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LICENSED INSOLVENCY TRUSTEE FOR BANKRUPTCY SIMPLE STEPS ON HOW TO AVOID BANKRUPTCY AND SAVE YOUR BUSINESS

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We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Licensed Insolvency Trustee for bankruptcy on why businesses go bankrupt

In my last Brandon Blog, Business Bankruptcy In Canada: Discover The Causes Of Business Insolvency And Bankruptcy, I described the causes of business insolvency, the types of business entities normally found in Canada and tips on how to pull your business around back from insolvency.

Numerous businesses are battling to survive today, not to mention stay lucrative. They are scaling down or just closing their doors. They are accessing the available government support money for a business. Most entrepreneurs hesitate to seek the advice of a licensed insolvency trustee due to the fact that they are afraid all the licensed insolvency trustee (formerly called a bankruptcy trustee or a trustee in bankruptcy) wants to do is be a trustee for bankruptcy.

In this Brandon blog post, I want to continue from the suggestions from my last blog, to show you exactly how that the last point I push for is to be a trustee for bankruptcy. I first look to reorganize your business. If your business or company remains in danger because of the effect of the COVID-19 pandemic, it will certainly be advantageous for you and also your organization to do so.

I will also show how sometimes, a trustee for bankruptcy or receivership, can actually help save parts of your business. The only other alternative could be to let all the business parts fail, which is the worst possible outcome.

The role of a debtor in bankruptcy or insolvency

Remember, I previously defined insolvency as a financial condition, where bankruptcy is a legal condition and a legal process. You will also recall that in my last Brandon Blog, I described the three common types of business structures in Canada; proprietorship, partnership and corporation. Just as these three business structures are different in form, they are also treated differently in insolvency vs bankruptcy. Here is how I differentiate the role of each debtor.

Proprietorship – Sole proprietorships are a type of business structure in which one individual is the sole owner of the business, which gives that person control over everything related to the business. This includes the business’ name, structure, accounting, legal obligations and tax responsibilities.

As I described last week, in Canada, the person, the sole proprietor, is carrying on business in their personal name, operating as the business name. You can register a sole proprietorship with the provincial government by completing an application form.

A sole proprietorship is the simplest kind of business structure. It permits an individual to sell goods or run a service with complete control of it on their own. Nonetheless, a sole proprietorship is not considered a separate legal entity from the owner. This means that any liabilities incurred by the business are also personal financial obligations of the owner.

So in an insolvency situation, all of the sole proprietor’s assets come into play as do all of his or her debts. It is not just the business assets and business liabilities. It is everything. This is the worst-case scenario for an entrepreneur.

So if the business is viable, and the personal assets and liabilities lead to the sole proprietor being in the situation where they can do a debt settlement plan, they can choose one of two options to restructure their entire personal financial situation. This assumes they cannot resolve their financial issues informally to bring their financial situation back to being solvent.

Partnership – A terrific way to begin a new business is teaming up with one or more people. All of you should enhance the group’s abilities as well as energy. Nonetheless, you also wish to be with people that are trustworthy, industrious and have a certain expertise that will help the business grow. Just like the way a proprietorship is one person, a partnership is made up of two or more people.

A partnership agreement is crucial. This is an agreement between the partners, describing the rights as well as obligations of each partner in the business. The same way a sole proprietor is personally responsible for the debts of the business and is putting all of their personal and business assets at risk, the same is true for partners in a business partnership. The partners are each liable for 100% of the business debts in case of insolvency. The partners cannot limit their liability to only their partnership share of the business.

Corporation – When you incorporate a business, it is a corporation. The company is a different legal entity from its owner shareholders. Shareholders are not responsible for the unpaid debts owed to financial institutions (normally a secured creditor), suppliers to the firm (normally an unsecured creditor) or the government. There are only two exceptions: (i) certain government liabilities that are a personal liability of a Director; and (ii) if the entrepreneur directly guarantees a financial debt of the company, such as a company loan, then that individual will have a liability with respect to such debt.

If the company’s financial future becomes bleak because it is insolvent, there are options. In my last blog, I talked about self-help remedies senior management of a company whose business is viable can try to informally bring the company back to a healthy financial state. You can re-read that blog to see the options available. If the self-help remedies do not work yet then we must look at more formal proceedings.

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licensed insolvency trustee for bankruptcy

Licensed InsolvencyTrustee for bankruptcy: Settle with creditors and debt collectors without bankruptcy

In a proprietorship or partnership, if the underlying business is viable, then there are a variety of options to try to turn the business around yourself. You would use the self-help methods I described in my last blog. If the self-help options do not work, there are debt settlement options available to the individual(s) under the Bankruptcy and Insolvency Act (Canada) (BIA). They would be the only government-sanctioned debt settlement plan available in Canada. Either a consumer proposal or a Division I Proposal. You can read about how each one works by clicking on the following links:

In a successfully completed debt settlement program, the bankruptcy trustee would not be a trustee for bankruptcy. Rather, the trustee in bankruptcy would be an Administrator under a consumer proposal or a Proposal Trustee in the Division I Proposal.

