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CONSUMER PROPOSAL IN CANADA: CONSUMER PROPOSAL TORONTO ONTARIO REVIEW

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consumer proposal in canada

Consumer proposal in Canada:  Introduction

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
  • stay clear of bankruptcy

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 administering your CP will send the Proposal to the Office of the Superintendent of Bankruptcy
  • 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.

 

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FORMER PRO ATHLETES WHO ARE BROKE: EARN OVER $400 MILLION & GO BANKRUPT?

former pro athletes who are brokeFormer pro athletes who are broke:  Introduction

I know that earning over $400 million and going bankrupt seems unbelievable to most of you, but it’s true. Just ask Mike Tyson. And he’s not the only one. There are many former pro athletes who are broke.  They have made fortunes and lost them, with nothing to show for it.  No secure investments, no retirement fund, nothing put away for a rainy day.

Former pro athletes who are broke:  They don’t know where the money went

They wake up one day and the money’s all gone, the credit cards have been cancelled, the bank has foreclosed on the mansions and the fleet of exotic cars is being repossessed. The worst part is that most of them don’t even know where the money went.

Former pro athletes who are broke:  Evander Holyfield

It’s easy to blow through a fortune. Evander Holyfield spent $230 million in no time flat. He bought a 235-acre Utah estate with 109 rooms that included at least one monthly electric bill of $17,000. There was also a $550,000 loan he took out to pay for landscaping; $200,000 in back taxes, plus alimony and child support for three ex-wives and 11 children.

Former pro athletes who are broke:  Boris Becker

It adds up fast when you’re spending like a drunken sailor. Boris Becker is the latest of the sports stars to declare bankruptcy in spite of enormous earnings. The marriages, girlfriends, children and an unsupportable lifestyle finally caught up with Boom Boom. The list of these bankrupt athletes goes on and on and on.

Former pro athletes who are broke:  According to Charles Barkley….

​Charles Barkley estimates that 60% – 70% of professional athletes go broke and there are many reasons.

  • Buying lavish gifts and giving money to family and friends
  • Unsupportable lifestyles
  • Mansions around the world
  • Yachts
  • Exotic cars
  • Bad business ventures
  • Bad money managers
  • Not understanding financial matters
  • Zero savings
  • No rainy day fund
  • No retirement plan
    ​

Former pro athletes who are broke:  So what does it all mean?

Having enormous amounts of money is no guarantee of financial security as you can see.  And financial problems can plague both the rich and not-so-rich.

If you’re having trouble paying the bills, don’t wait until you’ve hit rock bottom.  The earlier you seek help, the more options will be available to you.  With immediate action and the right plan, the Ira Smith Team can have you on your way to financial peace of mind Starting Over, Starting Now.  Give us a call today.

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BANKRUPTCY AND INSOLVENCY ACT: COURT MAY NOT LISTEN TO BANKRUPTCY TRUSTEE

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Bankruptcy and insolvency act:  Introduction

I want to describe to you a very interesting case that was recently decided in the Court of Appeal of British Columbia, Randen v. HPCB-Online Ltd., 2018 BCCA 123 (CanLII).  The bankrupt’s creditors applied to have the transactions reviewed under section I00 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”).  One of the areas of contention was that the judge in the lower court found he could not rely on the bankruptcy trustee’s opinion of value in the circumstances.

The applicants, Shawn and Edvige Cody, were the principals of the bankrupt, Half Price Computer Books Ltd. (“Half Price”) and the applicant HPCB-Online Ltd. (“Online”). About ten days before Half Price was assigned into bankruptcy, Online bought roughly 10% of the book inventory of Half Price.

The application under s.100 was originally made by the bankruptcy trustee, and later transferred to creditors David Randen, The Innovative Alliance Inc., J.R. Trading Co. Inc. and Fairmount Books Inc. under section 38 of the BIA. The lower court judge found Online acquired property from Half Price at much less than reasonable market value. The lower court judge ordered Online and the Codys to pay back the difference which he established to be $287,000.

Bankruptcy and insolvency act:  Section 100

Section 100 of the BIA. The section was repealed in 2009, but applies on transactions before then. The main purpose of that section was for reversing the effects of non-arm’s length transactions that reduced value from the estate of a bankrupt person or company.

Until 2009, s. 100 of the BIA provided:

“100 (1) Where a bankrupt sold, purchased, leased, hired, supplied or received property or services in a reviewable transaction within the period beginning on the day that is one year before the date of the bankruptcy event and ending on the date of the bankruptcy, both dates included, the court may, on the application of the trustee, inquire into whether the bankrupt gave or received, as the case may be, fair market value in consideration for the property or services concerned in the transaction.

