amount over to the Trustee, then it is over.  The Trustee has recovered the funds intended to prefer the friend or relative over the other unsecured creditors.  The Trustee now has the funds so that all ordinary unsecured creditors can be treated equally.

Should the Trustee’s demand goes unpaid, the Trustee could then make application to Court for an order against the friend or relative declaring that a preference was given and that the funds must be paid over to the Trustee.  The evidentiary bar for the Trustee is not set high at all. As long as the transaction has the effect of giving the friend or relative a preference, it is assumed to have been a preference. It is up to the friend or relative to have to prove by way of evidence to the contrary, that it was not a preference.

As I mentioned previously, a consumer proposal must offer the creditors a better alternative than in the case of the person’s bankruptcy.  So, the preference payment must be taken into account in assessing what type of consumer proposal to offer. This includes the total payment to be made by the insolvent woman to the Trustee to pay a dividend to the unsecured creditors.  

For best practices in the consumer proposal administration, the Trustee should add a clause in the consumer proposal that states that the provisions of the preference section of the BIA do not come into play.  The reason for doing so is to make it clear that the Trustee, acting as Administrator in the consumer proposal, has no right to demand payment from the friend or relative. The reason is that the amount was already taken into account in formulating the total amount paid under the consumer proposal.  

It also acts as a signal to the unsecured creditors, to highlight the issue of the preference.  The Trustee should explain the issues to the creditors and show how the amount of the preference has already been taken into account.  In this way, full disclosure has been accomplished.

Bankruptcy vs consumer proposal: Is a consumer proposal a good idea

A successful consumer proposal is one of the bankruptcy alternatives.  It is always a good idea to avoid bankruptcy if you can.  There are many reasons why consumer proposals are better than bankruptcies. By having a successful consumer proposal, you will avoid:

  • having to file monthly income and expense statements;
  • being subject to a surplus income recalculation;
  • a bankruptcy on your credit record;
  • bankruptcy negatively affecting your credit score;
  • having a discharge process that could be opposed; and
  • a court discharge hearing

Bankruptcy vs consumer proposal:  What about you?

Do you have excessive debt? Are you having trouble making your month-to-month payments? Is your business not taking care of financial challenges that you simply cannot figure out how to escape from?

If so, call the Ira Smith Team today. We have years and generations of experience assisting people and companies trying to find a financial restructuring or a debt negotiation strategy. As a licensed insolvency trustee, we are the only professionals identified, accredited and monitored by the Federal government to give insolvency help and services to assist you to avoid bankruptcy.

Call the Ira Smith Team today so you can finish with the tension and anxiousness debt issues produce. With the unique roadmap, we establish special to you, we will quickly return you right into a healthy and balanced worry-free life.

You can have a no-cost assessment to help you so we can fix your debt issues. Call the Ira Smith Team today. This will certainly allow you to return to being productive and healthy, Starting Over Starting Now.bankruptcy vs consumer proposal

 

 

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SOMETIMES EVEN A BONA FIDE SHARK NEEDS BANKRUPTCY AND INSOLVENCY HELP

bankruptcy and insolvency
bankruptcy and insolvency

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

Bankruptcy and insolvency:  Introduction

Not every innovation that is seen on The Shark Tank is bound to be one of the very best. Among the winners, Fizzics is a machine that makes use of sound waves that improve the taste and quality of a beer.  Not even a Shark can stop its company from being driven to bankruptcy and insolvency Chapter 11 bankruptcy protection. This proves that often an ingenious and fantastic invention being marketed with the assistance of a Shark might not truly interest people.

bankruptcy and insolvency
bankruptcy and insolvency

Fizzics was seen on the season 8 première of The Shark Tank. The judges, in spite of the early skepticism, accepted this pitch. It currently seems to be backfiring in a huge way. The idea of making a bottle of beer taste better, just like a draft beer from the tap, isn’t a silly way to invest your time.  But a better tasting beer is a big luxury. Many people may check out is the brand-new shiny plaything on the block. It is something wacky and cute but not completely effective or needed.

What is difference between bankruptcy and insolvency in Canada?

