If you’re a Toronto resident then you’ve seen the cost of living in Canada continuously rise. However, the cost of living in Toronto has risen over 20% faster than in the rest of Canada. And, the cost of living is now 36% higher than it was in 2002.
The cost of living in Canada: What StatsCan says
According to Statistics Canada, a few categories were responsible for most of the gains – gasoline, food from restaurants, passenger vehicles, homeowner replacement costs and mortgage interest costs. The cost of living in Canada: 6 Reasons The Cost Of Living In Toronto Causes Many To Downsize Their Life
In the last 10 years, the cost of living has skyrocketed. In 2008, Toronto’s living wage – the minimum amount necessary for an individual to meet their basic needs – was $16.60 per hour or an annual income of $34,000.
Since then:
The cost of childcare in Toronto has risen by roughly 30%
Rent has gone up an average of 13%
Public transit cost has increased by 36%
The average price for a 1 bedroom condominium downtown is about $400,000
An average price for a single detached home $1.2 million
The average price for a litre of gasoline is $1.37/litre (with predictions that it could soon reach $1.50/litre)
The cost of living in Canada: How much do you need to live comfortably in Toronto?
According to a report by the Toronto based think-tank, the Wellesley Institute, a single person between the ages of 25-40 would need to make between $46,186 and $55,432 – after tax – to live the good life in the Greater Toronto Area.
They arrived at that figure by first accounting for the basic costs of survival, like food and shelter, and then considering the costs associated with quality of life categories like social participation, which includes things like hobbies, travel and socializing.
“This figure indicates the total cost of supporting an individual’s ability to thrive, which is defined as meeting their basic material needs, enabling connections to community and family, supporting educational and professional advancement, and ensuring long-term financial security,” the report states. The cost of living in Canada: Is the cost of living forcing you to change your lifestyle?
For many, the answer is yes. You can’t cut down or out on necessities like housing, food, transit, and daycare. But, you can:
We can’t lower the cost of living or find you a fantastic, cheap place to live, but we can help you solve your financial problems. Give us a call today because with immediate action and the right plan you can be back on your feet financially Starting Over, Starting Now.
Bankruptcy is sometimes necessary for the financially troubled individual or company. In Canada in 2017, there were 125,807 insolvency filings; 60,669 bankruptcies and 65,138 proposals. Bankruptcy in Ontario Canada accounted for 15,968 of the 2017 filings. The majority of these across Canada filings were people, not companies.
Bankruptcy in Ontario Canada: Not entirely unexpected
This is an expected statistic once you understand the purpose of the Canadian insolvency system to get rid of financial obligations. It is also for the financial rehabilitation of people and companies and if possible, allow them to do so while retaining their assets. In a down economic climate, even more, debtors use bankruptcy to protect their wide range of interests. Although on a per capita basis Canadians are savers, more recently, especially related to real estate, we are a country of borrowers. A lot of people are overloaded with debt, including credit card debt. Bankruptcy in Ontario Canada: Bankruptcy is not always right
Any debtor with severe monetary troubles must think about bankruptcy. Bankruptcy isn’t always the right response though. In my practice, we first run through the various options available to avoid bankruptcy.
It is proper only when you have too many financial obligations that you cannot realistically repay, in whole or in part, from your future earnings or from selling your assets. This is the meaning of the financial state of insolvency.
If you make $100,000 a year and your financial obligations are only $20,000 (assuming you have no assets), why go bankrupt? Temporary financial sacrifice on your part could pay off your debts in full. This is definitely more suitable for bankruptcy. What about a proposal?
Although each case is unique, generally speaking, if your unsecured financial debts are less than 60 percent of your net yearly pay, stay clear of bankruptcy. You could use a self-help remedy to pay off your debts in full. Alternatively, you could look to the proposal or consumer proposal mechanisms under the Bankruptcy and Insolvency Act (Canada).
Under the proposal provisions of the BIA, a person or company could take up to 5 years to pay off part of the debt. A successful proposal forgives the balance of your debt (subject to certain ones indicated below). Many creditors will wait if you show good faith and make organized repayments that provide your creditors with a better result. A filing may protect some assets
A bankruptcy or proposal filing may also be necessary to secure your assets; this is especially true for companies looking to restructure. In a BIA filing, all civil actions against you instantly stop— whether they are legal actions, CRA garnishments or secured creditor seizure and enforcement (the last under specific conditions). Every creditor must obey the automatic stay of proceedings imposed by the BIA. A proposal filing gives you the possibility to solve your economic issues with lenders who would certainly otherwise seize and sell your assets. Timing is everything
I advise every person and company in need of restructuring that timing is crucial. It is human nature for debtors to regularly wait far too long. By waiting too long, they shed possible advantages from an earlier restructuring filing. The longer a person or company waits, the fewer options they have. Also, if you wait too long, the less creative I can be to protect your assets.
5 general tips
Collect your tax refunds prior to your filing. When you file for bankruptcy, any tax refund owing to you prior to the date of bankruptcy belong to your bankruptcy estate. Your licensed insolvency trustee (Trustee) collects the payments.
The insolvency process is meant to treat all creditors fairly and all ordinary unsecured creditors equally. Seek the advice of a Trustee prior to making payments to specific unsecured creditors prior to filing. Your good intentions may prove to have created transactions that the Trustee can attack. The Trustee will then seek recovery from those parties.