(2) Where the court in proceedings under this section finds that the consideration given or received by the bankrupt in the reviewable transaction was conspicuously greater or less than the fair market value of the property or services concerned in the transaction, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the bankrupt or against all those persons for the difference between the actual consideration given or received by the bankrupt and the fair market value, as determined by the court, of the property or services concerned in the transaction.”

Bankruptcy and insolvency act:  The questionable transaction

The brand-new company Online bought roughly 10% of Half Price’s stock, or 44,000 books. These books were clearly selected by Mr. Cody as the best-selling. Online paid $21,964.50 for these books, about $0.50 CDN for each publication. The books and records of Half Price, including an e-commerce website which Half Price created at its expense and was the property of Half Price, were copied and used by Online to aid in the sale of these publications at the instructions of Mr. Cody.

The Half Price sorting software and mailing software program that was later used to retail these books by Online, which software was the property of Half Price, was duplicated and taken or transferred to Online. Additionally, there was a claim that the goodwill of Half Price was made use by Online.  There was no evidence that Online paid anything for the use of the software and goodwill.bankruptcy and insolvency act 1

Bankruptcy and insolvency act:  The lower court’s first problem

The lower court found that Online paid conspicuously much less compared to fair market value.  It must pay to the bankruptcy Estate for the benefit of the creditors which he determined to be $287,000. The lower court judge noted that this was not a case in which the trustee was driving the application.  The trustee assigned the action to specific creditors.

Normally, the bankruptcy trustee would have to submit evidence to the court in a section 100 application as to the value of the property in question.  Since the trustee had assigned its interest to specific creditors, there was no report from the trustee. The creditors said the value of the joint assets is close to $1.07 million.  The lower court had to look at the trustee’s actions in determining what the trustee must have thought the value was.

The lower court acknowledged the need in s. 100 to accept the trustee’s viewpoint about the value, unless other values are confirmed.  The court however discovered it could not depend on that viewpoint in this case. The first problem was that they were standing in the place of the trustee.  The trustee had determined that the software and other assets was of no value. In addition, the trustee did not figure out that there was any kind of goodwill value to this.

Bankruptcy and insolvency act:  The lower court’s second problem

The second problem was that Half Price could have moved the best publications to Online at the direction of the Codys. The remaining books, being 90% of the book inventory, sold for around the same value as the 10% of publications. Though this is not entirely determinative of worth, it shows that the inventory, software and goodwill was not as valuable as these creditors represented to the lower court..

The BIA required the lower court judge to accept the trustee‘s viewpoint as to the value, or in this situation the point of view of those creditors, unless other values can be confirmed.  The lower court considered the trustee’s activity when the bankruptcy first happened, that those assets had no value. The lower court found that it could not rely on any trustee viewpoint on worth.

Bankruptcy and insolvency act:  The Court of Appeal

The Court of Appeal confirmed that a trustee in bankruptcy is an officer of the court and has an obligation to offer all relevant facts to the court in a dispassionate, non-adversarial fashion. It went on to say that the creditors do not have the same responsibilities.  They got the right to pursue the proceedings in their very own passionate way. The Court of Appeal went on to say that it was open to the court to decline the trustee’s opinion on the evaluation of a fair market price.

The Court of Appeal finally concluded that although the Court did not have to accept the trustee’s opinion of value, there was insufficient evidence for the lower court judge to place a value.  So the Court of Appeal ordered a new trial in the lower court. Now both the creditors, and certainly the trustee, will have to submit evidence about what the fair market value was, in their respective opinion.  That way, the lower court will be able to rely on experts, an officer of the court and real evidence.

Bankruptcy and insolvency act:  The licensed insolvency trustee

Licensed insolvency trustee is the relatively new name for a bankruptcy trustee.  Is your company experiencing financial problems? Are you, or somebody you care about, experiencing personal financial problems?

Bankruptcy is the last thing we try to do for a company or person in financial difficulty.  If caught early enough, we can get involved in a turnaround situation for your company to keep jobs and value.  We also carry out debt settlement plans for people.

If you’ve personally fallen victim to money mistakes and are in pain and stressed out, it’s time for professional help now too.

The Ira Smith Team knows that you are worried because you are facing significant financial challenges. Your business provides  income not only for your family. Many other families rely on you and your company for their well-being. The stress placed upon you due to your company’s financial challenges is enormous. We understand your pain points.

Contact the Ira Smith Team today.  We know how to solve both corporate and personal 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 company, Starting Over Starting Now.

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FINANCIAL HARDSHIP: ARE YOU GOING BROKE SPLURGING ON THE KIDS?

financial hardship
financial hardship

Financial hardship:  Introduction

As parents, you want to give your kids every advantage, but how much is too much? And do you really need to splurge on non-necessities if it’s putting a financial hardship on the family? It’s ironic to hear rich and celebrity parents say that they’re really trying to give their children a normal upbringing, without over-the-top excess; while on the other side of the fence, average, working families are making birthday parties that cost thousands of dollars. Does your child’s birthday party really have to feature pony rides, live entertainment and loot bags that cost a fortune? Clearly the days of BBQ and “pin the tail on the donkey” have gone the way of the dodo.