What is insolvency? – Individuals are considered to be insolvent when they are not able to pay the financial debts they owe their creditors on their respective due dates. If you become insolvent, you might choose to declare bankruptcy, or you could handle your financial debts with other options such as a consolidation loan or a debt settlement consumer proposal.

Insolvency and bankruptcy are 2 terms that are often very closely associated when discussing debt. However, they have very different meanings. Insolvency describes an economic state.  It is when you cannot afford to pay your debts when due.  If you liquidated all of your assets, there would not be enough money to pay off all your debts in full.

What is bankruptcy? – Bankruptcy is a legal process. It means that a creditor has gone to court and obtained a Bankruptcy Order to place a person or company into the legal status of bankruptcy.  Or, the person or company has filed an Assignment in Bankruptcy.  The Bankruptcy and Insolvency Act (BIA) is the Canadian bankruptcy law legislation regulating all administrations of the BIA in Canada.

The various kinds of insolvency proceedings under the BIA are:

  • corporate bankruptcy;
  • personal bankruptcy;  either a summary administration bankruptcy or an ordinary administration.
  • consumer proposals;
  • Part III Division I Proposal; and
  • receiverships.

Canadian BIA insolvency proceedings and bankruptcy proceedings can only be administered by licensed insolvency trustees (formerly called trustees in bankruptcy).  The short form for a trustee in bankruptcy is now LIT, licensed insolvency trustee (Trustee).  Trustees are licensed and supervised by the Office of the Superintendent of Bankruptcy (Canada) (OSB) which is part of Industry Canada.  The OSB is responsible for the administration of bankruptcies in Canada.

Bankruptcy and Insolvency:  Does the consumer really need it?

Eventually, these types of ideas are those that often tend to seem like the most effective thing since sliced bread. Their shiny brand-new finish tends to subside promptly given the expense of creating them. Even tougher, is finding a large enough market of people who truly intend to quit the dependable and old ways to carry out something.  The uniqueness will swiftly wear away. The equipment will then come to be a chunk of scrap that is most likely to rest on the counter and seldom gets used. That might seem unkind, however, usefulness and need to at some point seem to divide the wheat (or barley) from the chaff!

So Fizzics, for all that it is able to do, turned out to be not the sort of device that has the ability to make a great deal of sense in a business setting. It is just for home-usage. In a bar, people go to consume alcohol and socialize. They are not there to wait on a number of sound waves to make their drink preference taste and look better.  If they want a draft beer, they will order from the tap. If they want a bottled beer, that is what they will order.

For home usage, it is an excellent novelty. Everyone has their favourite beer.  People anticipate it to taste the way they know it too – straight out of the bottle or can.

The Fizzics Business:  The Sharks bit and invested money

Philip Petracca and his partner, David McDonald, made it to ABC’s “Shark Tank” in 2016, offering beer to a hesitant panel.  They eventually turned most of the judges into followers. Lori Greiner and fellow Shark Mark Cuban agreed to spend $2 million into Fizzics for a consolidated 16.67 percent equity. Fizzics attained its objective of expanding its selling networks.

With the help of the Sharks, Fizzics entered Target, Best Buy, Brookstone, on Amazon, and several other areas– including Bed, Bath & Beyond. They have been reviewed in many renowned publications, and on several websites such as Yahoo! Tech as well as CNet. The Fizzics beer-making device was called absolutely nothing short of a wonder.

bankruptcy and insolvency
bankruptcy and insolvency

They increased their patented modern technology and generated a much more portable item called the Fizzics Waytap. Beer fanatics were still going crazy about the original dispenser in magazines.

On March 12, 2019, Fizzics Group, Inc. applied for Chapter 11 bankruptcy in Delaware under the United States insolvency and bankruptcy code. It reported assets of between $100,000 as well as $500,000 and debts of between $1 million and $10 million (based on contingencies and disputed claims).  Time will tell if the business can be reorganized and saved, or if the remaining product inventory will end up in the clearance area!

Bankruptcy and insolvency:  Do you need help?

I hope you enjoyed this Fizzics Shark Tank bankruptcy and insolvency blog.  Do you or your business have excessive debt? Are you having an issue making your month-to-month expenses?  Is your company handling its financial obstacles something you simply can’t figure the way out of? Are you looking for a business restructuring plan or an individual debt negotiation plan?