Consider how the causes of your insolvency will look to your creditors. Uncontrolled lifestyle spending looks a lot different from ongoing costs due to a mental or physical illness or an addiction. The causes of your insolvency sometimes dictate whether a proposal or bankruptcy filing is preferable.
Have you contributed to an RRSP in the 12 months before filing for bankruptcy? That amount will have to be paid over to your Trustee under bankruptcy or accounted for in what type of proposal can be successful.
If you have student loans, was the last time you were either a full or part-time student more than 7 years prior to your filing? If no, you won’t be able to end the student loan debt. However, it may be enough to relieve yourself of your other unsecured debts to have enough funds every month to start repaying the student loans.
Some debts can’t be discharged
Bankruptcy will not end every debt. There are certain debts that cannot be discharged through bankruptcy. Examples are:
student loans as described above
child support and alimony under either a court order or written separation agreement
fines or restitution ordered by a Court
debts arising out of fraud, embezzlement or misappropriation while acting in a fiduciary capacity
amounts owing to secured creditors registered against your assets, such as a mortgage or car loan. Any amount still owing after the asset is sold, if any, is an unsecured claim which is discharged in a bankruptcy
Bankruptcy must be your last option
Bankruptcy could be your ideal choice if the amount of your debt and the amount you can realistically repay will not settle it. If you have few possessions to lose in bankruptcy, then a bankruptcy filing may be your best choice. By meeting with a Trustee early to discuss your options, you will get a good understanding of what may be possible.
I always advise every person or company never file for bankruptcy without first striving to solve a case without bankruptcy. Bankruptcy must be your last option, not your very first – avoid bankruptcy if you can.
Think about all readily available options prior to determining that bankruptcy is genuinely the best decision for you and your situation. If you find you are in too deep and can’t dig out fast enough, then you do need professional help.
Seek the advice of a professional trustee
Many people and companies facing serious financial issues don’t know where to go for professional help or are too embarrassed. There’s no shame in seeking professional, financial help. Licensed insolvency trustees evaluate your situation and help you to arrive at the best possible solution for your problems.
Ira Smith Trustee & Receiver Inc. is here to help. We’re federally regulated and subject to a strict code of ethics. We offer a depth of expertise and provide a high quality and cost-effective service. I understand your pain and we can end it. You will find that we use a friendly, non-judgmental method.
August 30, 2018 – NEW BONUS VIDEO AT THE BOTTOM OF THIS BLOG
Introduction
Although I can’t now fathom a world without the Internet, there are some reasons to wax nostalgic about the good old days. Most notably, many families lived nicely on one income and people retired from their jobs with a defined pension plan. They did not have to worry about repayment of student loans Canada. It was commonplace for students to put themselves through college working summers and weekends during the school year.
There is a new reality
Those days are gone! Two incomes are now an absolute necessity for most families and defined pensions have all but disappeared. To pay for university, even with working summers and weekends, students are saddled with enormous loans. In the 2015-16 school year, 497,000 students enrolled in the Canada Student Loans Program.
Students #1 worry
Dan Allan, Director of the Student Budget Consultation Program, states:
“While students are concerned about unemployment after school, their biggest worry is about their university debt and the cost of education being a huge hurdle going forward”
Why is there so much student loans debt?
Government funding dropped from over 77% in 1992 to less than 55% in 2012. To make up the difference, post-secondary institutions turned to students. Tuition fees began to rise – 115% between 1980 and 1995 (Glenn Burley, Canadian Centre for Policy Alternatives)
By 2016-17, the average Canadian university tuition was about 40% higher than it had been in 2006. (Fred Lum/Globe and Mail)
Tuition fees increased by 3.1% per cent for undergraduate programs in the 2017-18 academic years (Statistics Canada)
The average tuition cost for a Canadian university — before the cost of books, travel and supplies — is $6,500 per year (Statistics Canada)
The average amount owing for both bachelor and master’s graduates is $26,000 and $41,100 for doctorate graduates (Statistics Canada)
What happens when students can’t repay their student loans?
According to Dan Allan, the current Liberal government wrote off $200 million dollars in outstanding student loans on which it will never be able to collect. This is the third time in the past four years that the government has had to write off outstanding loans for reasons that include bankruptcy. There is a six-year legal limit on collection and debtors who can no longer be found. This results in direct student loans loan forgiveness.
How can young people get ahead when student loans are holding them back? As a society, we must increase our investment in education. Instead of the government writing off hundreds of millions of dollars in uncollectable student loan debt, wouldn’t that money be better spent on funding education?
Repayment of student loans Canada: What to do if you have too much debt
You can certainly contact Canada student loans to find out about their program for those having trouble repaying their student loan debt. If you’re a graduate with student loan debt that you can’t repay, and you were not able to work out an arrangement with Canada student loans then you are in a student loans debt crisis. If you are struggling with student loan debt, or debt for any other reason, you need professional help and you need it now. We understand your pain points and we know how to relieve you of the stress and pain.
Mortgagees rely upon the provincial land registry system to decide what obligations are secured against real property and in what order of priority. When it comes to mortgage lending criteria self employed, a recent Court decision has proven that when it comes to a self employed person’s mortgage, if there is a deemed trust claim by Canada Revenue Agency (CRA), you cannot solely rely upon the registry system.
Mortgage lending criteria self employed: The Court case
The Court case I am referring to is Canada v. Toronto-Dominion Bank, 2018 FC 538 (CanLII) which was heard in Federal Court. In this matter, the Crown on behalf of Her Majesty looked to recover funds Toronto-Dominion Bank (TD) obtained from one of its clients who repaid a loan secured by a home mortgage upon the sale of his house. The client was a self employed person.
