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CAN YOU BANKRUPT A DEAD PERSON? DEATH OF A DEBTOR, PART 1

death of a debtor, insolvent, insolvency, bankrupt, bankruptcy, boomer retirees, debt, debt products, what is a consumer proposal, what is bankruptcy, vaughan bankruptcy, living wills, funeralsIf you have an aging or aged parent, you no doubt have had discussions surrounding living wills, end of life medical decisions and funerals. However, there is one topic that many families consider taboo – money – because many adult children consider it disrespectful to discuss finances with their parents. But, the truth is that many seniors in Canada are struggling. We began this discussion in our Blog “Grey Divorce Can Create Serious Debt For Boomer Retirees” but serious debt is not the exclusive domain of seniors that are divorced; it is rampant across the demographic. It may shock you to know that Canadians over the age of 65 now have the highest insolvency and bankruptcy rates for their age group and seniors were 17 times more likely to become insolvent in 2010 than they were 20 years ago, according to the Vanier Institute’s 13th annual “Current State of Canadian Family Finances: 2011—2012 Report.” Can you bankrupt a dead person? Can you bankrupt a dead person? Find out here in what we call “Death of a Debtor”.

A TD Bank study revealed that:

  • Debt among the 65 plus age group increased 15% in 2012
  • The average debt for those 65 and older increased by about $6,000 since 2011
  • Average debt among this group is $47,500

A CIBC study revealed that:

  • 59% of retired Canadians currently hold some form of debt
  • Only 27% of retired Canadians said they have made an extra lump sum payment towards their debt in the past 12 months
  • On average, retired Canadians carry 1.65 debt products with a balance (including mortgages, lines of credit, loans and credit cards)

What will happen if your parent(s) pass away in debt? You really have only 2 options?

  1. Pay the debts
  2. Let the estate go bankrupt

We recognize that this is an emotionally charged issue, but just because your parents were insolvent doesn’t mean that you have to be. Starting Over, Starting Now you can live a debt free life with help from Ira Smith Trustee & Receiver Inc. Contact us today and watch for our next blog – Is It The Ultimate Indignity To Bankrupt A Deceased Person? Part 2 – when we’ll be discussing what you can do if your parent(s) pass away in debt.

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WHAT HAPPENS IF MY EMPLOYER OWES ME MONEY & GOES BANKRUPT?

employer owes me money went bankrupt did not pay employees

Employer owes me money: Introduction

People ask us what if my employer owes me money & goes bankrupt? We answer if your employer is bankrupt don’t despair; there is hope for you to recuperate monies that are owing to you. The Wage Earner Protection Program Act – WEPPA – with an amendment to the Bankruptcy and Insolvency Act (Canada) – BIA – created a mechanism for employees to be compensated for claims of unpaid wages, commissions and vacation pay accrued in the six months preceding the employer files for bankruptcy or being placed in receivership and have unpaid wages along with claims for unpaid termination and/or severance pay.

This amendment came into being as a result of the federal government’s previous concern that when you experienced “my company owes me money & went bankrupt” there was rarely an opportunity for you to get the wages you owing to you.

However, you are generally not eligible if, during the period for which eligible wages are unpaid, you:

  • were an officer or a director of your former employer
  • had a controlling interest in the business of your former employer
  • were a manager whose responsibilities included making binding financial decisions impacting the business of your former employer, and/or making binding decisions on the payment or non-payment of wages by your former employer

Employer owes me money: Who is eligible for the WEPP?

So, if the employer went bankrupt did not pay employees:

You may apply if:

  • your former employer has filed for bankruptcy or is subject to a receivership
  • you have unpaid wages, vacation pay, termination or severance pay from your former employer
  • amounts earned during the eligibility period or, in the case of termination or severance pay, your employment was terminated during the eligibility period ending on the date of bankruptcy or receivership

What is the eligibility period?

The eligibility period is defined as the period in which wages and vacation pay are earned to be compensated under the WEPP and in which your employment must have ended to be eligible for termination and severance pay. The eligibility period starts six months before a restructuring event and ends on the date of bankruptcy or receivership. Should your employer not have gone through restructuring, the eligibility period is the six-month period ending on the date of bankruptcy or receivership.