If the business is not viable or the circumstances are such that a debt settlement plan is not feasible, then personal bankruptcy would be the only other option. You can read about how personal bankruptcy works by looking at our top 20 bankruptcy FAQs section. Upon the bankruptcy of the person, the sole proprietorship is automatically terminated.

Since a partnership is a way of carrying on business personally, then the same insolvency options available to the partners to the business debtor are also available. A restructuring is always preferred over a bankruptcy when the partnership is in financial difficulty.

For a debt settlement insolvency filing, the licensed trustee is not a trustee for bankruptcy. That is the case only if there is an actual bankruptcy assignment. Under provincial law, if a partner goes bankrupt, the partnership is automatically dissolved.

Licensed Insolvency Trustee for bankruptcy: Ask creditors to help you avoid bankruptcy of the corporation

Without wanting to sound like a broken record, you can review my prior blog to go over the self-help remedies for turning a business around, even if it is a corporation. A self-help remedy is always a great alternative to bankruptcy. If that isn’t appropriate, or just plain does not work, then you must get in touch with an insolvency trustee.

Again, if the company’s business is viable, then there are financial restructuring alternatives. these alternatives will be within a government-regulated insolvency proceeding. There are two formal restructuring statutes in Canada:

In both cases, a company should retain the services of both a licensed trustee for bankrutpcy and a bankruptcy lawyer. The lawyer acts as legal counsel to the company. The licensed trustee will be both a financial advisor and steer the company through the restructuring process. The CCAA option is for companies with $5 million or more of debt. A BIA Proposal is for a company with any amount of debt. The main difference between the two processes are:

  • In a failed BIA Proposal, the debtor is immediately deemed to have filed an assignment in bankruptcy. This is not the case in a failed CCAA Plan of Arrangement.
  • A CCAA proceeding is more costly as there are many more court appearances in that forum than in a BIA restructuring.

Using one of these two statutes to gain what is called in the media “bankruptcy protection” in order to work out a successful restructuring with your unsecured creditors is always preferable. The company will pay less than it owes while keeping its viable but insolvent business alive. Don’t underestimate the power of preserving jobs in the eyes of a court. A bankruptcy trustee can be very helpful in obtaining great results.

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licensed insolvency trustee for bankruptcy

Licensed Insolvency Trustee for bankruptcy: When to consider an Assignment for the Benefit of Creditors

If the business is not viable and is insolvent, then the only thing left to consider is an assignment in bankruptcy filing. It is definitely a last resort if everything I have already spoken about in this Brandon Blog just won’t work and you have run out of options. Trustees in bankruptcy always consider the alternatives to bankruptcy, but sometimes filing bankruptcy is the only option available.

In the case of a proprietorship or partnership, it is the individual sole proprietor and one or more of the partners who will be meeting with a trustee in bankruptcy and filing for a personal type of bankruptcy. the personal bankruptcy trustee will administer the personal bankruptcy estate. Again, you can read up on personal bankruptcy by looking at our top 20 personal bankruptcy FAQs section.

In personal bankruptcies, it will be either a streamlined system called a Summary Administration and if not, it is then an ordinary administration bankruptcy. Unlike a company, a person is ultimately entitled to a bankruptcy discharge.

When it comes to the administration of bankruptcy for a corporation, it is always an ordinary administration bankruptcy. The purpose of this Brandon Blog is not to run through all the steps in a personal or corporate bankruptcy process. Above I have provided some links to read up on debt settlement restructuring and personal bankruptcy. For corporate bankruptcy, I recommend that you read our corporate website page on corporate bankruptcy.

Alternatively, you can also read my previous Brandon Blog Bankrupting a Limited Company: Canadian Corporate Bankruptcy Process.

A trustee for bankruptcy administers the bankruptcy process for the benefit of unsecured creditors. Sometimes, it is a secured creditor who needs to enforce their security. They do not necessarily need the company to meet with a trustee for bankruptcy. Rather, the secured creditor needs the appointment of trustee to act not in a bankruptcy administration, but rather, to act as a receiver or receiver-manager to enforce the secured creditor’s position by taking control of the assets subject to the security and ultimately selling them. To read the receivership process, you can read the receivership section of our corporate website.

You can also read my Brandon Blog titled What Is A Receivership? Our Complete Guide To Receivership Solutions.

Licensed Insolvency Trustee for bankruptcy: How to avoid bankruptcy and save your business from closing

I hope you enjoyed the licensed insolvency trustee for bankruptcy Brandon Blog post. Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve. As you can see from this blog, we are not just a trustee for bankruptcy. We believe every person and business should first explore debt settlement to avoid bankruptcy.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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CONSUMER PROPOSAL VERSUS BANKRUPTCY: MASTER THIS KNOWLEDGE AND BE SUCCESSFULLY DEBT FREE

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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

consumer proposal versus bankruptcy
consumer proposal versus bankruptcy

Consumer proposal versus bankruptcy introduction

The holidays are upon us and we can all ideally get a well-deserved break. This 2020 year truly threw us a curveball in March and it isn’t over yet. Many people have already identified that they need to understand their options in taking care of way too much debt. Hopefully, they will use the period of time during the holiday break downtime to seriously consider fixing their situation.