The Crown claimed that there was an outstanding deemed trust claim for collected but unremitted GST. The Crown further claimed that the proceeds from the sale of the home collected by TD was subject to the CRA deemed trust claim, was property of Her Majesty and that TD had to pay it over. TD did not take the position that it had a registered first charge and can keep the funds. It argued that as a “bona fide purchaser for value” it is not subject to the deemed trust claim and does not have to pay over the money.
Mortgage lending criteria self employed: The undisputed facts
The borrower carried on a landscaping business as a sole proprietor. In 2007 and 2008, he collected and did not remit GST totaling $67,854. TD held both a registered mortgage and a home equity line of credit (HELOC) against the borrower’s home. The home was sold in 2011. The borrower repaid the mortgage and HELOC in full from the sale of the home.
Almost two years later in April 2013, CRA made demand on TD for repayment of $97,327, revised in 2015 by amended demand for $67,854. TD refused to pay.
Mortgage lending criteria self employed: What the Court said
The Federal Court reviewed the legislation. The Court decided that the funds paid to TD were proceeds of sale of his property. Therefore, it is covered by the deemed trust CRA claim. So the Court found that the requirements of Section 222 of the Excise Tax Act were met.
The Court agreed with the Crown’s position that the deemed trust Canada claim covered the debtor’s house. This is in spite of there was no registration on title and that the Bank had proper valid registrations. The Court further agreed that according to Section 222(3) of the Income Tax Act, the Bank has an obligation to pay over the proceeds it received which were impressed with the deemed trust.
The Judge disagreed with TD’s position. TD stated that the payment of proceeds only applied if a secured creditor enforces its security. This was not the case in this situation. The Court further disagreed with TD’s position that it was a bona fide purchaser for value. The Court agreed that money could be considered property available in such a defence. However, it stated that a secured creditor facing a deemed trust claim could not use that defence. TD also offered certain public policy issues in its defence, but the Court was not swayed.
TD is liable to pay over the amount of $67,854, interest and costs.
Mortgage lending criteria self employed: So what is the biggest myth?
The biggest myth is as follows. To find out what claims against the real property, you only have to perform a title search.
This is an important decision for mortgage lending criteria self employed people. Now TD is in the position of having to make demand on and possibly sue in 2018 its borrower who ostensibly repaid the loan in full in 2011! It would be suing as an unsecured creditor.
What this means for mortgagees is that they can no longer just accept funds from a self employed person who wishes to pay off a loan, be it a mortgage or other type of loan, from the sale of property. It also cannot merely accept funds to pay off a loan from a self employed individual’s business bank account.
Mortgage lending criteria self employed: So what is the fix?
Rather, the lender also must now get a true copy of a statement from CRA showing that there are no amounts owing by the self employed person on account of either HST or source deductions as the employer of others.
Lenders would also be well advised to add language to their loan term sheet, loan documents and any other documents issued when a loan is repaid. The new language would be an attestation by the self employed borrower that there are no amounts owing to any government authority that would be considered or deemed to be a trust claim.
Further, the language would have to make it clear that in the event there were any such amounts owing, even if the loan was fully repaid, the lender had the right to demand and sue the borrower for any amounts proven to be a deemed trust claim that the lender was required to pay over to the government at some later date.
Mortgage lending criteria self employed: Does your business need HST and source deductions you collected to stay afloat?
Does your business need HST and source deductions you collected to stay afloat? Can your business not afford to pay over to the government deemed trust claim amounts collected? If so, then your business is in trouble and requires restructuring immediately. You need the advice of a professional trustee now!
The Ira Smith Team have decades of experience in complex corporate and other business financial restructurings. We first look at how we can reorganize and restructure your business to rescue it. You are worried because your business is facing significant financial challenges. The stress placed upon you because of your business’s financial challenges are enormous. We understand your pain points, and we know how to relieve them for you.
If you or your company cannot survive without a restructuring, contact Ira Smith Trustee & Receiver Inc. NOW for a free consultation. You are just one phone call away from getting back on the road to financial health and reducing your stress levels, Starting Over, Starting Now.
Many Canadians are in a hole financially because of their spending habits and don’t realize it. When it hits them in the face, they need the best debt solutions. Many people can’t even afford to seek the help they need. But there is good news. The best fixes are the ones you can do yourself. The purpose of my blog is to describe to you steps you can take by yourself to solve your financial problems, as long as you catch it early enough. My blog will also help you turn any wasteful spending habits into wise spending habits.
Debt solutions: Disposable income
There’s a tendency to look at income as disposable – what we earn, we spend. If that’s your attitude, then you already have the shovel in your hands and you’ve started digging. Before you get in so deep that you can’t get out of the hole, let’s look at what you’re doing wrong and what you can do to get back on track financially.
Debt solutions: My 5 step self-help free plan
Stop spending everything you earn. Living paycheque to paycheque is no way to live. Your income should cover all of your expenses, fund an emergency account and allow you to save for retirement. Look at your budget and see what expenses you can end or reduce. Don’t have a budget?
Make a budget and stick to it. Do you know where your money’s going? Or do you think you have a hole in your wallet? A budget is the most effective money management tool. List all the things that you spend money on each month; and that includes designer coffees. In order to pay down debt and/or save money you’ll have to do some penny-pinching. Eliminate wasteful spending. Spend mindfully instead. Think twice before making a purchase you don’t really need. Make sure you’re getting the best prices on your cellphone plan, car insurance, house insurance, cable and internet. Use coupons at the grocery store. Make a budget and stick to it to meet your financial goals.