Financial hardship:  Strain on the family budget

Extracurricular activities can also put a strain on the family budget. How many extracurricular activities are your kids participating in? And what are these activities costing you? According to an Ipsos poll commissioned by Global News:

  • Canadian parents spent an average of $1,120 to enroll their children in extracurricular, community and sports activities during the last school year
  • For some, the cost of a busy after-school schedule was even higher, with nearly one in 10 parents shelling out over $2,000
  • Many families are overstretched to pay for it all, with over half of parents saying the cost of kids activities puts a strain on family finances
  • Nearly a third of respondents who were Gen X parents (between the ages of 35 and 54) said they had taken on debt to pay for things like dues, fees and equipment.

If your child is in a competitive dance program, costumes alone can cost thousands of dollars. Hockey is extremely expensive and the costs of competitive hockey are not for the faint of heart.

Financial hardship:  Be realistic

Parents, you have to be realistic about what you can or can’t afford. Going into debt for birthday parties and after school activities makes no sense. Scale back. Make a birthday party that makes financial sense for the family, not the neighbours. Choose an after school activity with your child that they’ll enjoy and you can afford. Not only will you save a lot of money, but you’ll have some money to put away for your child’s education – a better investment in their future than a birthday party or extracurricular activities.

Financial hardship:  Are you in too much debt?

If you’re already overextended and feeling the pinch of financial hardship, don’t wait until the situation becomes dire. Contact the Ira Smith Trustee Team as soon as possible. We can help you manage debt and put you on a path to debt free living Starting Over, Starting Now. Make an appointment today for a free, no cost, no obligation consultation. You’ll be glad that you did.

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BUSINESS DEBT ADVICE CANADA: TROUBLE SHOOTING DEBT STRAPPED COMPANIES

business debt advice canada

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Business debt advice Canada:  Introduction

When it involves money, timing is everything. Your business is getting closer to the top of its banking line and your banker is asking for more information than usual.  This is where your heart starts pounding faster and your stress level increases. This is the moment you can seize to right size your business or else it very well may fail.  The purpose of my blog is to give you business debt advice Canada.  

Business debt advice Canada:  Relationships can become strained

Relationships can become strained with your lender and suppliers when business debts are mounting and your company is facing a cash crisis.  However, there are actions a borrower can take to prevent calamity. Reassuringly, most of the time, lenders would rather support you if you have a viable business plan to correct the situation going forward, and not putting you out of business.

I hope the suggestions below shows you that you should look at this as an opportunity to fix your business.  I have found that in trying times when a company has mounting debts and insufficient cash, there is no replacement for good management.  

A solid business plan showing how the company will turn itself around is what your lender wants to see.  Communication with your lender and your suppliers is key. Do not hide from the problem.  Face it head on. If your business plan shows you can turn things around, you will feel like you are dealing from a sound platform and not just running scared.

Business debt advice Canada:  Take emotion out of the equation

These situations generally become more tense before they become better.  You, your lender and your unpaid suppliers all want the same thing. You all want the company to be successful and profitable, and to be able to pay all of its bills in full when due.  Your lender and suppliers are not out to get you. However, if they do not: (i) know that you have solid business turnaround plan; and (ii) receive ongoing information to show what steps you are taking to fix the problems, they will have no choice but to turn off the tap.

I have unfortunately seen too many companies fail in their business restructuring efforts due to lack of communication.  The turnaround plan may have been sound, but nobody knew.  This only creates ill will among the stakeholders and a result that nobody wants.

Business debt advice Canada:  Informal and formal turnaround options

I must preface this section by saying do not be afraid to consult with a licensed insolvency trustee (LIT) for business debt advisory services.  Trustees’ training makes them expert in assessing troubled business situations and implementing turnaround steps.  A LIT does a lot more than just bankruptcy.

You will find it helpful to have a professional trustee assist you in developing your turnaround business plan, implementing it and keeping management focussed and accountable.  You will also find it very helpful to have a LIT go with you for meetings with your banker;  there will be many of those!

Business debt advice Canada:  Troubleshooting

Fully understanding the full current status of the company showing signs of financial trouble is key. Things that I focus on early on when looking at troubled companies are:

  • What are all the different assets of the company and where are they located?
  • Are all the assets properly insured?
  • What is the going-concern value and the estimated liquidation value of the assets?
  • What is the full extent of all liabilities and business debt levels?  This includes amounts owing to the government for:
  • What is the status of premises lease(s) for both remaining term and cost?
  • Is the cost of the leased premises above or below current market value?
  • Has anyone personally guaranteed bank debt, the landlord or any other creditor that would affect turnaround decisions to be taken?
  • Has a current crisis cash-flow statement and turnaround business plan been developed and tested for reasonableness?
  • What are the causes of the company’s current financial problems and how likely are those causes to recur?