Maybe their New Year’s resolution will be to once and for all solve their financial situation. That is why I believe this is a good time to write this Brandon’s Blog to help those people who are wondering about the issues surrounding a consumer proposal versus bankruptcy.

Consumer proposal versus bankruptcy: Who qualifies for a consumer proposal?

A consumer proposal is an alternative to bankruptcy. Consumer proposals are for people whose total financial debts do not surpass $250,000, not including financial debts secured by their primary house.

Division 1 proposals are available to both:

  • companies; and
  • individuals whose debts exceed $250,000 (leaving out mortgages on their principal home).

I will focus on the differences between a consumer proposal versus bankruptcy.

Consumer proposal versus bankruptcy: What are consumer proposals?

Consumer proposals are formal ways governed by the Bankruptcy and Insolvency Act (Canada) (BIA) available only to people. Working with a licensed insolvency trustee (Trustee) acting as the consumer proposal administrator, you make a proposal to:

  • Pay your creditors a percentage of what you owe them over a specific period not exceeding 60 months
  • Extend the time you have to pay off the debt
  • Or a mix of both

Payments are made through the Trustee, and the trustee uses that money to pay each of your creditors. The consumer proposal must be completed within 5 years from the date of filing.

Below I will highlight more differences between a consumer proposal versus bankruptcy.

Consumer proposal versus bankruptcy: Is a consumer proposal worth it?

The advantages of a consumer proposal versus bankruptcy are:

  • You keep all of your assets
  • Legal actions that are being contemplated or actually begun against you by unsecured creditors and results of a judgment such as freezing your bank account and wage garnishments are stopped.
  • Unlike informal debt negotiation or debt settlement programs, the consumer proposal forum catches all of your debts and your unsecured creditors must take part in your restructuring process.
  • Of all the debt relief options available to a person, it is the only government-approved program that combines debt consolidation (without having to apply for one or more loans) and debt settlement.
  • You do not need to use the “B” word.

You will definitely pay less than you owe with a consumer proposal. It could be as much as 75% less. All of your unsecured debts will be consolidated right into a simple regular monthly payment. What you pay is based on what your creditors could expect to receive in your bankruptcy and what you can actually afford.

So is a consumer proposal worth it to make one monthly payment that you can afford to pay a portion of the total you owe instead of going bankrupt? I think it is.

What is the impact on my credit rating if I file a consumer proposal versus bankruptcy?

We are always asked, “How will a consumer proposal affect my credit rating?”. The follow-up question is “What is the impact on my credit rating if I file for personal bankruptcy or do a consumer proposal?”.

The person who files for bankruptcy will absolutely obtain R9 status. This is the lowest credit score possible. It will remain on their credit report for 6 years after the person gets their bankruptcy discharge. So for a first-time bankruptcy with no surplus income and the person gets their discharge after 9 months, it is on the credit report for about 7 years. If the person is a first time bankrupt with surplus income, then their bankruptcy discharge cannot be gotten for at least 21 months. This equates to having the R9 for 8 to 9 years.

An individual that files a consumer proposal sees their credit score go to an R7 ranking which is less extreme. It will remain to be on their credit report for around 8 years in total, starting with the filing date.

Through the two mandatory credit counselling sessions that are provided with either a consumer proposal or bankruptcy, we teach you ways you can start rebuilding your credit score right away.

What are the costs and fees of a consumer proposal versus bankruptcy?

When doing a consumer proposal as a debt solution, the Trustee costs are included in the settlement you bargain with your creditors. The calculation of what is reasonable for you to pay is done without any reference to the Trustee costs.

For example, if your consumer proposal has you paying a regular monthly payment of $400 for 60 months, the Trustee’s fee and disbursements are taken from those funds. The consumer proposal fee is a tariff defined in the BIA.

If there is no surplus income or assets that you hand over to the Trustee, the cost for this type of personal bankruptcy is about $2,000. This cost would need to be paid to the Trustee either upfront or over an 8 month period in equal monthly payments.

However, if you file for bankruptcy and you have surplus income and/or assets that you must turn over to the Trustee, the personal bankruptcy cost could be higher. The Trustee’s fee and costs must be taxed by the Court. However, it will be calculated using the hours spent by the level of staff at each staff member’s normal hourly rate. If there are insufficient assets to pay the Trustee’s fee, the difference has to be paid for by the bankrupt person or someone else guaranteeing the Trustee’s costs.

This is another distinction between bankruptcy vs consumer proposal.

consumer proposal versus bankruptcy
consumer proposal versus bankruptcy

What happens to my assets in a consumer proposal versus bankruptcy?

If you do a consumer proposal, you keep your assets. In bankruptcy, other than for exempt assets, your assets are seized by the Trustee. Exemptions depend on the province you live in.

In Ontario the assets you get to keep in bankruptcy consist of:

  • The equity in your home of no more than $10,000.
  • A motor vehicle with an equity value of no more than $6,000.
  • Clothing and medical and dental aids.
  • Household furnishings up to a value of $13,100.
  • Tools of the trade with a value of no more than $11,300.
  • Pensions, RRIF, RRSP (except for any RRSP contributions made within 12 months of the date of bankruptcy).
  • Farmers – no more than $29,100 for animals and tools and equipment.