Get rid of credit card debt as quickly as possible. High interest debt is the worst kind of debt. Pay off your credit card balances as quickly as possible. Use cash instead. Plastic is too easy.
Check your credit score annually. Do you know what your credit score is? You should. Your credit score will decide whether you can buy a house, buy/lease a car and it can even affect your ability to get a job. Check it annually and go over it thoroughly. It may contain errors that can adversely affect your ability to borrow money.
Save for retirement. Retirement will come quicker than you think. Have you started saving? Government sponsored pension plans will not keep you in the lifestyle you imagined for your retirement. It’s never too early or too late to start saving for retirement.
Debt solutions: The most serious financial problems need professional help
If you try my free 5 step debt solutions plan but find you are in too deep and can’t dig out fast enough, then you do need professional help. Many people facing serious financial issues don’t know where to go for professional help or are too embarrassed. There’s no shame in seeking professional, financial help. A trustee in bankruptcy (now called a licensed insolvency trustee) will evaluate your situation and help you to arrive at the best possible solution for your problems.
Ira Smith Trustee & Receiver Inc. is here to help. We’re federally regulated and subject to a strict code of ethics. We offer a depth of expertise and provide a high quality and cost-effective service. I understand your pain and we can end it. You will find that we use a friendly, non-judgmental method.
This is always a hot topic. I am asked often how does debt relief Canada work? I recently wrote blogs about professional athletes who made a lot of money in their careers and who are now broke, or worse, bankrupt.
I am going to tell you about former tennis star Boris Becker. He is trying to avoid bankruptcy, diplomatically.
First some background information. The inviolability of diplomats is among the oldest rules of international law. During the Greek Empire, it was unlawful to abuse, apprehend or detain a country’s agent. In contemporary times, there is polite resistance from court territory as a matter of global regulation. The purpose of this is to make certain the reliable efficiency of diplomatic features preventing the holding authority from intervening with the diplomat’s job.
Debt relief Canada: Diplomatic immunity
Diplomatic immunity separates into 3 categories. The resistance of the consular office properties and residential properties. The buildings, cars, archives and diplomatic communications. While the holding authority has a task to shield the diplomatic properties from any type of damages, the embassy remains immune from any kind of law enforcement actions. The authorities cannot enter the consular office other than to safeguard human life for instance of a severe emergency.
The 2nd kind is within the premises. The resistance of the employees functioning in the consular office from the local court’s jurisdiction. Mediators are immune from any kind of type of law enforcement like arrest, search as well as apprehension.
The 3rd kind is that the diplomat, as well as his/her family members, are additionally immune in the hosting country from paying taxes other than the settlement for solutions like electricity or water.
It likely raised a few eyebrows when Boris Becker revealed he was pursuing a 2nd profession in diplomacy In April 2018 as the Central African Republic’s attaché for Sports/Humanitarian/Cultural Affairs in the European Union.
The statement came while Becker had a claim made against him over a loan he presumably owes to exclusive financial institution Arbuthnot Latham, after the sports celebrity’s bankruptcy in 2017. His lawyers claim that his diplomatic function grants him immunity under the 1961 Vienna Convention on Diplomatic Relations. They state this indicates he cannot be subject to any kind of lawful procedure in the courts of any nation. Additionally, they say this protection is for as long as he stays an identified diplomatic representative.
The Boris Becker method of debt relief
His legal representatives have also provided those claims to Britain’s High Court, saying that British Foreign Secretary Boris Johnson in addition to the Central African Republic would need to decide whether any kind of suits could continue. This takes the bankruptcy of a previous tennis star transforming it into a politically delicate matter. The Court process against Becker might lead various other countries can potentially make use of the situation. In the same fashion British diplomats abroad could lose immunity if certain countries wished to make a point.
Becker’s defence method has actually likewise set off inquiries over his motivations as well as timing in accepting a polite duty with the Central African Republic— a nation in the midst of a bloody civil conflict and humanitarian situation. It appears now the Republic has more important matters to focus on. Its social and sporting activities ties to Europe cannot be a current priority.
The former tennis champ condemned the choice to start bankruptcy procedures versus him as unjustified and unjust and introduced he would look for payment for the totally unneeded affirmation of bankruptcy that he was pushed into.
Debt relief Canada: The precedent story of Sheikh Walid Juffali
The Article 29 of the Vienna Convention on Diplomatic Relations I previously referred to, has actually long been controversial. In 2014, the little Caribbean island of Saint Lucia named Saudi business owner Sheikh Walid Juffali its irreversible representative. Moreover, this appointment occurred after his former spouse Christina Estrada separated from him and instituted divorce proceedings.
Britain’s High Court ruled that his diplomatic status was totally fabricated. Britain’s Foreign Office slammed the judgment when stating it can result in problems with British diplomats’ immunity abroad. The Court said that Sheikh Walid Juffali, a permanent resident of Britain, is not protected by his diplomatic status. Estrada’s award was about $100 million.
Applying the very same reasoning in Becker’s instance would negate any diplomatic immunity claim by the long-time British homeowner.
What if you can’t claim diplomatic immunity?
Boris Becker’s uses a very novel and entertaining defence to avoid lawsuits to recover debts. However, most of us don’t have the ability to get diplomatic status from a country and then claim immunity. We deal with creditors suing us on our debts. We have to take a less dramatic and more common sense approach. Here is my list of options for those looking for debt help in Canada.