This list is not meant to be exhaustive.  No doubt other questions will arise as answers are found for these first questions.  However, this is the information I first want to get before embarking on developing a restructuring plan.

Business debt advice Canada:  Informal restructuring and turnaround

If the business problems have been identified early and have not been allowed to fester, then an informal restructuring may very well work.  Perhaps all that will be needed is some accommodation from the lender both in time and money.  Banks are quite willing to enter into a forbearance agreement with their corporate client allowing the time (and sometimes more money) to see if the turnaround plan will work.

The bank would rather have a successful turnaround than shut you down.  The bank needs to know that management has the bench strength to pull off the restructuring.  If not, they will expect you to have a lawyer experienced in turnarounds and a LIT active on your team.

Companies that have relatively few trade suppliers may also be able to work out a restructuring of their unsecured debt.  The fewer people you have to talk to and get onside, the higher the likelihood of success. Of course, the trust developed from earlier dealings is very important.  If there is no trust, or if there are just too many suppliers, an informal restructuring will not work with them.

Business debt advice Canada:  Formal restructuring

The Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA) and the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (CCAA) are the two primary Federal statutes that govern corporate restructuring in Canada.  The requirements of each statute and the exact processes themselves are weighty enough to deserve their own blog.  However, the takeaways from this blog on formal restructuring are:

  • In a formal restructuring, I still go through the checklist I have identified above of issues to look into.
  • Under the BIA, the restructuring section is Part I Division III of the BIA
  • If a restructuring under the BIA does not receive the necessary creditor AND court approval, the company will automatically be bankrupt
  • In a formal restructuring, the company stays in control of its assets and business operations
  • A formal restructuring invokes a stay of proceedings so no party can begin or continue litigation or enforcement action against the company
  • A company needs to have at least $5 million in debt to restructure under the CCAA
  • A BIA restructuring will be less costly than a CCAA restructuring because the company does not have to go to Court for approval every time it wishes to do something
  • The term “bankruptcy protection” in Canada, refers to a formal restructuring under either the BIA or CCAA.

Business debt advice Canada:  What to do if your company has too much debt

Is your business facing financial problems?  Perhaps your company is in need of a restructuring.  The Ira Smith Team can develop a restructuring plan which may or may not include the need to file for bankruptcy protection.

The Ira Smith Trustee & Receiver Inc. Team understands the pain you are going through trying to keep your company alive while trying to negotiate with potential purchasers.  We understand that you are playing beat the clock, and the pain and stress you are feeling thinking that you may just run out of time.  The bankruptcy protection process can ease this stress and provide a level playing field so that no potential purchaser takes advantage of you.

The Ira Smith Team has a great deal of experience in running a stalking horse stalking horse asset purchase agreement.  The stress placed upon you due to your company’s financial challenges is enormous. We understand your pain points.  Call the Ira Smith Team today for your free consultation.  We can end your pain and put your company back on a healthy profitable path, Starting Over, Starting Now.

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INTEREST ON CREDIT CARDS CALCULATOR: WHAT A LOSS OF YOUR INCOME MEANS

interest on credit cards calculator

Interest on credit cards calculator:  Introduction

As Benjamin Franklin so wisely stated in 1789, in this world nothing can be said to be certain, except death and taxes. Life is full of surprises – not all of them pleasant. Are you financially prepared in the event that life deals you a low blow – job loss, injury or a health crisis? And, if so, would you turn to credit cards to support your lifestyle?  Do you really know how to calculate the interest on your credit card balances? Below I will explain how an interest on credit cards calculator works.

Interest on credit cards calculator:  And the survey says

According to a recent survey by Forum Research:

A Manulife Bank survey of Canadian homeowners reports that:

  • 9% have access to $1,000 or less
  • 14% have not put away any funds

Interest on credit cards calculator:  An alarming Canadian trend

These two surveys bring to light an alarming trend. With no emergency fund, or any savings to fall back on, many Canadians who find themselves in a crisis with a sudden loss of income turn to living off credit cards. According to Bankruptcy Canada:

  • Only 25% of Canadians pay off their credit card debt in full each month which means that 75% of Canadians carry a balance on our credit cards each month
  • This can result in paying several thousands of dollars each year in interest

Interest on credit cards calculator:  How the interest is calculated

The annual interest rate on credit cards ranges from 19% to almost 30%.  Credit card companies actually calculate interest on a daily basis. Therefore, if you do not pay the full balance on time by the due date, the interest actually compounds on a daily basis.  That is why once balances are overdue, or you are only making the minimum monthly payments, you can never get catch up. The daily compound interest accrues too quickly.