This difference to your assets between a consumer proposal versus bankruptcy is massive.

What happens if I miss payments and default on my consumer proposal versus bankruptcy payments?

If you do not maintain your payments on a consumer proposal, it defaults and it is over. You then cannot file a new one. Collection action by your creditors will begin again.

If you do not complete all your duties in bankruptcy, you will definitely not be discharged. If your Trustee gets discharged and you remain undischarged, then all your creditors can return to taking collection action against you to try to recover on their loans or other debt payments you owe them.

This is one more consumer proposal versus bankruptcy difference.

When is a meeting of creditors held in a consumer proposal?

A meeting of creditors in a consumer proposal is held if one is requested by one or more creditors who are owed at least 25% of the overall value of the proven claims.

A request for a meeting has to be made by the creditors within 45 days of the declaration of the consumer proposal. The Office of the Superintendent of Bankruptcy (OSB) can also ask for the Trustee to call a meeting of creditors whenever within that specific very same 45-day time frame.

The meeting of creditors is held within 21 days after being called. At the creditors’ meeting, they elect to either approve or turn down the proposal.

If no meeting of creditors is requested within 45 days of the filing of the proposal, the proposal will be regarded to have actually been approved by the creditors no matter any kind of objections received later.

A consumer proposal is fully performed as soon as:

  • the person has made the required payments within the time period called for in the consumer proposal; and
  • the two mandatory counselling sessions with the Trustee have been done.

In a bankruptcy, the discharge relies on various facets, including whether it was the first time the debtor filed for bankruptcy and if they need to make surplus income payments to the Trustee. The calculation for surplus income is based mainly on your household monthly income.

If the debtor has actually never ever declared bankruptcy before as well as they do not have to make surplus payments, the bankrupt is entitled to be released 9 months after declaring bankruptcy. Nevertheless, if the bankrupt has surplus income, they will require to make payments for 21 months before they can be discharged.

This is one more distinction between a consumer proposal versus bankruptcy.

Consumer proposal versus bankruptcy: How to file for bankruptcy?

In order to file, you need to engage a Trustee. This is a person or company accredited by Industry Canada to administer the insolvency process in Canada.

The 11 steps below are a guide to the filing for bankruptcy process:

  • Contact a Trustee and attend a meeting with him or her to speak about your personal situation and your options. This will include all your options to avoid bankruptcy.
  • Deal with the Trustee to complete the necessary bankruptcy documents.
  • The Trustee will after that submit the bankruptcy paperwork to the OSB and get back a certificate evidencing your bankruptcy.
  • The Trustee notifies your creditors of the bankruptcy.
  • You attend a meeting of creditors if one is called.
  • You participate in 2 counselling sessions.
  • Based on your provincial exemptions, the Trustee sells your non-exempt assets; you may likewise need to make surplus income payments to the Trustee.
  • In certain conditions, you might have to participate in an evaluation by an officer at the OSB.
  • The Trustee prepares a report to the OSB describing your activities during the bankruptcy.
  • You go to the discharge hearing if required.
  • You get your discharge from your bankruptcy and afterwards, the Trustee completes the management of your bankruptcy file, including paying a dividend to your creditors, if available.

As you can see from the description of how a consumer proposal works and from these 11 steps, there is a difference in how a consumer proposal versus bankruptcy works.

Consumer proposal versus bankruptcy: Get back to a stress-free life

I hope you have enjoyed this consumer proposal versus bankruptcy Brandon’s Blog. Both a successfully completed consumer proposal or obtaining your discharge from bankruptcy lets you get back on the road to financial health, relieve the stress you face and bring you:

  • Freedom by getting out from under garnishments;
  • The ability to live better than just hanging on one payday to the next;
  • Improved credit ratings; and
  • Improved health and well-being.

You are worried because you are facing significant financial challenges and you don’t fully understand the options available to you, including, filing a consumer proposal versus bankruptcy. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

Ira Smith Trustee & Receiver Inc. offers a full range of insolvency services to people facing a financial crisis. Whether you need help with a proposal to your creditors to avoid the worst case, financial counselling or advice about insolvency options, our goal is to make sure that you understand the process, your choices, and what steps will get your life back on track.

Call us for your free first consultation. We will inform you about all the choices readily available so you can make a proper decision about the very best plan to deal with your financial obligations.

Call Ira Smith Trustee & Receiver Inc. today. All you have to lose is your debt!

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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BANKRUPTCY TRUSTEE IN VAUGHAN BECOMES LICENSED INSOLVENCY TRUSTEE

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The bankruptcy trustee in Vaughan: Why did we transform into a licensed insolvency trustee?

Similar to caterpillars turning into butterflies, this bankruptcy trustee in Vaughan went through a metamorphosis. The Office of the Superintendent of Bankruptcy officially changed the name “bankruptcy trustee” to “licensed insolvency trustee” (LIT). As of April 1, 2017, all licensed trustees must have fully transitioned to the use of the LIT designation.

The purpose of this blog is to offer an overview of the Canadian insolvency process. Think of it as a bankruptcy and insolvency lesson 101.