Debt relief Canada: Credit counselling
This addresses debt troubles without bankruptcy and supplies you with the skills to live debt totally free. Credit counselling solutions consist of budgeting, just how to use debt intelligently, restoring credit as well as debt management programs. Debt management programs are developed to aid you to settle your debt. You enlist willingly in a debt monitoring program; the court did not mandate it. When you enlist a credit counsellor will call your financial institutions and ask for their collaboration in minimizing your debt. Your creditors could agree in ways like minimizing the amount of debt owing. A debt management program cannot cover all debts. It cannot cover secured debts. A mortgage, line of credit registered against your home or an auto loan are examples of debts not covered.
Debt relief Canada: Debt consolidation
Debt consolidation is getting a loan that enables you to settle your financial debts to a number of or all your unsecured creditors, leaving you with simply one loan. Usually, this approach is ideal to deal with your unsecured debts. The theory is that the debt consolidation loan will have a lower annual interest rate than many of your unsecured debts.
Debt relief Canada: Proposals
Consumer proposals and Division 1 proposals are alternatives to bankruptcy. Although similar in many areas, there are some major distinctions. Consumer proposals are readily available to people whose overall financial debts do not go beyond $250,000, not consisting of debts secured by your house. Division 1 proposals are for both companies as well as people whose financial obligations go beyond $250,000 (excluding the mortgage on their primary residence). Proposals are governed by the Bankruptcy and Insolvency Act (BIA). Collaborating with a licensed insolvency trustee you make a proposal to:
✥Pay your creditors a percentage of what you owe them over a certain amount of time, without any interest
✥Extend the time you need to repay the debt
✥Or a mix of both
Proposal payments are made to your trustee. The trustee uses that money to pay each of your creditors. You can take up to 5 years to complete a proposal.
The last resort: Bankruptcy
As a last resort, you can declare bankruptcy. The Government of Canada licences and supervises us. We can look at your circumstance and discuss with you the options available to you to avoid bankruptcy. We can also advise you what is involved in the bankruptcy option and administer it for you.
Do you have too much debt?
I can’t provide you diplomatic immunity from your debts. However, If you’re thinking about a consumer proposal or are looking for ways to end your financial debt, or you need CRA debt forgiveness, call Ira Smith Trustee & Receiver Inc. We understand the stress and pain your financial problems are causing you. We feel your pain and we can end it for you.
Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you walk through our door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress-free life.
If you would prefer to listen to the audio version of this what happens to debt when you die Canada Brandon’s Blog, please scroll down to the bottom and click on the podcast.
What happens to debt when you die Canada introduction
When discussions of debt come up, people often joke around and say they’ll finally be free of debt when they die. But, is that true? Although we’ve written about this issue before, we thought this would be a good opportunity to update you. Does debt survive death? In Brandon’s blog, I want to explore with you what happens to debt when you die Canada.
In this what happens to debt when you die Canada blog, I use the terms Estate Trustee and Executor interchangeably. Here are some previous blogs I wrote on the topic of debt and death.
When you pass away, all of the assets (your life belongings) and obligations (your financial debts) in your name enter into a separate legal entity called your estate. Your will certainly names one or more people or firms to act as your Estate Trustee to sort out the finances, administer the estate and ultimately, make the necessary distributions to the beneficiaries. There are no special requirements to be an Estate Trustee. It is really up to the wishes of the deceased.
The Estate Trustee or executor first needs to be a copy of the Death Certificate. That document is required for the executor to do what is necessary for administering the estate. The will expresses the desire of the deceased in dealing with his or her estate.
The Estate Trustee is in charge of securing, insuring and either selling or distributing your possessions. The Estate Trustee must also collect all relevant documents of the deceased that might indicate the extent of the assets and liabilities.
They are also liable for making sure that the debts of the deceased are also paid off before there is any distribution to the beneficiaries. The Estate Trustee must make sure that they understand what happens to debt when you die Canada. There are specific rules that an executor must follow. Each province establishes its own rules.
Beneficiaries are the parties named in the will of the deceased entitled to receive either specific assets or possessions and/or cash from their sale. An Estate Trustee can be a pal or relative that the deceased had full trust and confidence in who is willing and capable to do the task.
Choosing a close friend or relative to act makes sense because they are trusted. However, not everyone views such an appointment as an honour. Rather, it can be viewed as an obligation they do not feel comfortable carrying out. Anyone thinking of naming a close friend or relative should discuss it first with them to make sure they are willing to take on the role.
It can also be an independent professional or company that is experienced in acting as an Estate Trustee. We have been appointed as Estate Trustee when relatives or friends do not feel comfortable, choose the option to renounce their responsibility and a new executor must be appointed. As you can see, there are many steps that an Estate Trustee must take to properly administer the estate.
what happens to debt when you die canada
What happens to debt when you die Canada: When Debt Collectors Call
Taking care of the financial debts of the deceased person can be confusing. Along with the psychological stress and the countless jobs that require scrutiny, you now have the debt collectors calling trying to collect on the outstanding bills.
Debt collectors can commonly call the family of the departed to do their best to collect the outstanding debt. Guidelines vary between provinces. Collection agencies will use many deceptions to try to collect debts that only the deceased is responsible for. All such calls should be directed to the Estate Trustee who should request that all communications come only in writing.
