AUTO INSURANCE IN ONTARIO CHANGE PUSHES FAMILY CLOSER TO BANKRUPTCY

Post author By Brandon Smith
Post date October 17, 2016

12 hours made

Who would have believed that a mere 12 hours could cost a family over $1.9M and put them on the verge of bankruptcy? Sadly this is exactly what happened to a family because of the auto insurance in Ontario rule change that came into force 12 hours on the same day before Adam Bari’s motorcycle was T-boned. Although Mr. Bari was not at fault, it did not help his cause.

What is this new auto insurance rule that has this family on the verge of bankruptcy?

When I tried to contact Go Skippy, they explained that this new auto insurance rule change affects the evaluation of injuries. It’s a miracle that Mr. Bari survived. He was in a coma for one month and survived with major injuries including significant brain trauma, multiple broken bones in his right arm, leg and hand, as well as internal organ damage. Although absolutely unbelievable, Mr. Bari’s injuries are no longer considered severe enough under new auto insurance in Ontario guidelines to be deemed catastrophic.

It all boils down to defining catastrophic. Under the old guidelines, the Glasgow Coma Scale (GCS) was used to evaluate functionality. If a car crash victim had a GCS rating of nine or less, they were automatically considered catastrophically impaired and were eligible for increased benefits. At first, Mr. Bari scored a three on the scale which is considered to be the most severe result with the patient being completely unresponsive. Later on, his score rose to an eight, still leaving him catastrophically impaired. New auto insurance in Ontario rules no longer use the scale, though it remains a common evaluator for trauma teams.

What does this mean financially for the Bari family?

According to the personal injury lawyer representing the family, if the accident had happened 12 hours earlier before the new guidelines came into effect, the family would have received $2M in compensation. Instead, they received a pathetic $86K, which can’t even begin to cover the astronomical medical bills the family is facing. Mr. Bari may never recover sufficiently to return to work. His wife is working greatly reduced hours to care for him and there are twins to support. He’s going to require specialized equipment at home, extensive rehabilitation, a personal support worker, therapy and medication.

What recourse does the Bari family have?

They have retained a personal injury lawyer and are planning to sue the driver of the vehicle that hit Mr. Bari to help recover damages for health care expenses. Careless driving charges have also been laid against the driver. Unfortunately, nothing can be done about the new auto insurance rule change that has shamefully put the Bari family on the verge of bankruptcy.

Auto insurance in Ontario: What should you do if you are hit with an emergency that ruins your family budget and finances?

Hopefully, you will never find yourself in the same place as the Bari family but should you feel that you’re on the verge of bankruptcy contact Ira Smith Trustee & Receiver Inc. Sadly we can’t change the auto insurance guidelines but we can help you deal with serious financial issues. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Contact us today so that Starting Over, Starting Now we can put you back on track to financial well-being.

Image Courtesy: CheapFullCoverageAutoInsurance.com

Tags auto insurance, auto insurance in ontario, auto insurance rule, auto insurance rule change, Bankruptcy, Ira Smith Trustee, new auto insurance guidelines, Ontario insurance guidelines, trustee

Brandon Blog Post

CONSUMER PROPOSALS ONTARIO: THE SOLUTION TO YOUR TORONTO DEBT PROBLEMS

Post author By Brandon Smith
Post date October 12, 2016

Consumer proposals Ontario: Make a federal case out of it!

Consumer proposals Ontario are governed by federal legislation; the Bankruptcy and Insolvency Act (Canada) (BIA). The proposal provisions used by companies and creatively used for people with extremely large debts is commonly referred to be “restructuring” or “reorganization”. In the United States, it is what is commonly called “Chapter 13 proceedings”.

Consumer proposals Ontario: Debt solutions for the smaller debtor

However, there was no similar provision available to small individual debtors in the BIA. Parliament wished to find a way to offer these smaller consumer debtors to have a restructuring alternative. So, after consultation with the stakeholders in the Canadian insolvency world, in the 1990s, the consumer proposal process legislation was enacted. It benefits people who owe $250,000 or less (not including mortgages against your principal residence).

Consumer proposals Ontario: Avoiding personal bankruptcy in Canada

Now, the consumer proposal process provisions for consumer debtors are used more than the consumer bankruptcy provisions of the BIA. So Canadians are now avoiding personal bankruptcy more while still obtaining the help and counselling of a Licensed Insolvency Trustee.

The main use of the (consumer) proposal provisions of the BIA is to allow you as a debtor to keep your assets if you can afford to in your budget, it is a great way for how to avoid bankruptcy in Canada, and give a better alternative to your creditors than a bankruptcy would. In this way, you are allowed to be relieved of your debts, for an amount less than the total face value of all of your debts.