If so, call the Ira Smith Team today. We have years and generations of experience helping people and companies seeking financial restructuring or a debt settlement strategy.  As a licensed insolvency trustee, we are the only specialists recognized, accredited and supervised by the Federal government to give insolvency advice and remedies to assist you and to prevent bankruptcy.

Call the Ira Smith Team today so you can end the stress and anxiety financial problems create.  With the special roadmap, we will develop with and special to you, we will promptly return you right into a healthy, balanced hassle-free life.

You can have a no-cost appointment to assist you so we can fix your debt troubles. Call the Ira Smith Team today. This will certainly allow you to make a fresh start, Starting Over Starting Now.

 

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WHAT IS A GOOD CREDIT SCORE IN CANADA? THE UNTOLD CREDIT SCORE SECRETS

What is a good credit score in Canada:  Introduction

I have previously written reviews of the two main companies that can give you your credit score for free in Canada.  The two are Credit Karma Canada and Borrowell. It is one thing to know what your credit score is.  But what does that number mean? Do you have control over how to increase your credit score?  To answer those questions, you must know the topic I am writing about in this Brandon’s Blog. What is a good credit score in Canada?

Your credit rating

There are three main points you need to learn about your credit rating. In Canada, your credit score is a number between 300 and 900. Lenders use this to forecast just how likely you are to be responsible with the money they are considering providing you. Will you pay back the cash you are asking they fund you?

The greater your score number, the more probable you are to be an excellent wager to be able to pay back what you owe. Your credit history is composed of five elements:

  1. Your payment history composes 35%.
  2. How much debt you owe comprises 30%.
  3. The length of your history makes up 15%.
  4. 10% comes from the sorts of loans or credit cards you have.
  5. Just how often you typically apply to borrow has a 10% effect.

 A better understanding

Let’s drill down on this a little more.  The greatest chunk is your repayment history. This checks out whether you’re making your payments on time. If you’re late on repayments, exactly how often are you late or are there financial obligations in the enforcement and collection process. How much debt you owe takes into account how much debt is owed and how much borrowing room is still available to you.  

The length of your borrowing history considers how long you’ve had your loan products for. The longer you’ve had them the better it is for your history. Types of credit look at the range of items you have. A brand-new application is when you ask for a new loan. New loan applications stay on your report for three years. Applying many times decreases your score.

The theory is that if you keep applying, you are having 2 problems.  The first is that you keep needing new loans for some reason. The second problem is that you must keep being turned down in order for you to need to keep applying.

Hard and soft hits

When you apply for a new loan, the potential lender performs a check on you.  This produces what is known as a hard hit which can negatively impact your score.  When you pull your own reports, such as through Credit Karma Canada or Borrowell, this makes what they call a soft hit.  This won’t negatively impact your score.  

How often should I check my score?

You might be wondering do you need to look at your own score monthly? I am here to tell you that you don’t. Your rating adjusts throughout the month based on the five items I spoke of above. So your rating can look different from month to month.

If you’re exercising excellent credit rating behaviour a new report will certainly show that. Likewise, if you are not acting responsibly, your report and your score will show that.  What I do recommend you do is check your rating by pulling an annual credit report. You do this to ensure that your record is exact and there are no errors in it.

The most effective time to check the accuracy of your report would certainly be prior to you making a huge purchase for something like a home or vehicle. You recognize that your lender will certainly perform a check. It is to your benefit to make sure everything on your rating profile looks good and is error free.

In that situation, where a lot is riding on the precision and completeness of your report, you would go directly to the two main score rating companies in Canada; Equifax Canada and TransUnion Canada. You will certainly have to pay for them to generate an Equifax or TransUnion score and history report for you. What you pay them to understand that your record is precise and totally error-free is worth that peace of mind.