If assets pass to you as a beneficiary, the only time a beneficiary, who has not co-signed or guaranteed any debts of the deceased would be responsible for any related debt, is if the debt is secured. For example, if the will calls for you to inherit the home or vehicle of the deceased, there could be a mortgage against the home or vehicle financing involved. Those debts are secured and follow the asset.
Unsecured debt is outstanding debt that is not specific to any asset. The Estate Trustee must make sure that all unsecured debts, including income tax debt, are fully paid off before any distribution is made to the beneficiaries.
What happens to debt when you die Canada if there is a secured debt against specific assets and the beneficiary of those assets cannot afford to maintain the loan payments? If proper estate planning was not done, such as using a life insurance policy to cover secured debts or large unsecured debt like income tax debt, then it is probably best that the Estate Trustee takes the option of selling the asset in question.
The cash obtained from the sale, after paying off the related secured debt, and any income tax liability arising from the sale of the asset, can then be paid to the beneficiary who was entitled to that asset. Obviously, the Estate Trustee will have to discuss this with the beneficiary before taking any action with an asset and get their agreement.
It is clear that the Estate Trustee role is not a simple one. Most often, legal advice is necessary to make sure that mistakes are not made.
What happens to debt when you die Canada: Who is responsible for the debts?
All of your assets that are registered solely in your name make up your estate. Examples of such assets are bank accounts, like savings and chequing accounts, cash, real estate, stocks, etc. Your estate will then go through a process called probate to decide its value.
Before your assets can be bequeathed as you’ve requested in your will, your estate uses them to pay off your financial obligations. An executor takes care of these things. Only after your bills are paid off will your heirs inherit anything.
If there aren’t enough assets in your estate to pay off your liabilities, any co-signer will be on the hook for the specific debts they co-signed on. If the estate is insolvent, then the Estate Trustee would be forced to make an application to the bankruptcy court for authority to assign the deceased’s insolvent estate into bankruptcy.
Yes, a dead person can become bankrupt, believe it or not. I have done several bankruptcies of deceased estates. That is what happens to debt when you die Canada if there are not enough assets that when liquidated, will pay off all of the debts of the deceased.
What assets are safe from creditors?
Typically retirement accounts and insurance policies, as long as they name a designated beneficiary, are safe from creditors. However, they are not safe if the deceased designated his or her estate as the beneficiary.
what happens to debt when you die canada
What happens to debt when you die Canada: There are different types of debt
Mortgages:
Mortgages are secured obligations, meaning that they’re among the first to claim your assets to get paid. If someone inherited the home or the home was owned jointly and each owner was registered as joint tenants, then they’re responsible for the mortgage. It can be considered not only as a secured loan but, in the case of joint tenants, a joint mortgage loan!
Auto loans, like mortgages, are another example of secured loans, meaning that they’re among the first to claim your asset(s) that were pledged as security for the loan, to get paid. If the estate can’t pay off the amount owing and you have a co-signer or guarantor responsible for what is now a joint debt, they will be responsible for the car loan. If the loan isn’t repaid by the estate or the co-signer (if there is a joint debt holder), the car will likely be repossessed.
When the lender sells the vehicle, if the net proceeds (net of all recovery and enforcement costs) yields insufficient funds to pay off the loan, then the estate (and co-signer) are responsible for this shortfall.
Credit Card Debts:
Credit card debt, unlike a mortgage or a car loan, isn’t secured. This means that if the estate can’t pay back the amount owing on each credit card, the creditors are out of luck. However, if there is a joint credit card holder, who holds a supplementary credit card then they are responsible to pay back the debt.
Many people don’t know that merely holding a supplementary credit card makes that person a joint debt holder who is responsible to repay the balance owing in full. That is a term of a standard credit card agreement of the credit card issuer. Credit card insurance is available to take care of credit card debt, but it is costly. Normally the bank lines up an insurance company to provide that life insurance policy coverage.
I hope you enjoyed this what happens to debt when you die Canada Brandon Blog. The Estate Trustee is the administrator charged with the responsibility of properly administering the estate of the deceased.
Don’t pass on your financial obligations to anyone else after your death; it’s important to deal with debt while you’re alive. Give us a call today. The Ira Smith Trustee & Receiver Inc. Team can help you get rid of debt Starting Over, Starting Now.
We understand the pain you are in because of too much debt. We also know how to end your pain. Don’t pass that pain on to your loved ones. You don’t have to wonder what happens to debt when you die Canada.
Contact us today so we can begin healing you to lead a stress-free life.
Being debt-free will give you the peace of mind that all is in order and that you’re not burdening your heirs with financial hardship.
With filing for bankruptcy in Canada, if a person’s discharge is opposed, there must be a court hearing. At the hearing, the court will decide if the discharge will occur. Once the discharge is granted, the person will be relieved of his or her debts as of the day he or she filed for bankruptcy (with certain exceptions) and will be free to start rebuilding his or her credit rating and financial future.
Filing for bankruptcy in Canada: Court of Appeal for Ontario decision
The purpose of my blog is to describe a March 2018 Court of Appeal for Ontario decision, Kuczera (Re), 2018 ONCA 322 (CanLII). This is an important decision in how mental health issues intersect with the bankruptcy discharge process.
Mr. Kuczera’s financial problems began with a costly and hotly contested divorce proceedings. With his debts mounting and the divorce proceedings continuing, Mr. Kuczera filed a consumer proposal. As a result of the ongoing family law battle, his mental health deteriorated and he became clinically depressed. He was no longer able to cope with life and was unable to work.