It is best used when you have extra income and can afford to pay back some debts if the рауmеnt plan is structured properly, but not enough income to pay back all of your debts, especially with penalties and interest! The consumer proposal legislation allows you to pay back less than you owe, but what you can afford. Interest and penalties stop and in most cases, you are able to settle your debt for less than 50 cents on the dollar.

You can structure your repayment plan in monthly payments for up to 60 months. Again, no interest or penalties. So, it is very much like an interest-free loan for less than half of your debt to settle all of your debts.

Consumer proposals Ontario: What should I do if I have too much debt?

So if you’rе ѕtіll dеtеrmіnеd to рау your debts in full but you can’t see a way to ассоmрlіѕh that goal, this may be just the ѕесrеt you need to know! If you’re a Canadian with financial concerns seek the counsel of a professional trustee.

We can help you deal with how to solve your financial problems while you still have options available to you so that Starting Over, Starting Now you can be on your way to enjoying financial health. Make an appointment with us for a free, no obligation with the Ira Smith Team today. You’ll be happy you did.

consumer proposals ontario

Tags avoiding personal bankruptcy, chapter 13 proceedings, consumer proposal process, consumer proposals, consumer proposals ontario, how to avoid bankruptcy in Canada, Ira Smith Trustee, licensed insolvency trustee

Brandon Blog Post

CONSUMER DEBT CANADA & TORONTO HOUSING BOOM PUTS CANADA’S ECONOMY AT RISK

Post author By Brandon Smith
Post date October 10, 2016

Consumer debt Canada: Introduction

Consumer debt Canada and household debt as a percentage of income remains a hot topic these days. The high household debt as a percentage of income coupled with a Toronto housing boom and until recently a Vancouver housing boom, puts Canada’s economy at risk. Whenever we thought that Canada’s consumer debt burden had swelled to its limit, it’s reached a new high.

Consumer debt Canada: Our previous blogs and vlogs

We have before blogged and vlogged about:

Consumer debt Canada: How serious is Canada’s consumer debt burden?

Consumer debt Canada has achieved a new milestone; for the first time in history, the level of debt held by Canadians has surpassed the country’s gross domestic product to 100.5% of GDP, up from 98.7% during the previous three-month period. According to Statistics Canada:

The ratio of credit market debt to disposable household income climbed to 167.6% between April and June, from 165.2% in the first quarter of the year
Total credit market debt was $1.97 trillion at the end of the second quarter
Consumer credit alone reached $585.8 billion
Mortgage debt stood at $1.29 trillion
Net worth of households increased 1.9% in the second quarter to $9.84 trillion boosted by a gain in real estate

Consumer debt Canada: What’s causing this?

Surprisingly, some feel that the debt isn’t actually the problem. Benjamin Tal, deputy chief economist at CIBC World Markets reports, “Given that interest rates are so low, this is an environment you’d expect consumer credit to rise to the sky — and it’s not. The debt-to-income ratio is not because of the debt accumulating very fast, but rather the income is not rising fast enough to compensate (borrowers).”

Consumer debt Canada: How is Canada’s economy at risk?

According to the Bank of Canada and the International Monetary Fund, it was low-interest rates that stimulated a growth in household credit. As a result many Canadians are highly indebted. Should there be any adverse shock to the economy, the Canadians who will feel it the most are those who’ve borrowed above their ability to meet mortgage payments if a real-estate crash occurred.

Consumer debt Canada: What’s being done to keep Canada’s economy stable?

The Liberal government just announced four major changes to prevent Canadians from assuming bigger mortgages than they can afford. In addition the changes address concerns related to foreign buyers who buy and flip Canadian homes.

Consumer debt Canada: What are the four major changes?

A mortgage rate stress test implementation for approving high-ratio mortgages to all insured mortgages as of October 17, 2016 to prevent defaults in the future should the mortgage rates rise.
The government will impose new restrictions on when it will offer insurance for low-ratio mortgages as of November 30, for lowering its exposure to residential mortgages for properties worth $1-million or more.
As of this tax year new reporting rules for the primary residence capital gains exemption will come into effect. The capital gains tax is still waived, but the sale of the primary residence must be reported at tax time to the Canada Revenue Agency.
The government is launching consultations on lender risk sharing because the federal government wants to limit its financial obligations if widespread mortgage defaults begin.

Consumer debt Canada: What to do if yours is so high it is stressing you out

If you find yourself with more debt than you can afford to pay contact a professional trustee immediately. We’re experts in debt management and with immediate action and the right plan we can help you get your finances back on track Starting Over, Starting Now. Give Ira Smith Trustee & Receiver Inc. a call today.