What are eligible wages under WEPP?

Each case is examined individually and I strongly suggest that you contact a Trustee for a correct answer to the question “my employer owes me money & went bankrupt”. There remains some confusion and a disconnect between WEPPA and the BIA. WEPPA includes severance and termination pay while the BIA excludes severance and termination pay from compensation in sections 81.3 and 81.4. Such claims have and continue to be recognized by the BIA as being ordinary unsecured claims.

How much can I expect to receive?

Regardless of the total amount owing to you, the most any employee can receive under WEPPA is the greater of $3,200 or four times the maximum weekly insurable earnings under the Employment Insurance Act (which is now greater than $3,200). Once employees file claims with both the Trustee and Service Canada, Service Canada pays their claims and Service Canada becomes the creditor. The amendment to the BIA has recognized WEPPA and created a priority charge that supersedes all secured charges except CRA’s deemed trust claim (and the reclaiming rights of farmers and suppliers) to a max of $2,000 per employee, secured against current assets.

Do you have too much debt?

Contact Ira Smith Trustee & Receiver for more information if you have the questions “my employer owes me money and has gone bankrupt” or on any and all matters related to corporate or personal bankruptcies. We are full-service insolvency and financial restructuring practice serving companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now.

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HIDING YOUR ASSETS IN A BANKRUPTCY COULD LAND YOU IN PRISON

hiding your assets, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy court, bankruptcy file, Criminal Code, Office of the Superintendent of Bankruptcy, declaring bankruptcy, trustee, trustees, what is bankruptcyIf you think that hiding your assets in a bankruptcy is a good way to hang onto your property; think again. This is not a minor matter. In fact it’s a violation of the Bankruptcy and Insolvency Act (BIA) and the Criminal Code and it’s punishable by hefty fines and/or prison time. You will find yourself in a world of trouble if you:

  • Fraudulently dispose of property before or after the bankruptcy
  • Make false entries in a statement of account or hide, destroy or falsify a document related to your property or affairs
  • Conceal or fraudulently remove property, or conceal claims or debts
  • Refuse to respond fully and truthfully to questions posed during an examination held in accordance with the BIA

Committing fraud against the government is never a good idea and the likelihood is that you will get caught. The Office of the Superintendent of Bankruptcy (OSB) identifies possible offences through its detection programs or through complaints received from creditors, trustees or the public. When the OSB has reason to believe that an offence has been committed, it sends the file to one of its three special investigation units. The investigation units work closely with the Royal Canadian Mounted Police (RCMP) and in some cases files are transferred to the RCMP. The OSB encourages people to report fraudulent activities that relate to a bankruptcy file and they even have a toll free number to call or use an affordable background check USA 1-877-376-9902.

In addition to fines and/or prison time, if you hide your assets from the bankruptcy court:

  • You will not be able to discharge your debts
  • The trustee can revoke your discharge and those debts cannot be discharged in subsequent bankruptcies

Still think that hiding your assets in a good idea?

Honesty is always the best policy. If you are thinking of declaring bankruptcy, contact Ira Smith Trustee & Receiver as soon as possible. We will guide you through the process and Starting Over, Starting Now get you well on your way to living a debt free life.

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TANK YOUR CREDIT SCORE RATINGS, DECLARE BANKRUPTCY, IMPROVE YOUR LIFE!

credit score ratings, bankrupt, Bankruptcy, Consumer Proposal, credit report, credit score, declare bankruptcy, insolvent, toronto bankruptcy, vaughan bankruptcy, what is bankruptcyAre you the poster child for financial responsibility? You have a good job, you take care of your family, your bill payments are all current and you have an excellent credit score. So, what can possibly be wrong with this picture and why would we think you should tank your credit score ratings, declare bankruptcy and improve your life?

The reality is that as many as 70% of bankruptcy filings are made by people with strong credit scores, according to TransUnion. Why isn’t a great credit score a predictor of whether or not someone will go bankrupt? “Many people are hopelessly insolvent but they’re not delinquent. From a credit report they are making their payments on time but they’ve got no reasonable prospect of ever paying this debt off,” said Mr. Mantin, senior vice-president of E. Sands & Associates Inc. According to Ira Smith, President of Ira Smith Trustee & Receiver Inc., “This is a very telling comment. Most people believe that as long as you make the minimum payment, you are “current”, especially when it comes to credit cards, even though deep down you know that you will never be able to pay off the debt. Current used to mean that when you received the credit card statement, you paid off the balance in full and you were delinquent if all you made was the minimum payment. This is a huge societal mind shift.”