4 things you must know about your score

To summarize, the 4 things you must know about your score are:

  1. Your credit score in Canada is a number between 300 and 900.
  2. Lenders use your credit score to forecast just how likely you are to be responsible with the credit they are considering providing you.
  3. The greater your credit score number, the more probable you are to be an excellent wager to be able to pay back what you owe.
  4. Your credit history is composed of five elements:
    1. your payment history composes 35%;
    2. how much debt you owe comprises 30%;
    3. the length of your credit history makes up 15%;
    4. 10% comes from the sorts of credit you have;
    5. just how often you typically apply for new credit has a 10% effect; and
    6. lastly, you don’t need to check the credit score all the time.

You might have a concern about, and ask yourself, is Credit Karma Canada safe?  Is Borrowell safe? The answer is yes, but you still may have a concern. You are providing each of them with very personal information about yourself when you first sign up for their respective services.  Then they do on a regular basis perform a credit score check on you. These are soft hits, so it won’t affect your score.  However, they are updating your private personal information which stays on their database. Anytime such sensitive information is on a computer server, there is, of course, a danger from hackers.

The reason they regularly check your credit situation is so they can then send you an email about any change to your credit score – good or bad.  They do this for two reasons. The first is to alert you about their latest finding of your credit report.  The second reason is to give you a reason to go to their website. Their hope, of course, is while you are on their site seeing the change to your credit score, perhaps you will stay and look at some of the products they offer to produce revenue for themselves.

What is a good credit score in Canada:  What about you?

I hope this what is a good credit score in Canada blog 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 along with generations of experience aiding people and companies looking for financial restructuring or a debt settlement plan. As a licensed insolvency trustee, we are the only professionals recognized, licensed and supervised by the Federal government to provide insolvency advice and services to assist you to stay clear of bankruptcy.

Call the Ira Smith Team today so you can end your stress, anxiety and pain today. With the roadmap we develop unique to your situation, we will swiftly return you right into a balanced, healthy and carefree life.

You can have a no-cost assessment to assist you to repair your credit and debt troubles. With you, we will uncover your financial discomfort points and use a method to rid them from your life. This will absolutely allow you to begin a fresh start, Starting Over Starting Now.what is a good credit score in canada

 

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RETAIL STORE CLOSINGS 2019 USA

retail store

If you would prefer to listen to the audio version of the retail store closings 2019 USA Brandon’s Blog, please scroll to the bottom and click on the podcast

Retail store:  Introduction

The retail apocalypse in 2019 is continuing.  We hear almost daily about US chains filing for bankruptcy protection and retail store closings.  We are seeing stores closing in America more often than stores are being opened.  I am talking about brick and mortar stores closing down.  Is it strictly because of Amazon and other online sellers?  We will discuss that in a bit.

Retail store:  Victoria’s Secret

Victoria’s Secret’s parent company, L Brands, in its most recent earnings report earnings announced that they would be closing 53 stores this year. That follows up from 30 in 2018. Victoria’s Secret has been accused of not fitting into the #MeToo era and not adapting to change.

Critics say that the runway show is outdated and that the images in stores are inappropriate. Other brands like American Eagle’s Aerie are launching more body-positive campaigns. They also said that they would never use airbrushed photos. So while Aerie has had explosive success over the last few years, Victoria’s Secret slowly has seen its sales slide.

In the most recent runway show, which took place in November, Victoria’s Secret came under fire.  Before the runway show aired publicly, Ed Razek, the chief marketing officer, was interviewed by Vogue.  He made some controversial comments about plus-size and transsexual models being featured in the show or rather not being featured in the show.  This caused a big outrage online and so, whether it’s a result of this, their ratings. The viewership ratings actually fell this year versus the year before.

So increasingly, new brands are cropping up.  People are seeing that more body-positive brands like American Eagle’s Aerie are achieving a lot of success. So new brands like ThirdLove, Lively and Rihanna even has her own line of lingerie.   They are trying to fill the void that Victoria’s Secret has created of creating more body-positive clothing by having extended sizes and more body-positive and inclusive marketing.

Store closures are trying to deal with a more urgent problem, slipping sales.  There has also been talking of quality concerns in Victoria Secret’s garments. It would seem that they have their work cut out for them.