Tags capital gains tax, consumer debt, consumer debt burden, consumer debt canada, credit-market debt, household debt, household debt as a percentage of income, mortgage debt, mortgage rate stress test, Toronto housing boom, Vancouver housing boom

Brandon Blog Post

FULLY FUND YOUR RETIREMENT: ARE YOU ASKING YOUR HOUSE TO DO IT FOR YOU?

Post author By Brandon Smith
Post date October 3, 2016

Fully fund your retirement

Fully fund your retirement: Introduction

To fully fund your retirement, you need to start early. Canadians are just not facing that reality. According to HSBC Bank Canada almost half of working-age people in Canada are not currently saving for retirement. And, they’re twice as likely to consider selling their homes to fully fund their retirement compared to those who have been diligent about their retirement savings plans. Perhaps you are one of the smart and lucky ones who have including seeking the advice of one of the many retirement planning experts.

Fully fund your retirement: Are you counting on your house to?

A recent HSBC survey found that:

20% of pre-retirees in Canada plan to downsize or sell their primary and secondary residence to fund their retirement.
Only 5% of current retirees will sell their house to fund their retirement.
At age 25-29, a group with low home ownership levels, only 12% expect their property will fund their retirement.
In their 40s, 20% expect their property will fund their retirement.
In their 50s, 26% expect their property will fund their retirement.
In their 60s, 31% expect their property will fund their retirement.

Fully fund your retirement: Needs are changing

There is certainly a dramatic shift in people’s views on pension funds, retirement funds needed, retirement strategy and certainly speaks to the lack of retirement planning, saving and the fully funded pension plan.

It seems that as Canadians approach retirement age, selling their house is the only retirement finance option available to them. The problem with this scenario is that it assumes that the house is sold and very sensibly the couple or individual will downsize their lifestyle and put their budget on a diet so that they can live off the proceeds of the sale of the house.

The reality is that if they haven’t:

clearly calculated the retirement funds needed for the lifestyle they wish to have;
saved for retirement (including considering the impact of tax on retirement funds); and
have not already downsized their lifestyle in preparation for retirement

they may blow through the proceeds of the house and be worse off than they were before.

Fully fund your retirement: What to do if your financial concerns prevent you from doing so

If you’re a pre-retiree with financial concerns seek the counsel of a professional trustee before retirement. We can help you deal with how to solve your financial problems while you still have options available to you so that Starting Over, Starting Now you can be on your way to enjoying financial health in retirement. Make an appointment with us for a free, no obligation with the Ira Smith Team today. You’ll be happy you did.

Tags budget, downsize lifestyle, fully fund your retirement, fully funded pension plan, fund their retirement, Ira Smith Trustee, pension funds, retirement finance, retirement funds needed, retirement planning, retirement strategy, saving for retirement, tax on retirement funds, trustee

Brandon Blog Post

INSOLVENT ESTATES CANADA 3 QUESTIONS WE ALWAYS ARE ASKED

Post author By Brandon Smith
Post date September 28, 2016

INSOLVENT ESTATES CANADA

Insolvent estates Canada: Introduction

We previously discussed the aspect of death and insolvency in two blog posts:

When it comes to insolvent estates Canada, among the various questions asked of us, these three questions are always asked:

What are the duties of an executor/personal representative when the estate has more liabilities than assets?
Can the executor(s) pay bills before the creditors actually file a claim?
Do executors or beneficiaries have to pay creditors out of their own pocket if the estate is insolvent?

We prepared the above video to answer these 3 questions. Below is a more detailed discussion of the last 2 questions.

Insolvent estates Canada: The loss of life of a debtor occurs; who’s responsible for the money owed?

Although some creditors may try to collect from the spouse or other relatives, money owed doesn’t transfer because of marriage or death. If the debt is “joint”, the survivor has taken on the obligation directly and is liable on the account.

Debts are normally paid out of the assets of the property of the deceased before distributions to heirs (before paying heirs, the deceased’s debts must be paid). If the estate is insolvent (the assets of the estate are not enough to pay the amounts owed), then the order of charge is commonly prescribed by way of provincial rules.

If warranted, the executors could apply to Court for an order letting them assign the deceased’s estate into bankruptcy. In that situation, then the Bankruptcy and Insolvency Act (Canada) (“BIA”), the federal legislation, will prescribe the order of payment.

If insurance was bought to pay off a specific debt such as a bank issued mortgage or loan, then upon the death of the individual the insurance company will repay the bank and the debt will not exist in the deceased’s estate.

What are your alternatives and your responsibilities, as an executor upon the death of a debtor?

If the estate is insolvent, before or after paying the testamentary costs, you have alternatives:

Pay the money owed out of your personal resources.
Allow the estate to go bankrupt.