Filing for bankruptcy in Canada: Defaulting on the consumer proposal
Filing for bankruptcy in Canada: The bankruptcy discharge hearing
Mr. Kuczera represented himself in Bankruptcy Court on his discharge hearing. He tried to show the Registrar in Bankruptcy that he tried his best to live up to all of his bankruptcy obligations to the licensed insolvency trustee, but due to his mental health issues, he could not. Unfortunately, his evidence was only a basic report from his psychiatrist.
The Registrar did not grant an absolute discharge. Rather, based on the evidence in front of her, she ordered that a discharge be granted only after payment of the outstanding balance under the consumer proposal, and one other minor condition. The Registrar went on to state that he was held responsible for his situation.
Filing for bankruptcy in Canada: Appeal of the Registrar’s decision
Mr. Kuczera was able to hire a lawyer to appeal the Registrar’s decision to a Judge sitting in Bankruptcy Court. The Judge refused to consider fresh evidence in the form of more descriptive psychiatric reports supporting the summary findings presented at the original discharge hearing. The Judge dismissed Mr. Kuczera’s appeal.
Filing for bankruptcy in Canada: Appeal of the Judge’s decision
He now had his lawyer appeal the Judge’s decision to the Court of Appeal for Ontario. The Court of Appeal disagreed with the approach of the appeal judge. The Court of Appeal could not understand why the appeal judge would not allow the more detailed reports from Mr. Kuczera’s treating psychiatrist. These new detailed reports were further to the summary report provided to the Registrar.
The Court of Appeal went on to say that neither the Registrar nor the appeal judge gave proper weight to the psychiatric evidence. It also went on to say that a discharge condition requiring Mr. Kuczera to pay the payments due under the consumer proposal would not be “difficult”, as described by the Registrar. Rather, the Court of Appeal said that it would be “crushing”.
Filing for bankruptcy in Canada: What the Court of Appeal found
So the Court of Appeal found that:
the appeal judge erred by not considering the fresh psychiatric report evidence;
The need for the bankrupt to pay the balance of the consumer proposal payments would be crushing; and
The fresh psychiatric evidence was compelling.
Given the length of time that Mr. Kuczera remained in bankruptcy, and considering the above factors, the three-judge panel in the Court of Appeal for Ontario unanimously agreed that Mr. Kuczera gets his absolute discharge from bankruptcy.
Filing for bankruptcy in Canada: Mental health issues
Mental health issues are at the forefront of the news. Most recently, both Kate Spade and Anthony Bourdain committed suicide because of mental health issues. I believe that as society recognizes mental health issues as a legitimate illness or disability, you will see it influencing Bankruptcy Court decisions. That certainly was the case for Mr. Kuczera.
Filing for bankruptcy in Canada: Debt after your bankruptcy discharge
After receiving your bankruptcy discharge, NOBODY can try to collect this debt again. Discharged debt cannot appear on your credit report as anything other than a zero balance. Sometimes collection agencies report a discharged debt to the credit bureaus, hoping you will pay off the debt and not correct the information with the credit bureaus. The debt will still incorrectly appear on your credit report.
Filing for bankruptcy in Canada: Discharged debt and your credit report
When discharged debt re-appears on your credit reports, it affects your credit score and can result in higher interest rates or credit denials. Sometimes debt collectors buy discharged debt, knowing they can’t collect on it, but hoping you don’t know that.
These debt collectors may tell you that the discharge doesn’t apply to them because they are not the original creditor. Don’t be fooled. Creditors who attempt to collect a discharged debt are violating a court order. The court can stop them, and they may even have to pay damages. Discharged debt should not show on your credit report except as a zero balance – Monitor your credit report and be proactive. A discharged debt is not valid and is not collectible.
Filing for bankruptcy in Canada: Do you have too much debt?
I hope that you have found this information helpful. Bankruptcy is the last thing we try to do for a person in financial difficulty. If caught early enough, we can get involved in a debt settlement restructuring program for you.
The Ira Smith Team knows that you are worried because you are facing significant financial challenges. The stress placed upon you is enormous. We understand your pain points.
Contact the Ira Smith Team today. We know how to solve your financial challenges, remove your pain and put things back on a healthy path. Contact us today for your free consultation so that we can save your life, Starting Over Starting Now.
Last week we told you about professional athletes who earned enormous fortunes and blew it all on lavish, unsupportable lifestyles. The end result was bankruptcy. There is another group of professional athletes who also earned millions and ended up using a bankruptcy alternative to avoid bankruptcy, but not because they blew it all. They were trying to shield their money from taxes through complex offshore tax structures. However, the Canada Revenue Agency (CRA) reassessed them and now they had a huge tax bill and needed debt forgiveness CRA.
This is certainly not a new phenomenon. The newspapers and tabloids often feature stories about famous people who the tax department reassesses for using complex tax structures designed by agents, managers, accountants, and lawyers. In this case, our very own Olympian, Donovan Bailey, had to file a proposal under the Bankruptcy and Insolvency Act (Canada), as a result of an offshore tax scheme to try to beat the CRA. And, sadly, he’s not the only one.
Debt forgiveness CRA: Her Majesty outruns the offshore tax scheme
The offshore tax scheme that nearly bankrupted Donovan Bailey was designed to lessen the amount of income tax to be paid. Donovan Bailey made a “charitable donation”. It went through a complicated series of transactions. The money made its way back to Mr. Bailey, through an offshore account. It was supposed to come back in tax-free.