The Financial Consumer Agency of Canada provides a free online credit card payment calculator.  Check it out by clicking here.

Interest on credit cards calculator:  What to do if you can’t keep up with your credit card payments

In fact, it can take a lifetime to pay off a credit card balance of a few thousand dollars if you’re only making the minimum payments. Living off credit cards is not the answer; getting professional help is. You need a trustee now. Many people fear that bankruptcy is the only option for serious financial problems, but that’s just not true. Although bankruptcy is an option, there are bankruptcy alternatives to consider:

Ira Smith Trustee & Receiver Inc. is here to help. We approach every file with the attitude that your financial problems can be solved given immediate action and the right plan. Give us a call today and Starting Over, Starting Now you can put your financial problems behind you and look forward to living a debt free life.

 

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AFTER BANKRUPTCY DISCHARGE CANADA:  LIVE WELL AFTER A BANKRUPTCY DISCHARGE

after bankruptcy discharge canada

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After bankruptcy discharge Canada:  Introduction

The purpose of my blog is to provide ideas and suggestions on how a person can fulfill one of the aims of the Canadian insolvency system.  That is to carry out successful financial rehabilitation and live profitably and happily after bankruptcy discharge Canada.

After bankruptcy discharge Canada:  You are not alone

In 2017, 122,198 Canadians went for either bankruptcy or a restructuring proposal.  The split was roughly even. These people and their families underwent significant financial and emotional pain. In January and February 2018 together, 19,082 Canadians went for either bankruptcy or a restructuring proposal.  The split favoured restructuring proposals slightly.

After bankruptcy discharge Canada:  Your financial slate is now clean

Your financial slate is wiped clean.  However, your credit score has taken a beating.  Now is the time to not squander the opportunity you have for financial rehabilitation.  Notation of your bankruptcy stays on your credit report for 7 years after your bankruptcy discharge.  In the case of a restructuring proposal, the notation remains on your credit report for 3 years after successful completion of your financial restructuring.

After bankruptcy discharge Canada: My 10 step program to live profitably after a bankruptcy discharge

So how can a discharged bankrupt hop on a rapid course to a bankruptcy rebound? Here are my suggestions:

  1. Use your bankruptcy experience to improve your financial education.  Take a course on practical money management.
  2. You won’t have any credit cards so you have to rely more on cash.  Use an envelope system so that every payday you segregate your cash into envelopes, each marked with an essential family expense.  Make sure the cash is used only for those essential purposes and no cheating. No borrowing from the envelopes!
  3. Points 1 and 2 above lead naturally into the next point.  Sit down with the entire family and work out a monthly budget.  Your total expenses cannot be more than your total income, after income tax, for the month.  If everyone is involved in setting it up, then they will all understand if you just can’t afford something in a certain month.  Also, they will all be helping you stay on budget.
  4. You do need to find a way to start rebuilding credit.  Obtain a secured credit card.  Not the drug store variety, but the kind issued by a real credit card company.  You have to deposit funds with the credit card issuer and then you get a credit limit equal to the funds deposited.  Use that credit card each month, but pay off the FULL balance each month. The credit card company then reports to the credit reporting agencies that you are using credit wisely.  Over time, this will improve your credit score.
  5. Always remember the behaviours that got you into financial trouble in the first place and don’t repeat them.  If it was an event outside of your control like job loss or a medical emergency, it was not your behaviour that was the cause of your financial problems.
  6. Establish SMART goals. Specific, Measurable, Achievable, Realistic and Timely goals.  Setting and reaching your goals will certainly make you an economic success.
  7. Begin building up savings. You need to be financially prepared for a life emergency.   As a bare minimum, begin setting up a reserve so that you can withstand a 6 to 9 month emergency that increases your expenses or reduces your income.
  8. Start investing in an RRSP using an RRSP loan.  Take out a small RRSP loan. Use your tax savings to pay it down, and work into your budget repaying the rest of the loan, with interest, during the year.  Do the same thing the following years. Not only will you build up RRSP savings, the reported loan repayments will improve your credit rating because you are using credit wisely again.
  9. Purchase based only on your needs that are in your budget;  never on your “wants”.
  10. Do not purchase anything on impulse.  Research, research and research to make sure that you are getting the best deal possible.

After bankruptcy discharge Canada:  The takeaway

The takeaway? It is not easy to recover after bankruptcy discharge Canada.  It is a series of small steps using modified behaviour and healthy money management skills.  But it is possible. I have seen many of my past clients do it. There is not a magic pill you can take.  It is a matter of concentrating and working on moving on and learning from your past mistakes. Working at it one day at a time, you will regain your self-respect and feeling of self-worth by restoring your financial and credit report health and wellness.

After bankruptcy discharge Canada:  What if 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.