Emotionally you may wish to pay the money owed because you believe in your heart that it is the proper thing to do and you don’t wish to dishonour the memory of your loved one with a string of bad debts and bankruptcy. But before you decide, you need to know that there is no liability for an executor or heir to take on the debts of the deceased.

Even though there may be a stigma connected to bankruptcy, the reality is that you are not responsible for the money owed, so why should you assume this burden and in all likelihood put your family in financial jeopardy?

Bankrupting the estate makes economic sense. An executor can sidestep the minefield of issues involved in administering the deceased’s insolvent estate by bankrupting it.

What should executors and heirs be aware of?

If you and/or another family member is the executor, be aware:

The executors have a legal responsibility for all acts completed, and for all acts not accomplished that they should have.
Notwithstanding everyone’s best efforts, they may unknowingly be inviting proceedings from lenders or heirs for difficult issues. This happens when family members, who are well-intentioned but not skilled at monetary, insolvency or legal issues, are executors because she or he is named, however actually has no know-how in this region.
By putting the property into bankruptcy, which requires the previous approval of the bankruptcy court, the executors are relieving themselves of personal legal responsibility because the estate will now be administered under the BIA and all creditors by the Licensed Insolvency Trustee.
The executor will relieve him or herself of coping with collection calls.
As long as there are sufficient funds in the estate to pay the funeral costs, that can be paid out first in the case of a bankruptcy of the deceased’s estate because of S.136. (1)(a) of the BIA states:

Priority of claims

“136 (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

(a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;”

It is the first debt with a preferred status that can be paid.

What should I do if I am an executor and I find that the liabilities are greater than the assets?

If you are an executor of a will and you find out that the estate is insolvent, after speaking with the estate lawyer, contact Ira Smith Trustee & Receiver Inc. as soon as possible. We will evaluate the situation and give you sound financial advice on how best protect yourself as executor and the heirs, so that you will be able to go ahead Starting Over, Starting Now.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags Bankruptcy, Bankruptcy and Insolvency Act, BIA, creditor, Debt, executor, heir, insolvent estates canada, Ira Smith Trustee, licensed insolvency trustee, priority

Brandon Blog Post

GREY DIVORCE CANADA CREATES THE 4 BIGGEST PROBLEMS YOU NEED TO SOLVE

Post author By Brandon Smith
Post date September 26, 2016

Grey divorce Canada on the rise

Grey divorce or silver separation, whatever you choose to call it, is a sad fact of life in our society today there is a boom in the ending of the marriage of retired or near retired couples. According to Statistics Canada, the grey divorce Canada statistics shows that the rate of breakups has been steadily growing among those 55 and over and it’s expected to increase as more people age. Therefore, it is on the rising trend will not be expected to stop anytime soon.

There is no marriage Canada border

This is not just a Canadian issue; it’s some worldwide phenomena. In the United States, the divorce rate among baby boomers has doubled. The statistics in the U.K. and Europe mirror those in the U.S. In Japan couples married 30 years or more have seen their rate of a marriage ending quadruple in the last 20 years.

What is the seniors’ divorce?

We have written on the subject before in:

Divorce problems

Sadly, grey divorce Canada isn’t just an emotional issue; it’s financial, and the ramifications of the marriage ending can be devastating. Do you know all about your finances – assets, liabilities, insurance, pensions, retirement savings plans, real estate holdings, expenses, and cash flow? Are you financially ready to be single in retirement? Or will you have to put off retirement? Do you have any idea what you’d require to maintain your current lifestyle and if you’ll be able to maintain it?

Does it affect retirement

Unfortunately, many older Canadians in the throes of a marriage ending are not ready financially and may start accumulating high-interest debt to cover expenses. Your senior years are not the best time to be caught in a debt trap. We’re not suggesting that you stay in an unhappy marriage because of financial considerations, but you can get yourself on solid financial footing before the marriage ends. At the best of times marital problems are not fun; why put yourself in added stress and adding to your marriage problems by not thinking things through properly financially first?

A possible procedure

Don’t let your grey divorce Canada financial issues put you into a state of financial ruin. Reach out to Ira Smith Trustee & Receiver Inc. We’re experts in debt. Meet with us for a free, no-obligation consultation. We’ll evaluate your situation and come up with a solid financial plan so that you can have peace of mind and move forward with your life Starting Over, Starting Now.