Retail store:  Michaels

Dallasnews.com reports that the arts and crafts retailer Michaels is closing 36 of their Ohio based Pat Catan stores they purchased.  They are citing it as consumer volatility. Chuck Rubin, CEO of Michaels, stated in January 2019 that they have seen more volatility in consumer shopping behaviour than they initially expected.  He also went on to say that Michaels is lowering its 2018 fourth-quarter outlook for same-store sales and profit.

Retail store:  Things Remembered

Next up is Things Remembered.  They have announced that they are going to be filing for Chapter 11 bankruptcy protection.  As part of their reorganization plan, they will be closing most of their 400 stores in shopping malls.   They will keep their strong performing stores. Things Remembered sells customizable gifts including jewelry and decorative items. You can have engraved your personalized message on a necklace or other jewelry or item.  They were founded 40 years ago. As recently as June 2018 Things Remembered had 450 stores open. That dwindled down to 400 stores and now the bankruptcy filing. Time will tell if they can really survive.

Retail store:  Department stores

Sears, Kmart, JC Penney, Macy’s, Kohl’s and Nordstrom have all announced store closures. The Motley Fool reports that over the past decade Nordstrom has closed an average of about two stores a year.   So more department store closures, especially Sears closing down, is really not a new story.

Last January, Kohl’s announced four store closures. With all store closures, people lose their jobs.  Kohl’s stock has fallen because same-store sales growth slowed. It has also been reported that Kohl’s is going to offer voluntary retirement programs to hourly associates who are age 55 years or older and who have at least 15 years of service.  

The Wall Street Journal reported that owners of retail buildings, including malls, are reducing rents now for some stores that are seeing struggling sales.  This includes JC Penney and some of the Sears locations that are still open. They are doing that because they fear that there may not be other anchor stores that are going to be able to come in and replace them.

Moneywise.com reported that Target Stores may be closing some stores. However, they have also announced new store openings.  So with Target Stores, it seems to be more of a rebalancing shutting down underperforming locations.

Lord and Taylor, owned by Hudson’s Bay Company, announced certain store closures also.  They reported that weak holiday sales led to the decision at the end of 2018. Lord and Taylor closed one of their more iconic locations on Fifth Avenue in New York City.

Retail store:  Other

Upscale accessories store Henri Bendel will be closing 19 23 stores in 2019. That also includes their store on Fifth Avenue in New York. They have been in business for more than one hundred years.  Christopher & Banks sell women’s and especially petite clothing. They say they are going to close between 30 and 40 of their over 400 stores.

Gap and the Banana Republic. A lot of clothing stores are on the chopping block. Between Gap and the Banana Republic, there is going to be over 200 stores shutting down.   Clothing retailer Chico’s announced they will be closing 250 stores in the United States. The Gymboree bankruptcy resulted in the sale of certain assets, but not store locations. About 900 stores closed.  

Retail store:  Is it only because of Amazon?

The U.S. Fed reports that the consumer savings rate is at 6%. It has not been that low since March 2013. The Fed also reported that Americans’ savings are dwindling combined with rising debt levels. There is a similar story in Canada.

No doubt that online shopping, including Amazon, takes up a big chunk of who normally would have shopped at these brick-and-mortar retailers.  But we know that low savings and high debt can’t go on forever. You can’t see savings continue to decline and debt continuing to increase. As I have previously written in many blogs, there has to hit a limit at some point and that’s called insolvency.

Retail store:  How about you?

Do you have too much debt? Are you having a problem making your month-to-month bill payments? Is your company dealing with financial obstacles that you just can’t figure the way out of?

If so, call the Ira Smith Team today. We have years and generations of experience aiding individuals and businesses looking for financial restructuring or a debt settlement plan.  As a licensed insolvency trustee, we are the only experts recognized, licensed and supervised by the Federal government (the OSB) to provide insolvency recommendations and solutions to help you prevent the B word.

Call the Ira Smith Team today so you can end the stress and anxiety financial problems create. With the special roadmap, we develop unique to you, we will promptly return you right into a healthy and balanced stress-free life.

You can have a no-cost consultation to aid you so we can repair your debt problems. Call the Ira Smith Team today. This will definitely enable you to make a fresh start, Starting Over Starting Now.

Call a Trustee Now!