When you are staying afloat by making the minimum payments, it doesn’t take much to tip you over the edge. Any major life changing experience can do it – loss of job, divorce, serious health issues, unexpected major expense – and all of a sudden you go from paying your bills on time and having a great credit score to not paying your bills and looking at bankruptcy.

What should you do? If you are struggling with a mountain of debt, even if you are making your monthly payments and have a great credit score, contact Ira Smith Trustee & Receiver Inc. A great credit score won’t solve your debt problems, but a consumer proposal or bankruptcy can help you both financially and emotionally, alleviating the monthly stress when the bills are due. Starting Over, Starting Now you can take charge of your financial future and improve your life.

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CAN YOU REALLY HAVE SURPLUS INCOME IF YOU’RE BANKRUPT?

bankruptcy faqs, surplus income, bankruptcy, bankrupt, bankruptcy process, trustee, bankruptcy alternatives, Vaughan bankruptcy, Richmond Hill One of the things that seems to confuse many people when it comes to the bankruptcy process is “surplus income”. It’s hard to wrap yourself around the concept of surplus income when you are considering or are involved in a bankruptcy. Can you really have surplus income if you’re bankrupt?

What is surplus income? Surplus income in a bankruptcy refers to an amount that a bankrupt must pay to the Trustee monthly. It is part of the goals of the Canadian insolvency system that balances the elimination of debt with the rights of creditors to be paid. To allow Canadians to maintain a reasonable standard of living during the bankruptcy process, the government has set thresholds or guidelines on net earnings (after taxes and deductions) intended to allow a bankrupt to maintain a reasonable standard of living during the bankruptcy process. The Office of the Superintendent of Bankruptcy sets the threshold limits each year and these limits are indexed to inflation.

How are surplus income payment amounts calculated?

Surplus Income payments are calculated based on a prescribed formula set by the Federal Government and applies across Canada, with no distinction for the region a person lives in. To find out what your surplus income is, contact your Trustee.

Surplus Income thresholds are based off of nationwide “poverty line” statistics and the thresholds are fixed regardless of what the cost of living may be in your region. Although the dictionary definition of “surplus” is excess or leftover, Surplus Income has nothing to do with what you have left over every month in your budget. It is a government formula that looks at only your income, certain non-discretionary spending and your family size, and imposes a duty to make a payment to your trustee.

There are many questions people have when contemplating bankruptcy. If you are in financial distress, contact Ira Smith Trustee & Receiver Inc. We will make sure that you have a clear understanding of every step of the bankruptcy process and alternatives to bankruptcy. Also check out our bankruptcy faqs. Starting Over, Starting Now you can take your first step towards living debt free life.

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COMMERCIAL PROPOSAL – CORPORATE RESTRUCTURING PART 3

bankrupt, commercial proposal, corporate restructuring, division 1 proposal, liquidator, proposal, restructure, trustee, Company bankruptcyIn last week’s blog we discussed the stakeholders and key players and their roles in a corporate restructuring. This week we’ll be addressing the Division 1 Proposal, commonly referred to as a Commercial Proposal or the Proposal.

What is a Division 1 Proposal? The Division 1 Proposal is a legal document typically drawn up by either the Trustee or the company’s lawyer. It is essentially a compromise between a commercial debtor and his/her creditors that, if approved by the creditors and the Court, becomes legally binding. Proposals help resolve the financial difficulties of a business and offer creditors more than they could expect to receive in a bankruptcy. The agreed upon Proposal is a part of the overall restructuring plan, which is a business plan.

When is a Commercial Proposal, otherwise known as a Division 1 Proposal used? A Division 1 Proposal can be used if a business is viable but financially unsound. The general principal we use in determining if a business is a good candidate for a Proposal is that they have to have a core business that is viable and once they shed themselves of most of their debt and develop a business plan and model that will be profitable they can use a Proposal as a tool to continue operations and settle their unsecured debt for less than the full amount of the unsecured debt.