Tags grey divorce, grey divorce boom, grey divorce canada, grey divorce canada border, grey divorce canada procedure, grey divorce canada statistics, grey divorce in canada, grey divorce on the rise, grey divorce problems, grey divorce retirement, Ira Smith Trustee, silver separation, what is grey divorce

Brandon Blog Post

#VIDEO-HISTORY OF BANKRUPTCY NEVER GETS ANCIENT#

Post author By Brandon Smith
Post date September 21, 2016

HISTORY OF BANKRUPTCY NEVER GETS ANCIENT

History of bankruptcy: Introduction

A subject that rarely gets written about is the history of bankruptcy. Understanding the history of the Canadian bankruptcy system and how it has evolved, gives a helpful look into how it works and help Canadians and Canadian society.

History of bankruptcy: Helping the debtor

The Bankruptcy and Insolvency Act (BIA) provides a way for the orderly liquidation of a bankrupt’s assets and distribute that value to the creditors. In this way, the BIA assists the insolvent debtor who needs a way to be forgiven for his or her financial sins, relieved of their burden and be returned to society as a productive contributor. The BIA assists creditors in providing the system of turning the assets into cash to be distributed to them, and not keeping those assets either out of their reach or just laying in an unproductive state. The BIA also is a system of checks and balances, so that it provides both Canadians and foreigners that there is a vibrant and safe Canadian economy.

History of bankruptcy: Helping the creditors

The BIA also ensures that there is a fair and logical system in place to deal with the assets of the debtor and the claims of creditors. By invoking it, it avoids a race among creditors to attempt to get the right to seize assets in an uncontrolled way. Creditors are paid according to their place in the hierarchy of claims as described in the BIA as follows:

Trust claimants who are outside of the bankruptcy scheme
Secured creditors, who are also outside the bankruptcy scheme as long as they hold good and valid security
Unsecured creditors:
- Preferred
- Ordinary

History of Bankruptcy: bankruptcy alternatives

The BIA also provides debtors to opt for avoiding bankruptcy by making a Proposal. In the case of corporations, a Proposal; for people, either a Proposal or Consumer Proposal, depending on the level of their debt. Proposals are the bankruptcy alternative that allows companies or people to financially rehabilitate themselves and avoid bankruptcy, while offering the creditors more than they would receive in a bankruptcy. In this way, the BIA is both a liquidation and a rehabilitation statute, benefiting both debtors and creditors.

History of bankruptcy: The BIA

The present bankruptcy statute came into force on July 1, 1950. The title of the statute was amended from the Bankruptcy Act to the Bankruptcy and Insolvency Act in 1992, to show the statute had matured into a full financial rehabilitation statute, that could be used to carry out a bankruptcy alternative. Further amendments were made in 1997 to deal with a number of practical issues that became problematic for Canadian society applying the BIA, including:

Claims for student loans
Priority status for claims for spousal and child support
Payment from a bankrupt’s earnings
Environmental claims
Liability protection for Directors
Securities firm insolvency
International insolvency

In 2005 there were another round of comprehensive amendments to the BIA mainly dealing with the new legislation of the Wage Earner Protection Program Act (WEPPA), designed to protect employees for their unpaid amounts when their employer goes either bankrupt or into receivership.

History of bankruptcy: Rehabilitation

It is a fundamental purpose of the BIA to offer the financial rehabilitation of insolvent persons. The BIA permits an honest but unfortunate debtor, be it a corporation or an individual, to secure financial restructuring through the Proposal provisions, or a discharge from bankruptcy for people. It allows for a fresh start for the debtor to resume his or her place in the business community and society.

The BIA attempts to offer balance by allowing an investigation to be made of the affairs of the debtor and setting aside fraudulent transactions so that ordinary unsecured creditors can share in a distribution, rather than someone else being the beneficiary of those questionable transactions. Finally, the BIA allows for creditors to purse actions against the bankrupt either through the Licensed Insolvency Administrator or directly by a creditor or group of creditors.

History of bankruptcy: The Courts

The general approach to the BIA by the courts is that it is a commercial statute. To administer the process it is left largely in the hands of business people. Technical and legal objections and manoeuvres are not given weight beyond those that are necessary for the proper implementation and interpretation of the BIA. Settlement and resolution are rewarded, litigation and court proceedings are not.

History of bankruptcy: What to do if you have too much debt

I hope this history of bankruptcy provides you with a good look into how the bankruptcy system developed in Canada and how it works. If you’re suffering from too much debt and are seeking debt relief options, contact Ira Smith Trustee & Receiver Inc. Our approach for every file is to create an outcome where Starting Over, Starting Now becomes a reality, beginning the moment you walk in the door. You’re only one call away from taking the steps towards a debt free life.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags assets, avoiding bankruptcy, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, BIA, Consumer Proposal, creditors, Debt, debt relief, debtor, history of bankruptcy, insolvent, Ira Smith Trustee, licensed insolvency administrator, liquidation, proposal, trustee, WEPPA

Brandon Blog Post

CONSUMER PROPOSAL FAQs TO HELP YOUR INSOLVENCY IQ(s)

Post author By Brandon Smith
Post date September 19, 2016

Consumer proposal FAQs: What is a consumer proposal?