What is the purpose of the Bankruptcy and Insolvency Act

Among the primary functions of this insolvency process, it is to release the individual from specific financial debts. It is to give a straightforward honest but unfortunate debtor a “new beginning.”. The debtor has no responsibility for discharged financial obligations.

A discharge is available to personal bankrupts, not to corporations. Although a personal case typically causes a discharge of financial debts, the right to a discharge is not absolute. Some sorts of debts may not be released. Section 178(1) of the Bankruptcy and Insolvency Act (Canada) (“BIA”) sets out the types of debts that are not released by the discharge of the bankrupt. The kinds of debts that are not released are:

1. child support and alimony;

2. fraud or near fraud;

3. debts arising from Court orders.

Where can I do some of my research?

You must initially do some of your own research to get an idea of exactly what your choices are. One place to start is our website to learn about:

  1. Personal Services
    1. Credit Counselling
    2. Consumer Proposals
    3. Bankruptcy Alternatives
    4. The Bankruptcy Process
    5. Why use a Licensed Insolvency Trustee?
    6. Rebuilding Credit
    7. Personal Bankruptcy
    8. TOP 20 PERSONAL BANKRUPTCY FAQs
  1. Corporate Services
  2. Creditor Services
  3. Our Blog titled Brandon’s Blog

Once you have a good handle on what to expect, speak to a LIT to begin discussing what actions you have to take next.

bankruptcy trustee in vaughan
bankruptcy trustee in vaughan

The BIA

The BIA allows for a procedure that permits people and companies to be released from all of their financial debts through either:

  1. a restructuring (Consumer Proposal, Division I Proposal or the Companies’ Creditors Arrangement Act) under secure arrangements of the federal insolvency statute; or
  2. through bankruptcy by turning over their property to a licensed insolvency trustee to realize upon it for the general benefit of creditors.

Either way, the funds available for distribution to the creditors are paid out by the licensed insolvency trustee. It is according to the scheme of priority laid out in the BIA.

The Court will consider approving a repayment plan that will repay the approved part of the financial obligations in no more than 5 years. When you use the restructuring provisions of the BIA (Consumer Proposal or Division I Proposal), you need to have a payback strategy to show your creditors just how you are going to pay back your debts. A successful restructuring plan is an alternative to bankruptcy and will allow a person or company to avoid bankruptcy.

There are various rules and ways that must be followed. Your licensed insolvency trustee can go over all the issues with you and is there to aid you through the process.

How does it all work?

Canada’s insolvency legislation is designed for debtors experiencing financial problems who cannot pay their present financial obligations and don’t have enough cash flow to offer a restructuring plan to avoid bankruptcy. The aim is to get a release from their existing debts.

The premise of the BIA is that the individual must deliver all of his or her non-exempt assets to the licensed insolvency trustee. The trustee will sell them for distribution to the creditors. In return, other than for either secured debts or the class of debts not released by a discharge from bankruptcy discussed above, the person’s debts will be erased. The person will be able to maintain any type of property that is categorized as exempt under provincial regulations. In this way, a discharge allows the individual to return to society as discharged bankrupt. This allows the person to start all over again.

Your credit score

Filing in an insolvency process could impact your financial resources and credit score for years. You should very carefully weigh all your options before choosing the bankruptcy option. That is a discussion a licensed insolvency trustee will be happy to have with you and will help you in first trying to find one of the possible bankruptcy alternatives. Hopefully, together you can see which one is best for you. Only if there is not an available alternative, will the trustee recommend bankruptcy?

A current bankruptcy filing may prevent you from acquiring a mortgage or other financing for years. Credit card businesses will instantly end your charge cards when you file for bankruptcy. Likewise, if you are trying to find a job or rent a place to live, some employers or property owners might look unfavourably on a current bankruptcy filing. If other applicants are as qualified as you and don’t have a bankruptcy on their record, you probably won’t be chosen.

Fresh start

Bankruptcy permits people or companies that are unable to pay their debts to settle their monetary difficulties and start restoring their credit. Declaring bankruptcy will trigger the “stay of proceedings”, preventing creditors from starting or continuing any legal action to collect their debts.

A bankruptcy filing will stay on your credit report for about 7 years. Since many financial debts can be discharged in bankruptcy with certain exceptions, people can take certain steps to begin boosting their credit rating after filing for bankruptcy and for sure after obtaining their discharge.

What to do if you are experiencing financial hardship

I hope this bankruptcy trustee in Vaughan Brandon’s Blog was helpful to you. People experience financial hardship for many reasons. If you’re experiencing financial hardship and are looking for a way out, contact Ira Smith Trustee & Receiver Inc. With immediate action and the right plan for moving forward, we can set you on a path to debt-free living Starting Over, Starting Now. All it takes is one phone call.

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CONSUMER PROPOSAL VS BANKRUPTCY: THE GREATEST INFO YOU REALLY NEED TO KNOW

 

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Consumer proposal vs bankruptcy: Introduction

The holiday shopping season is upon us and the first sign that you are in financial trouble is if you truly need to learn about consumer proposal vs bankruptcy BEFORE you begin your holiday shopping! If you have already recognized that you need to know your options in dealing with your debt before you start putting holiday gift purchases on your credit card, I suspect that the New Year will become the time when you begin taking positive action to reduce your debt and gain back control over your life.