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Brandon Blog Post

MONEY MANAGEMENT MISTAKES: AVOID MONEY MISTAKES – MISTAKES COST MONEY

money management mistakes

Money management mistakes:  introduction

No matter how much money you have, you can still get into financial trouble by making money management mistakes. Just follow the news and on a regular basis you’ll hear about a celebrity who you thought was worth millions and is now filing for bankruptcy. We have also all heard about retired athletes money errors.

Money management mistakes:  Good income means nothing

It’s not enough to make a good wage; it’s what you do with it that matters. I recently read a story of a woman who worked as a secretary her whole life and passed away leaving a multi-million dollar estate.

Money management mistakes:  5 money mistakes to avoid

Here are 5 financial mistakes that can really hurt your future:

  1. Live on your money; not on credit: It’s so easy to make purchases that you can’t afford when you use plastic instead of money. It’s really important that you don’t spend what you don’t have.
  2. Make a budget and stick to it: Everyone should have a budget. It’s the only way you’ll really understand how much money is coming in and what’s going out. I think you’ll be quite surprised at what you’re actually spending and what you’re spending it on. Without a budget to rein you in, it’s easy to lose control.
  3. Have a rainy day fund: Everyone at some time in their life is going to have a rainy day. It could be a job loss, health issue, major repair to the house or car or another unforeseen circumstance that will need a large amount of money. Unless you plan for the unexpected, you could be significantly impaired financially.
  4. Keeping up with the Jones: Are you worried about keeping up with the neighbours and living in a house beyond your means, driving cars that are too expensive and spending way too much money to give the impression of having money? This is a recipe for financial disaster.
  5. Indulging adult children: Are you going into debt supporting adult children? Borrowing money or dipping into your retirement savings so your kids can buy a house? Love your children, but don’t go into debt for them.

Money management mistakes:  We can correct your worst money mistakes

If you’ve already fallen victim to any of these money mistakes, it’s time for professional help now. Ira Smith Trustee & Receiver Inc. has helped people just like you in the Greater Toronto Area (GTA) for many years. Starting Over, Starting Now, we can help you overcome your financially difficulties. Contact us today.

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PERSONAL BANKRUPTCY CANADA FAQ: VIDEO – PERSONAL BANKRUPTCY FAQ CANADA

Personal bankruptcy Canada FAQpersonal bankruptcy canada faq: Introduction

Last week I provided you with my infographic, video and blog to give you information on the Canadian corporate bankruptcy Canada process.  I focussed on how an incorporated business files for a voluntary bankruptcy in Canada. This week, I want to describe how an individual files for voluntary bankruptcy.  I also want to answer what I have found to be the personal bankruptcy Canada faq. So look at the infographic and watch the video below.  Feel free to read in more detail below the video.

Personal bankruptcy Canada faq: Personal bankruptcy process in Canada

One of the most asked questions is “What is the bankruptcy process in Canada?”.  Last week our infographic and video described the corporate bankruptcy process in Canada. This week’s video describes the personal bankruptcy process in Canada.

VIDEO – Personal bankruptcy Canada faq

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Personal bankruptcy Canada faq # 1 – How do I recognize if I am in financial trouble?

If you are having difficulty paying your debts or have actually quit paying them altogether then you are in financial difficulty. Call an expert, a government qualified trustee to check your choices for reducing your debt and eliminating your stress and pain.

Personal bankruptcy Canada faq # 2 – Is bankruptcy my only alternative to get relief from debt?

The short answer is no; there are other options.  You should always start first with a free consultation with a licensed insolvency trustee (LIT or Trustee).  A LIT is a private party licensed by Industry Canada to carry out the restructuring and liquidation rules under the Canadian Bankruptcy and Insolvency Act (BIA). The LIT will discuss options with you to first avoid bankruptcy.  These options include:

  1. credit counselling;
  2. debt settlement;
  3. restructuring; and as a last resort
  4. bankruptcy

Bankruptcy does not deal with debts such as home mortgages, vehicle loan, spousal support or child support. Debt settlement firms try to bargain with your lenders to lower the amount owing.  They also prepare a payment plan for you to settle the debt; they do not “erase your debt”.  

The Canadian government is in the process of implementing new rules to curb the activities of some debt settlement companies.  Some of them charge you for reviews that a licensed insolvency trustee performs for free. They also sell you products you don’t need, under the guise of helping you improve your credit score.

Personal bankruptcy Canada faq # 3 – I have actually seen advertisements from Debt Settlement firms stating they could erase my debt without making use of a Trustee in bankruptcy. Just how does that work?

They don’t and their ads are misleading.  If you first have a free consultation with a LIT, you will learn that a number of choices available to you that include yet are not restricted to debt reduction including a consumer proposal.