What are the advantages of a Division 1 Proposal? After a debtor files a Division 1 Proposal or a notice of intention to file a Proposal, creditors may not begin or continue any legal action. The debtor remains in possession and control of their assets and company management continues to make all business decisions. Restoring the financial condition of a business with a Proposal may save the business, preserve jobs, give creditors the best return, provide a continuing source of business for existing and new creditors, and enable the owners and/or shareholders to retain an interest in the business.

If your company is experiencing severe financial difficulties, avoid a Company bankruptcy. Contact Ira Smith Trustee & Receiver Inc. to discuss whether a Division 1 Proposal is the right strategy for you. Starting Over, Starting Now we can help to restructure and turnaround your company, restoring it to financial health.

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FINANCIAL VIABILITY ASSESSMENTS – CORPORATE RESTRUCTURING PART 2

financial viability assessments, bankruptcy alternatives, consumer proposals, corporate restructuring, division 1 proposal, proposal, restructuring, toronto bankruptcy, trustee, turnaround management, Vaughan, company bankruptcyLast week we discussed the process of corporate restructuring. This week we’ll be addressing the stakeholders and key players and roles in a corporate restructuring, as well as the issue of financial viability assessments.

Serious financial difficulties cause a great deal of distress; the very viability of your company is in question. You need professional help and you need it now. The cause of the financial difficulties must be identified, financial and viability assessments must be done, and an organization and restructuring plan must be implemented. There are stakeholders and key players that are involved, but who are they and what role do they play?

Who are the stakeholders: Depending on the size and structure of your company stakeholders may include corporate management, financial institutions, suppliers, shareholders, governments, regulatory bodies and employees.

Who are the key players and what are their roles: The key players in a corporate restructuring are the:

Company’s Accountant: The role of the accountant may include payroll, cash collections, disbursements, procurement and property accounting, tax preparation, financial planning, business consulting and payroll services.

Company’s Lawyer: The role of the lawyer may include drafting contracts, taxes, facilitating mergers, and handling human resources issues.

Trustee: The trustee is a restructuring professional. We work with all of the stakeholders and key players, creating realistic strategies and solutions for your company. The problems that caused and contributed to the financial distress must be identified and addressed after which a plan must be put into place to restructure the company and affect the turnaround. We perform a financial viability assessment in order to begin the planning process of a corporate restructuring.

Contact Ira Smith Trustee & Receiver Inc. With our expertise and skills in restructuring and turnaround management we will work with you to find and implement the right financial and business strategies that address your particular issues. We will assist you to avoid your company bankruptcy. Starting Over, Starting Now we can begin to rehabilitate your financially troubled company. Watch for our next blog – Corporate Restructuring Part 3 – when we’ll be addressing the Division 1 Proposal.

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CORPORATE RESTRUCTURING PART 1

corporate restructuring, financial restructuring, proposal, restructuring, richmond hill, richmond hill bankruptcy, toronto bankruptcy, trustee, trustees, vaughan, vaughan bankruptcy, woodbridge, woodbridge bankruptcy, company bankruptcyMany companies are experiencing financial difficulties as a result of the current climate of economic uncertainty, fast-moving markets, increased competition and outdated business models. As Trustees & Receivers we are often involved in corporate restructuring, a process which many clients find confusing.

We know there is confusion about the meaning of the terminology, the roles played by the various stakeholders and professionals, and the difference between a restructuring business plan and the Proposal. I’ll attempt to demystify it for you.

What is corporate restructuring

Corporate restructuring is a strategy to move from financial harm and return to a financially viable state.

When to consider restructuring

When a company is having trouble making payments on its debt and this situation is one that may lead to the company’s collapse, corporate restructuring should be considered.

Corporate restructuring increases a business’ efficiency – reducing costs, increasing profits – and therefore avoiding closure.

When is a company eligible for restructuring

There is a general principle we use in determining if a business is a good candidate for financial restructuring. It is that they must have a core business that is viable. First they must shed themselves of their debt which is weighing them down. They must also develop a business plan and model that will be profitable. Then they will be able to continue to run.