A consumer proposal is an alternative to bankruptcy. Although similar in many respects, there are some major differences. Consumer proposals are available to people only whose total debts do not exceed $250,000, not including debts secured by their principal residence. Division 1 proposals are available to both businesses and people whose debts exceed $250,000 (excluding the mortgage on their principal residence). The focus of this vlog is on the differences between a consumer proposal vs bankruptcy.

Consumer proposal vs. bankruptcy: What are consumer proposals?

Consumer proposals are formal ways governed by the Bankruptcy and Insolvency Act (BIA) available only to people. Working with a licensed insolvency trustee (Trustee) acting as the consumer proposal administrator, you make a proposal to:

  • Pay your creditors a percentage of what you owe them over a specific period not exceeding 60 months
  • Extend the time you have to pay off the debt
  • Or a mix of both

Payments are made through the trustee, and the trustee uses that money to pay each of your creditors. The consumer proposal must be completed within 5 years from the date of filing.

Below I will highlight more differences between a consumer proposal vs. bankruptcy.

Consumer proposal vs bankruptcy: What are the advantages of a consumer proposal?

The advantages of a consumer proposal vs. bankruptcy are:

  • You keep all of your assets
  • Actions against you by unsecured creditors, such as wage garnishments will stop.
  • Unlike informal debt settlement, the consumer proposal is a forum where all of your creditors must deal with your restructuring
  • You don’t have to declare the “B” word

What are the differences in credit history score?

The individual that declares bankruptcy will certainly get R9 status. This is the lowest credit score as well as it will continue to be on their report for 7 to 14 years. A person that submits a consumer proposal will have an R7 ranking which is less extreme. It will certainly continue to be on their record for approximately 8 years in total, from the moment of declaring.

For the most part, you will certainly pay less than you owe with a consumer proposal. Often as much as 70% less. Your several financial obligations will also be consolidated right into a simple regular monthly settlement. This number will be based upon what you can pay for.

Your ability to improve your credit score later is much different in a consumer proposal vs bankruptcy

What are the costs and fees of a consumer proposal versus filing for bankruptcy?

When doing a consumer proposal, the Trustee’s charges are included in the payment you bargain with your creditors. For instance, if your consumer proposal has you paying $400 monthly for 60 months, the Trustee’s fee and disbursements are taken from those funds.

Nevertheless, if you were to file for bankruptcy, the cost is established by any kind of excess earnings you could have (based on the criterion that includes earnings as well as family size), any assets that you may intend to try to keep, and also the monthly contribution for surplus income if any.

If there is no excess earnings or assets, the insolvency cost will be around $2,000. This is another difference between a consumer proposal vs bankruptcy.

Are assets treated differently between a consumer proposal vs bankruptcy?

If you do a consumer proposal, you can retain your assets whereas in bankruptcy your properties might be impacted. This consists of the equity in your home if higher than $10,000, a car or truck worth more than $6,000 (with no liens against it), financial investments, tax refunds, and also RRSP payments made in the last 1 year. In bankruptcy, you transfer your possessions (except those that are exempt by regulation) to the Trustee, and they are then sold or transferred to repay your creditors.

This difference between a consumer proposal vs bankruptcy is huge.

What if I default on my consumer proposal vs bankruptcy payments?

If you do not maintain your payments on a consumer proposal, it defaults and is void. You also are unable to submit an additional one. Collection action by your credits will begin again. If you do not complete all your duties in bankruptcy, you will certainly not be discharged and eventually, your creditors will resume collection activities as well.

This is another consumer proposal vs bankruptcy difference.

When is a meeting of creditors held in a consumer proposal?

A meeting of creditors in a consumer proposal is held if one is requested by one or more creditors who are owed at least 25% of the total value of the proven claims.

A request for a meeting has to be made by the creditors within 45 days of the filing of the consumer proposal. The OSB can also request the Trustee to call a meeting of creditors any time within that exact same duration.

The meeting of creditors should be held within 21 days after being called. At the meeting of creditors, they vote to either approve or decline the proposal.

If no meeting of creditors is asked for within 45 days of the filing of the proposal, the proposal will be deemed to have been accepted by the creditors no matter any objections received later.

How long does it take to complete a consumer proposal vs bankruptcy?

A consumer proposal is finished once the individual has actually made the required payments for the needed period of time. In a bankruptcy, the discharge depends on a variety of different aspects, consisting of whether it was the first time the debtor filed for bankruptcy and if they need to make surplus income payments.

If the debtor has actually never ever declared bankruptcy before and they do not have to make surplus income payments, most bankrupts are discharged 9 months after declaring bankruptcy. However, if the bankrupt has surplus income, they will need to make payments for 21 months prior to when they can be released.

This is another difference between a consumer proposal vs bankruptcy.

What do consumer proposals and bankruptcy have in common?