Last week we discussed Consumer Proposal Vs Debt Settlement. Consumer proposals remain a hot topic and today we’d like to share with you some of our consumer proposal faqs.

A Consumer Proposal (Plan or CP) is a formal way governed by the Bankruptcy and Insolvency Act (BIA) available only to people. Working with a licensed insolvency trustee acting as your Plan administrator you make a proposal to:

Pay your creditors a percentage of what you owe them over a specific period
Extend the time you have to pay off the debt
Avoid bankruptcy

Payments are made through the trustee, and the trustee uses that money to pay each of your creditors. The debt must be paid off within five years.

Consumer proposal FAQs: How do I qualify for a consumer proposal?

As discussed in our last blog, you must be an individual and your total debts must not exceed $250,000 (not including debts from a mortgage or line of credit secured by your principal residence).

You must also meet the insolvency test. This means that:

your debts are greater than your assets;
if you liquidated all of your assets you would not have enough money to pay off your debts in full; and
you are having trouble making the full payment on all of your debts every month.

Making only minimum monthly payments don’t count as paying off your debts.

Consumer proposal FAQs: What does a consumer proposal cost?

There are no upfront fees associated with CPs. Your Plan payments cover the cost of filing a Plan. There are no separate charges either for filing a Plan or fees paid to the trustee to act as your CP administrator. To calculate the professional fee the trustee uses a formula in the BIA and it comes out of the amount you are paying in your Plan.

Consumer proposal FAQs: How does a consumer proposal work?

A CP allows you to make arrangements to pay all or part of your unsecured debt in monthly payments over a predetermined time period.

A licensed insolvency trustee will meet with you and work out a payment plan that they believe will work for you and be acceptable by your creditors.
The trustee acting as your Plan administrator will file the CP with the Office of the Superintendent of Bankruptcy.
The trustee will send the Plan to your creditors who then have 45 days to accept or reject your CP. The creditors can also accept or reject your CP before a meeting of creditors if such a meeting was held. Normally in a Plan, there is no need to hold a meeting of creditors.

Consumer proposal FAQs: How long will my consumer proposal last?

A CP can last a maximum of five years but you can shorten the proposal term either by increasing the amount of your monthly payment or by offering a lump sum payment (if you are able to borrow a sufficient lump sum from either a bank or family).

Consumer proposal FAQs: Can a consumer proposal get rid of collections agencies and prevent my wages from being garnished?

Yes, a CP immediately stops almost all creditor actions (garnishments for family law support payments cannot be stopped by a consumer proposal) including tax debts.

Consumer proposal FAQs: If I agree to a consumer proposal will I lose my house and my car?

Typically secured creditors are not affected by a Plan and in most cases, you will continue to make your payments as usual. This assumes that your budget, which you prepare as part of filing your consumer proposal, shows that you can afford to do so.

If you have a mortgage against your house or a car loan registered against your car, you can opt for surrendering your house and/or car (secured assets) and stop making those payments before filing the CP. In this case, the lender will sell the secured asset and any resulting shortfall becomes an unsecured debt in your Plan.

NOTE: If you were to give up your secured assets after the filing of your Plan, you won’t be released from any shortfall debt because it occurred after the filing of your Proposal. So make sure that if you are giving up secured assets, you wait for the secured creditors to recognize that you have given them up and they have begun their enforcement proceedings, including selling the home or car, BEFORE you file your CP.

Consumer proposal FAQs: Will I have to give up my credit cards?

Typically, you will have to give all of your credit cards to the trustee and you won’t be able to apply for a new credit card until the term of your CP is over. You will, however, be able to use a prepaid or secured credit card during this period.

Consumer proposal FAQs: If I miss a payment will I be bankrupt?

We strongly recommend you to make your payments faithfully. You can defer up to two payments but if you fall three payments behind, your Plan will end. This means that you will no longer have protection from creditors and they can again start their collection efforts against you.

Consumer proposal FAQs: What is my next step if I have too much debt?

If you’re considering preparing, filing and completing a Plan or are seeking debt relief options contact Ira Smith Trustee & Receiver Inc. Our approach for every file is to create an outcome where Starting Over, Starting Now becomes a reality, beginning the moment you walk in the door. You’re only one call away from taking the steps towards a debt free life.