The problem was that the tax authority reassessed Donovan Bailey. They said the charitable donation was no more than a sham to avoid paying taxes. Instead of tax-free money Donovan Bailey found himself in debt to the CRA to the tune of $2.3 million in unpaid taxes and ended up in bankruptcy court.
Debt forgiveness CRA: CRA gets tough
The CRA has vowed to get tough on tax evaders and the tax professionals who help them. CRA threatens with increased fines and jail sentences. They have a strategy to root out high-risk wealthy Canadians and corporations that stash cash in offshore accounts to avoid taxes. And, they’re spending $444 million on these measures, and expect to recoup $2.6 billion in added revenue over five years.
Debt forgiveness CRA: What to do if you have too much debt
The Ira Smith Team has a cumulative 50+ years of experience dealing with diverse issues and complex files. We deliver the highest quality of professional service. Don’t settle for less. Give us a call today and Starting Over, Starting Now you can overcome your financial difficulties.
In this vlog, I try to provide answers to the most asked questions about a consumer proposal in Canada (the Proposal, the Plan or CP). A Proposal is an official method controlled by the Bankruptcy and Insolvency Act (BIA) readily available to people.
Consumer proposal in Canada: Collaborating with the trustee
Collaborating with a licensed insolvency trustee (LIT) serving as administrator of your Plan you make an offer to:
pay your creditors part of the total you owe them over a specific duration;
expand the length of time you need to repay that part of your financial debts; and
Consumer proposal in Canada: The consumer proposal payments
Payments are made with the LIT. The LIT uses that cash to pay each of your creditors their in a proportionate share based on the proven claims filed by them with the LIT. The financial obligations need to be repaid through the CP within 5 years.
Consumer proposal in Canada: Who qualifies?
You need to be a person and not a corporation. Your overall financial debts need to not surpass $250,000. This limit doesn’t include debts from a home loan, mortgage or credit line supported by your primary house. You need to likewise satisfy the insolvency requirements. This implies that:
your financial debts value is above the value of your possessions;
if you sold off your assets you wouldn’t adequate funds to repay your financial obligations completely;
you are having difficulty making a complete settlement on every one of your financial obligations monthly
Making just the minimal month-to-month payments as disclosed on your credit card or loan statements do not count as repaying your financial debts.
Consumer proposal in Canada: What is the price of a consumer proposal? Your Plan payments also cover the fee for the Proposal. There are no different costs either for:
submitting a Plan; or
charges paid to the LIT to administer your CP
Consumer proposal in Canada: How long will my consumer proposal take?
A Plan could last for no more than 5 years. You could reduce the term either by boosting the amount of your month-to-month repayment or by providing a round figure repayment all at once. The one-time repayment makes sense if you can get an adequate loan from either a financial institution or family member.
Consumer proposal in Canada: What are the steps of a consumer proposal?
A CP permits you to pay all or part of your unsecured debt in regular monthly amounts over time. The maximum length of time is 5 years. In drafting your Plan, the LIT must make sure that your consumer proposal provides a better result for your creditors than in your bankruptcy. The normal steps are:
A LIT will consult with you and develop a Plan that you both think will work for both you as well as serve the needs of your financial institutions and others you owe money to
The LIT will mail out the CP to your creditors who then have 45 days to approve or deny it
The creditors can approve or deny your Plan at a meeting of creditors.
Typically, in a CP in Canada, there is no need to hold a meeting.
Consumer proposal in Canada: Can a consumer proposal eliminate debt collectors and avoid my income from being seized?
Yes, as soon as the filing of a Plan happens, all creditor seizure activities stop. However, it does not stop family law payments under a proper settlement agreement or court order.
Consumer proposal in Canada: In a consumer proposal will I hand over my home and my auto?
KEEP IN MIND: If you were to surrender your secured properties after declaring your Proposal, you will not be relieved from any type of financial debt shortfall since it happened after the declaring of your consumer proposal. Make certain that if you are offering up secured assets, wait until they have started their enforcement and are claiming any shortfall against you BEFORE you give your CP. Normally lenders who register a mortgage or other security for a loan are outside the Plan process. It is the equity you have in your residence or car that must be considered when you and the LIT first sit down to work out a budget. This will affect the type of offer you are going to make. If you have enough income to keep paying the mortgage against your home and/or your auto loan and you wish to keep the assets, you can do so. Again, your equity must be considered in the offer you make to your creditors. Your income and expenses must be reviewed to make sure you can afford all these expenses plus the monthly payment under your Proposal.
Consumer proposal in Canada: Will I need to surrender my charge cards?
Generally, you should be ready to offer every one of your charge cards to the LIT and you will not be able to ask for a brand-new charge card until after your Plan is finished. You nevertheless can make use of a guaranteed/secured credit card throughout this CP process.
Consumer proposal in Canada: If I miss out on repayment will I automatically become bankrupt?
We highly recommend you to make your repayments consistently and on time. If you drop 3 behind, your consumer proposal will certainly finish. If that were to happen, you will no longer have protection from your creditors and their collection efforts. However, you will not automatically become bankrupt if you default on your Proposal.
Consumer proposal in Canada: What should I do if I have excessive financial debt?
If you’re thinking about a debt settlement program or are looking for ways to end your financial debt call Ira Smith Trustee & Receiver Inc. We understand the stress and pain your financial problems are causing you. We feel your pain and we can end it for you. Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you walk through our door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress-free life.
The cost of living in Canada: Introduction