Understand that these debt settlement firms are not licensed trustees.  Eventually, they stop charging you for things a LIT would do for free.  Then they ultimately hand you over to a LIT for either a consumer proposal or bankruptcy.  You could have just gone to see a professionally licensed Trustee to start with!

Personal bankruptcy Canada faq # 4 – Do I get approved for bankruptcy?

You qualify for individual bankruptcy in Canada if you are financially troubled, insolvent and owe greater than $1,000.

Personal bankruptcy Canada faq # 5 – Should I file bankruptcy?

Without the detailed information of your unique circumstance, that decision cannot be made. Get In touch With Ira Smith Trustee & Receiver Inc. for a complimentary no commitment session so you will understand your options for ending your debt pains, Starting Over, Starting Now.

Personal bankruptcy Canada faq # 6 – If I declare bankruptcy, will I lose my house and car?

There are certain claims that are not released by your discharge from bankruptcy.  Examples are home mortgages and car loans, if you choose to keep them.  It comes down to what is your equity in those assets. The answer to that question and your ability to cash-flow those debts will be the determining factor. There is a list of items that are exempt from seizure. Call Ira Smith Trustee & Receiver Inc. to find out more.

Personal bankruptcy Canada faq # 7 – Once I file bankruptcy, exactly what occurs to the money I owe?

Once you declare bankruptcy you will be required to surrender certain non-exempt assets to the Trustee. These assets will then be sold and the money earned from the sale of the assets distributed  among your creditors.

Personal bankruptcy Canada faq # 8 – Even though I have not located work in my field, I still owe on my student loans. Will my bankruptcy get rid of that debt?

Is your date of bankruptcy within 7 years of when you discontinued to be a full or part-time student?  If so, your student loan debt will not be released by your discharge from bankruptcy. In particular instances, you could be able to apply to the court for a discharge of your student debt obligations under the “hardship provision”.

Personal bankruptcy Canada faq # 9 – What takes place to my salary or wages throughout a bankruptcy?

Salaries and wages are not influenced by bankruptcy. However you will need to complete an Income and Expense Form noting your household earnings as well as costs. This becomes part of your budgeting procedure. If your earnings goes beyond specific requirements developed by the Office of the Superintendent of Bankruptcy (OSB) (“surplus income”), you will be required to pay part of the surplus income into the bankruptcy estate through the trustee.

Personal bankruptcy Canada faq # 10 – Canada Revenue Agency has actually frozen my bank accounts and has a garnishee with my employer on my earnings. Just how can I stop all that?

If you have filed personal bankruptcy, personal income tax debt is an unsecured debt. As soon as you’ve declared bankruptcy or made a consumer proposal, Canada Revenue Agency (CRA) cannot start or continue taking any kind of enforcement activity versus you, consisting of wage garnishment or freezing your assets. Your Trustee will alert CRA once you file.  The LIT will also advise both CRA and your bank and employer that any enforcement activity against you for your debt cannot continue.

Personal bankruptcy Canada faq # 11 – Will I still owe loan after I state bankruptcy?

Maybe, due to the fact that bankruptcy does not cover secured lenders – home mortgages, auto loan, student loans (if it is less than 7 years given that you discontinued to be a full or part-time student).  It also does not cover certain other debts:

  • penalties or fines enforced by the court;
  • spousal support;
  • child support; or
  • debts arising from fraud.

Personal bankruptcy Canada faq # 12 – How long will I be bankrupt?

The time you spend in bankruptcy will depend on whether this is a first or 2nd bankruptcy and if you have surplus income. Get In touch with Ira Smith Trustee & Receiver Inc. to find out more.

Personal bankruptcy Canada faq # 13 – Who will know that I have declared bankruptcy?

As soon as you declare bankruptcy your Trustee will tell your creditors, CRA, and the Superintendent of Bankruptcy. The two Canadian credit bureaus, Equifax and TransUnion, obtain filing records from the Superintendent of Bankruptcy, so it will be on your credit report.  

Bankruptcy filings are a public document. On top of that particular personal bankruptcies, those with non-exempt assets estimated to realize more than $15,000, need an ad in the “legal” section of a local newspaper.

Personal bankruptcy Canada faq # 14 – How will bankruptcy influence my credit score ranking?

An individual that files bankruptcy gets the lowest credit score ranking. Details of your bankruptcy that influences your credit report is inevitably eliminated many years after your discharge from bankruptcy.

Personal bankruptcy Canada faq # 15 – What does a LIT/Trustee do?

A Trustee is an individual or company licensed by the OSB to carry out mandates under the BIA such as bankruptcy, proposal, consumer proposal, summary administration bankruptcy and business reorganizations. A LIT is an officer of the Court. The Trustee has a duty of care for the rights of both the debtor and the creditors.

The LIT also makes certain that the legal rights of the insolvent/bankrupt are not abused.