Tags a "consumer proposal, Consumer Proposal, consumer proposal administrator, consumer proposal faqs, consumer proposal versus debt settlement, consumer proposals, cp, debt relief, debt relief options, licensed insolvency trustee, plan, the consumer proposal, trustee

Brandon Blog Post

#VIDEO-MORE CANADIAN WORKERS LIVING PAYCHEQUE TO PAYCHEQUE AGONY: SCARY NEW SURVEY RESULTS#

Post author By Brandon Smith
Post date September 14, 2016

More Canadian workers living paycheque to paycheque introduction

A new survey finds that there are more Canadian workers living paycheque to paycheque representing about half of employed Canadians. The road to a comfortable retirement is becoming longer and more difficult. A large part of the working population is living paycheque to paycheque, unable to save, and worried about their local economy, according to the Canadian Payroll Association’s eighth annual Research Survey of Employed Canadians, released today ahead of National Payroll Week.

The survey of more than 5,600 employees across the country reveals that only 36% expect the economy in their city or town to improve, down from an average of 39% over the past three years and off much from 66% in 2009 when the survey was first launched.

More Canadian workers living paycheque to paycheque still

Many working Canadians are barely making ends meet. Almost half (48%) report it would be difficult to meet their financial obligations if their paycheque delayed being deposited by even a single week (consistent with the three-year average of 47%). Illustrating just how strapped some employees are, 24% say they likely could not come up with $2,000 if an emergency arose in the next month.

“A significant percentage of working Canadians carry debt, have a gloomy view of their local economy and are fearful of rising interest rates, inflation, and costs of living,” says Patrick Culhane, the Canadian Payroll Association’s President and CEO. “In this time of uncertainty, people need to take control of their finances by saving more. ‘Paying Yourself First’ (by automatically directing at least 10% of net pay into a separate savings account or retirement plan) enables employees to exercise some control over their financial future.”

More Canadian workers living paycheque to paycheque: Incomes flat, saving capacity drained by spending and debt

“Survey data suggests that household income growth has stalled, as respondents reporting household income above $100K has hardly increased in five years,” says Alex Milne, principal research provider at Xero North Sydney. “In fact, real incomes have actually declined when inflation is taken into account.” While pay has remained largely unchanged, employees’ spending and debt levels have affected their ability to save. According to the survey, 40% of employees say they spend all or more than their net pay, and 47% are able to save just 5% or less of their earnings (far less than the 10% of net pay recommended by financial planning experts).

Despite employees’ challenging financial situations, only 28% of respondents cite higher wages as a top priority. This is down from the average of 34% over the past three years. Instead, an overwhelming 48% are most interested in better work-life balance and a healthy work environment.

“Clearly, many Canadians are concerned about their financial situation,” says Lucy Zambon, the Canadian Payroll Association’s Board Chair. “But better work-life balance does not have to mean reduced financial security if you spend within your means and ‘Pay Yourself First’ as a step towards financial well-being.”

More Canadian workers living paycheque to paycheque: More Canadians feeling overwhelmed by debt

Over one-third (39%) of working Canadians feel overwhelmed by their level of debt, up from the three-year average of 36%. Debt levels have risen over the past year for 31% of respondents. And 11% do not think they will ever be debt-free.

Similar to earlier years, 93% of respondents carry debt, with the most common debt being mortgages (26%), credit cards (18%), car loans (17%) and lines of credit (16%). Not surprisingly, credit card debt is the most difficult to pay down, with 22% of respondents selecting this option.

Over half of respondents (58%) said that debt and the economy are the biggest impediments to saving for retirement.

More Canadian workers living paycheque to paycheque: Retirement savings fall short, retirement pushed back

Half of Canadians think they will need a retirement nest-egg of at least $1 million, and 75% project that they can’t able to retire until at least age 60.

Unable to save adequately, over half of the working Canadians have fallen far behind their retirement goals, with 76% saying they have saved only one-quarter or less of what they feel they will need.

Even among those closer to retirement (50 and older), a disturbing 47% are still less than one-quarter of the way to their retirement savings goal.

Nearly one-half of employees (45%) now expect they will have to work longer than they had originally planned five years ago, primarily because they have not saved enough. Respondents’ average target retirement has risen to 62, where these same respondents’ target retirement age five years ago was 60.

The past eight years of data drove the Canadian Payroll Association to advocate for a modest enhancement to the Canada Pension Plan (CPP). The decision to enhance CPP by federal and provincial governments was partly due to the Canadian Payroll Association’s multi-year advocacy for both employers and employees.

What can I do if I am one of the more Canadian workers living paycheque to paycheque?

Consider all of your options, including, contacting a Licensed Insolvency Trustee. Perhaps you just need help with credit counselling and budgeting. Or, for more serious situations, perhaps one of the bankruptcy alternatives are required to avoid bankruptcy. Regardless, you can get a free consultation.