Both a consumer proposal and filing for bankruptcy are lawfully binding procedures that are provided by a Trustee. If you are thinking about bankruptcy, it is essential that you consult with a Trustee so that you can totally understand the procedure, what’s involved, and also any charges. You can speak with friends or family that may have filed for one or the other before, yet it is necessary that you get professional recommendations concerning your unique situation.

Filing for bankruptcy or doing a consumer proposal are both matters of public record. That means there will certainly be an irreversible public document regarding your insolvency that can be accessed by anyone. If the debts are joint or co-signed, the other individual is accountable for the financial debt in both a consumer proposal and personal bankruptcy as well, unless it is a joint filing.

Even these similarities still point out differences between a consumer proposal vs bankruptcy.

Consumer proposal vs bankruptcy: How to Figure Out Which Option is Best for You?

As you can see, when you look at a consumer proposal vs bankruptcy, there are definitely differences between the two, but they also have a lot in common too. What’s most important, though, is that you find the best way to get your finances back on track in a way that will help you achieve your long-term goals.

Consumer proposals and bankruptcy aren’t the only ways of obtaining debt relief and consolidating debt. There are also other ways of resolving debt problems that don’t involve an official program or paying anyone. If you honestly want to carefully and objectively look at all your options, contact a local Trustee, and speak to him or her. They’ll listen to your situation and issues and advise you on what will work best for you even if you do not need to file for either a consumer proposal or bankruptcy.

Their help is usually free and non-judgmental.

At our Firm, declaring bankruptcy is only encouraged until all other settlement solutions have been exhausted. A consumer proposal in Ontario is shaping up to be one of the better bankruptcy alternatives, primarily because of the reasons I describe in this Brandon’s Blog.

Consumer proposal vs bankruptcy: Who qualifies for a consumer proposal?

A consumer proposal is available to people whose total debts do not exceed $250,000, not including debts secured by their principal residence.

Consumer proposal vs bankruptcy: The bankruptcy process

Before you decide what to declare, contact a professional to discuss all of your options. A trustee is a highly-skilled, professionally licensed by the federal government that can evaluate your situation and presents all the options available to you. Whatever process ends up being the best and the most helpful for your particular circumstance, we can administer the insolvency process.

Consumer proposal vs bankruptcy: How to file for bankruptcy?

In order to file, you must engage a Trustee. This is an individual or company licensed by Industry Canada to administer the insolvency process. The 10 steps below are a guide to the bankruptcy process.

Consumer proposal vs bankruptcy: The 10 steps of the bankruptcy process

  1. Contact a licensed insolvency trustee and attend a meeting with him or her to talk about your personal situation and your options including if it is possible for you to avoid bankruptcy.
  2. Work with the trustee to complete the required forms. The trustee will then file the bankruptcy with the Office of the Superintendent of Bankruptcy (OSB).
  3. The trustee notifies your creditors of the bankruptcy.
  4. You attend a meeting of creditors if one is called.
  5. You attend two counselling sessions.
  6. Subject to your provincial exemptions, the trustee sells your assets; you may also have to make surplus income payments to the trustee.
  7. In certain circumstances, you may have to attend an examination by an officer at the OSB.
  8. The Trustee prepares a report to the OSB describing your actions during the bankruptcy.
  9. You attend the discharge hearing if required.
  10. You get your discharge from your bankruptcy and then the trustee completes the administration, including paying a dividend to your creditors, if available.

Consumer proposal vs bankruptcy: Move on with your life

I hope you have enjoyed this consumer proposal vs bankruptcy Brandon’s Blog. Both a successfully completed consumer proposal or obtaining your discharge from bankruptcy lets you get back on the road to financial health, relieve the stress you face and bring you:

  • Relief from harassing calls from debt collectors;
  • Freedom by getting out from under garnishments;
  • The ability to live better than just hanging on one payday to the next;
  • Improved credit ratings; and
  • Improved health and well-being.

Ira Smith Trustee & Receiver Inc. offers a full range of insolvency services to people facing a financial crisis. Whether you need help with a proposal to your creditors to avoid the worst case, financial counselling or advice about insolvency options, our goal is to make sure that you understand the process, your choices, and what steps will get your life back on track.

Call us for your free first consultation. We will inform you about all the choices readily available so you can make a proper decision about the very best plan to deal with your financial obligations. Contact Ira Smith Trustee & Receiver Inc. today. All you have to lose is your debt!

consumer proposal vs bankruptcy
consumer proposal vs bankruptcy
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CREDIT REPAIR TORONTO: HOW TO USE IT TO NOT RUIN YOUR LIFE

Credit Repair Toronto: Why Not?

Many people think it’s best to try a credit repair Toronto company before they investigate the Canadian insolvency process. I’m here to tell you that many of these companies are not acting in your best interest.

What do Dave Ramsey and Gail Vaz-Oxlade have to say?

Many are paid – and in some cases managed – by credit card companies. According to an article by financial guru Dave Ramsey:

“Some of these ‘counselling’ companies withhold credit card payments until the account is three to six months past due. Then, they contact the lender and negotiate to settle the bad debt…That’s how they get negotiated discounts on credit card debt. Card companies don’t settle on your debts when your payments are on time. These services are always a bad idea, and sometimes they’re a complete scam.”