Here is a listing of standard steps taken by a Trustee:

  • Reviews and counsels debtors on available alternatives
  • Prepares official documentation that is both filed with the OSB and used to tell creditors
  • Ensures the validity of creditors’ claims
  • Ensures that debtors are provided with mandatory counselling and access to mediation services if there is a dispute about any income they are required to contribute
  • Sells the debtor’s assets, except those exempt from seizure by provincial and federal laws, and hold the proceeds in trust for distribution to creditors
  • Administers the bankrupt estate from beginning to end
  • Assesses the debtor’s conduct both before and during a bankruptcy, as well as the cause(s) of the bankruptcy; and
  • Arranges for (and if necessary reports all the above to the Court) for the bankrupt’s application for a discharge (in the case of personal debtors)

Personal bankruptcy Canada faq # 16 – How do I pick the ideal Trustee?

Make an appointment for your free consultation.  Meet with the Trustee and ask any questions you might have about alternatives to bankruptcy, consumer proposal, debt settlement/restructuring, bankruptcy and/or the bankruptcy procedure. Get a feel for not only the answers you receive, but how interested does the Trustee seem in you as a person.  Can you see yourself relating well to that person. Does the Trustee make you feel comfortable and the type of person you want to work with.

If not, consult with a different Trustee firm and repeat the procedure until you find a Trustee that you really feel comfy working with.

Personal bankruptcy Canada faq # 17 – Is my spouse/partner impacted by my bankruptcy?

Your partner/spouse will not be financially affected by your bankruptcy unless they have co-signed a debt or own assets jointly with you. A creditor could pursue your spouse/partner for any debt that they have co-signed for.  This includes a mortgage on your jointly owned home.

Personal bankruptcy Canada faq # 18 – How will my bankruptcy impact my present divorce case?

In Canada, the bankruptcy process does not interfere with the majority of the divorce proceeding. The Trustee will stand in the shoes of the bankrupt spouse when it comes to the rights for either the equalization payment or the division of property.  All issues about spouse and child support and child custody issues carry on as if there was no bankruptcy at all.

Personal bankruptcy Canada faq # 19 – What is Chapter 7?

Chapter 7 is not applicable in Canada. It is the liquidation section of the U.S. Bankruptcy Code, the federal law governing bankruptcy in America.

Personal bankruptcy Canada faq # 20 – What is Chapter 11?

Chapter 11 is not applicable in Canada. It is the corporate restructuring section of the U.S. Bankruptcy Code, the federal law governing bankruptcy protection in America.

Personal bankruptcy Canada faq – What Now?

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.

personal bankruptcy canada faq
personal bankruptcy canada faq
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SAVING MONEY TORONTO: FOLLOWING YOUR DOCTOR’S ORDERS CAN SAVE YOU MONEY

saving money toronto
saving money toronto

Saving money Toronto:  Introduction

I can see some of you scratching your heads right now.  You are wondering how in the world following your doctor’s orders can save you money; but it really can saving money Toronto. Even in Canada where we have Universal Healthcare, it does not cover 100% of all prescription medication. This unfortunately can lead to non-compliance which can be very costly and even deadly.

Saving money Toronto:  Don’t put yourself at risk

“People put themselves at risk,” warns LIUNA General Secretary Treasurer and LHSFNA Labor Co-Chairman Armand E. Sabitoni, “when they are prescribed a medication that they choose not to take, do not take as directed, do not finish or just plain forget to take at all.”.  Three out of every four Americans do not take their medication as directed. Every year in the United States and Canada, it leads to thousands of deaths and billions of dollars unnecessarily spent on health care.

Saving money Toronto:  Why aren’t we taking our medications as prescribed?

  1. Cost: Even in Canada, coverage by our Universal Healthcare for the costs of prescription drugs is not always 100%. Some medications can be extremely expensive.
  2. Quick response to treatment: After a few days on the medication, the patient feels great and stops taking the medicine instead of completing the course of treatment.
  3. Side effects: The patient feels worse from the side effects than from the illness.

Saving money Toronto:  Why should you always take your medication as directed?

“These choices are counterproductive,” Sabitoni stresses. “Taking medication as directed saves you money, keeps you healthier and helps you live a longer life. Never cut corners with your medicines. That’s one of the most important decisions you will ever make.” Following doctor’s orders will keep you healthy and save you money!

Saving money Toronto:  What if you can’t afford to follow your Doctor’s orders?

If you’re not taking your medication because the cost causes you more pain than your illness, you need professional help and you need it now! Ira Smith Trustee & Receiver Inc. understands financial pain and can help you solve your financial problems and get you back on track to debt free living Starting Over, Starting Now.  Call the Ira Smith Team today so that we can end your pain and you won’t have to worry about paying for prescription medication again. Don’t delay. Give us a call today!

saving money toronto
saving money toronto
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