When should you contact a trustee?

If your company is experiencing serious financial difficulties, the sooner you contact a trustee, the better.

Contact Ira Smith Trustee & Receiver Inc. We will evaluate your situation and create an effective restructuring plan that will help your company to become financially sound, Starting Over, Starting Now. We will help you avoid a company bankruptcy.

Watch for our next blog – Corporate Restructuring Part 2 – when we’ll be addressing the key players, stakeholders and roles in a corporate restructuring.

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GREY DIVORCE IN CANADA CAN CREATE SERIOUS DEBT FOR BOOMER RETIREES

grey divorce in canada“Divorce is the one human tragedy that reduces everything to cash”. – Rita Mae Brown

The terms “silver separation” and grey divorce” sound very benign, but their financial ramifications have spelled disaster for many boomer retirees. Instead of travelling the world or spending carefree days on the golf course, many retired baby boomers may now be saddled with a mountain of debt and are trying to figure out how to pay their bills because of grey divorce in Canada.

A study done in 2012 by Bowling Green State University in Ohio revealed that the divorce rate among people who are retired or near retirement had more than doubled in the United States in just 20 years. According to Statistics Canada, divorces among couples 65 years of age and older are becoming more and more common and that the average age at which Canadians divorce has been rising steadily for a number of years. And, this trend is expected to continue. Susan Eng of the national seniors’ advocacy group CARP said that in recent years her office has been seeing an increase in calls from divorcees who are unsure of how they were going to make ends meet now that they were alone.

Although women seem to be the hardest hit, men are not immune. The nest egg that you have accumulated for retirement now has to be divided and you may also be supporting minor children and helping to support adult children and/or ageing and ailing parents. The financial challenges of your new reality may have created more debt that you can handle.

Grey divorce in Canada summary

Debt is a four-letter word but it can be managed with professional help. If you are experiencing serious debt problems because of grey divorce in Canada, or for any other reason, contact Ira Smith Trustee & Receiver. Credit Counselling, Debt Consolidation, and Consumer Proposals are all options that we can explore and then we will come up with a plan that will work best for you. Although life can be difficult after a grey divorce you can start over and live a debt-free life Starting Over, Starting Now.

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SHOULD SOCIAL MEDIA BE USED TO DETERMINE YOUR CREDIT SCORE?

bad credit, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy in Canada, bankruptcy in ontario, bankruptcy ontario, bankruptcy protection, bankruptcy trustees, Consumer Proposal, consumer proposals, credit report, credit score, credit scores, debt management, debt settlement, declaring bankruptcy, Facebook and LinkedIn, social media, social networks, what is a consumer proposalAre you experiencing problems with debt management or having trouble getting credit due to a bankruptcy or a consumer proposal? If so, you are going to be delighted to hear that there are companies who believe that online reputations can tell lenders more about a person’s trustworthiness than the traditional credit score. Your credit score is established on the basis of how you pay your bills while companies like Lenddo and Neo Finance are analyzing data from social networks like Twitter, Facebook and LinkedIn, and other factors to reach people who have a hard time getting loans. The Lenddo score is based upon:

  • Number of followers
  • Background of peers
  • Education and employers
  • Repayment history of friends

The Neo Finance score is based upon the following information in a person’s LinkedIn profile:

  • How long the user has held jobs
  • The number and quality of connections in their industry
  • The seniority of their connections

Should social media be used to determine your credit score? Probably not. Basing anything on the number of social media followers is categorically unreliable. Social media networks have become a numbers game where there is the mistaken belief that “whoever has the most, wins”. Fake Twitter followers have become a multi-million dollar business. Open networkers on LinkedIn have thousands of followers that they don’t know and the same goes for people who collect Facebook friends. The other problem is that the consumer would have to be willing to connect the financial service to their social media networks’ data which of course brings up privacy issues. Although in theory, this sounds like an interesting idea, I’m afraid that there is no quick fix for bad credit.

If you are experiencing problems with debt management or having trouble getting credit due to a bankruptcy or a consumer proposal, contact Ira Smith Trustee & Receiver Inc. for information on how to fix bad credit so that you can live a debt free life Starting Over, Starting Now.

Call a Trustee Now!