We are debt professionals who will evaluate your situation and recommend which debt relief options are right for you. Consumer proposal is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a debt free life.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags bankruptcy alternatives, Canadian Payroll Association, Consumer Proposal, CPP, credit card debt, Ira Smith Trustee, licensed insolvency trustee, Lines of Credit, living paycheque to paycheque, more canadian workers living paycheque to paycheque, mortgage debt, national payroll week, paycheque, retirement

Brandon Blog Post

CONSUMER PROPOSAL VS DEBT SETTLEMENT: WHAT YOU NEED TO KNOW

Post author By Brandon Smith
Post date September 12, 2016

consumer proposal vs debt settlement

Consumer proposal vs debt settlement

I am often asked to explain the differences of consumer proposal vs debt settlement. Debt is such a prevalent issue in our society today and we’re bombarded by commercials about different options for debt relief. Two of the most talked about are consumer proposals and debt settlement. However, most people don’t really understand what they are. Let me explain.

Consumer proposal vs debt settlement: What is a consumer proposal?

According to the Office of the Superintendent of Bankruptcy Canada, a consumer proposal (Plan or CP) is a formal, legally binding process administered by a Licensed Insolvency Trustee (LIT). In this process, the LIT will work with you to develop a Plan. A CP is an offer to pay creditors a percentage of what is owed to them or extend the time you have to pay off the debts, or both.

The term of a Plan cannot exceed five years. Payments are made through the LIT. The LIT uses that money to pay each of your creditors. CPs are government sanctioned, federally regulated and administered by federally licensed and regulated LITs.

Consumer proposal vs debt settlement: Can anyone who owes money opt for a consumer proposal?

No. You must be an individual and your total debts must not exceed $250,000 (not including obligations from a mortgage or line of credit secured by your principal residence). You also must meet the insolvency test. This means that:

your liabilities are greater than your assets;
if you liquidated all of your assets you would not have enough money to pay off your liabilities in full; and
you are having trouble making the full payment on all of your liabilities every month.

Making only minimum monthly payments don’t count as paying off your liabilities.

Consumer proposal vs debt settlement: What is debt settlement?

Many people are seduced by slick ads and even slicker salespeople offering an easy way out of financial problems. Debt settlement companies (DS companies) tell you that they’ll negotiate with your creditors to accept a fraction of what you owe them. They tell you that like magic, your debt problems will disappear. NOT TRUE!

DS companies’ people are not financial services professionals. DS companies are not federally licensed or regulated. They’re nothing more than snake oil salesmen. They are well-known for high-pressure sales tactics, making false and unsubstantiated claims, insinuating ties to the government and demanding big upfront fees. We’ve written several blogs warning the public about DS companies:

According to Credit Canada Debt Solutions:

There are more than 50 organizations offering debt settlement services in Ontario.
The Ontario Association of Credit Counselling Services has received more than 100 complaints a month about DS companies.
Settlement companies have also been the focus of a “consumer alert” from the Financial Consumer Agency of Canada, which warns consumers to beware of “too good to be true” offers from debt reduction companies.

According to the U.S. Federal Trade Commission:

The success rate of for-profit DS companies is less than 10%.
65% of people who pay fees to these DS companies leave their programs without ever receiving a settlement.
The amount of money that people pay in fees to these companies almost equals the amount of money that they save. However, this is before creditor late fees, penalties and interest are added in (these can often double or triple a debt by the time a settlement is negotiated). So at the end of the day, it seems fair to say that most people who deal with these companies do not save any money and are often left worse off in the end.

Consumer proposal vs debt settlement: Who can administer them?

Since LITs administer CPs, the only federally licensed and strictly regulated professionals, they really can help you deal with financial problems. DS companies are not professionals of any kind. They are slick sales organizations designed to make as much money as possible from the consumer, not save you money or repair your financial situation. More often than not, after taking your money, DS companies then hand you over to a LIT for the only liability settlement program that really works, which is called, a consumer proposal.

The choice is clear when it comes to consumer proposal vs debt settlement, consumer proposals are an excellent financial relief option and you should run from DS companies as far as your shoes can carry you.

Sometimes a settlement is also termed consolidation. Whether the question is consumer proposal vs debt settlement, consumer proposal vs debt consolidation or debt settlement vs consumer proposal Canada, there is only one correct answer – look at a Plan for financial relief.

Consumer proposal vs debt settlement: Is a consumer proposal right for me?

Consult a LIT. We are financial professionals who will evaluate your situation and recommend which financial relief options are right for you. A CP is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a liability-free life.

Tags Consumer Proposal, consumer proposal vs debt consolidation, consumer proposal vs debt settlement, consumer proposals, debt reduction companies, debt relief, debt relief options, debt settlement, debt settlement companies, debt settlement vs consumer proposal canada, licensed insolvency trustee

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