Dave Ramsey isn’t the only one leery of credit repair Toronto companies. Gail Vaz-Oxlade writes:

“One of the big drawbacks of using a debt counselling or debt management company is that they don’t come with any serious advice, so people often fulfill their commitment and then go right back out and rack up their debt again.”

Does the Ontario government like credit repair Toronto companies?

The provincial governments have their own opinion. Most provinces have enacted legislation to try to thwart many of their shady practices. Stay away from credit repair Toronto companies. Do not be afraid to go to a Licensed Insolvency Trustee for a free consultation at the first sign of financial trouble. (See the picture at the bottom of this page for a special offer).

We have previously written blogs on the credit repair Toronto industry who have been preying on consumers for far too long. We’ve warned you about them in previous blogs:

In 2010, after a decade of massive growth in the U.S. debt settlement industry, the FTC brought in new regulations that effectively banned debt settlement companies and forced many of them to migrate north of the border. This resulted in 18 companies and 34 credit counselling providers offering debt settlement services in Ontario.

With ever-mounting numbers of complaints about unsuspecting consumers being taken advantage of by unscrupulous credit repair companies, the Ontario government has finally taken action and passed Bill 55.

What will Bill 55 do? It creates new standards of conduct for credit repair Toronto companies by:

  • Banning them from charging upfront fees
  • Limiting the number of fees consumers are charged and prohibiting the payment of fees before services are provided
  • Requiring clear, transparent, and detailed contracts that include information about the effect of the contract on the consumer’s credit rating
  • Requiring credit counsellors to disclose information to the consumer about how the organization is funded
  • Establishing a 0-day cooling-off period, providing consumers more time to consider their agreements with companies
  • Allowing the licenses of non-compliant companies to be revoked

If not credit repair Toronto companies, then what should YOU do?

Please stay away from credit repair Toronto companies! Rather, obtain a free consultation from a licensed insolvency trustee to understand the options available to you either as an alternative to bankruptcy or of bankruptcy itself. We are professionals, federally regulated, licensed and subject to a strict code of ethics. Our fees are regulated by the Federal Government and are usually much less than credit repair companies who make unsubstantiated claims. We can help; Starting Over, Starting Now you can live a debt-free life.

We have been able to help many individuals carry out a successful debt settlement program. It all began with debt counselling. The first step is a realistic household budget.
Successful completion of such a program will free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

Call us today so you can get on the road to financial recovery immediately.

The first part of this vlog is from our newly released book:

Toronto,Vaughan,credit repair toronto,credit fix toronto,credit counseling toronto,tips on how to repair bad credit,canada credit fix reviews,how to improve your credit score canada,credit repair loans canada,canada credit fix inc toronto on,credit repair,credit repair how to,how to improve credit score,how to repair your credit,fix credit score,credit repair lawyers,credit repair letters,sample credit repair letters,fast credit repair,debt,ira smith trustee, personal bankruptcy toronto, bankruptcy, consumer proposal, toronto, vaughanI said above that there would be a special offer and here it is. If you would like to receive a complimentary, totally free copy of our eBook, please sign up as a subscriber to our blog. You can do so by filling in the subscription pop-up box on this page. If you are already a subscriber, thank you, and just shoot me an email asking for your complimentary copy.

If the subscription box on this page has gone away, you can click on the picture of our eBook in this article which will take you to our main blog page, and you should soon see the pop-up subscription box again. As a side bonus, you will also receive notice of all of our new blogs and vlogs, with a link directly to them.

Early next week,you will receive an email with an invitation to download a complimentary copy of our new eBook – PERSONAL BANKRUPTCY CANADA: Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track.

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ADVANTAGES OF CONSUMER PROPOSALS VIDEO FOR YOU

Introduction

We have written many blogs on the advantages of consumer proposals, including:

We thought it would be good to now put together a short video on the topic.

The best alternative to personal bankruptcy in Canada

Of the various alternatives to bankruptcy, this government approved debt settlement plan is the one option with the most predictable and certain results for the insolvent person in dealing with their debt. You may have heard a proposal being called other names such as consumer credit proposal, debt proposal or debt settlement.

The main difference is that the only formal legal mechanism to be able to stop your creditors from continuing to harass and sue you is with a formal consumer proposal through a licensed trustee in bankruptcy. Unlike the other options, the consumer proposal is codified in the Canadian Bankruptcy and Insolvency Act which provides the trustee with certain weapons that can be used for your protection.

That is why we say that of all the bankruptcy alternatives, the consumer proposal is the best one. There are many bankruptcy options, but the consumer proposal also allows you to rebuild your credit thereby increasing your credit score.

Keep away from bankruptcy with the advantages of consumer proposals

If you are insolvent and are considering bankruptcy, contact Ira Smith Trustee & Receiver Inc. We offer sound advice, will check all of your bankruptcy options with you and then with you, formulate a solid plan for Starting Over, Starting Now so that you’ll be well on your way to a debt-free life in no time.

advantages of consumer proposals

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CONSUMER PROPOSAL VS DEBT SETTLEMENT

consumer proposal vs debt settlement
consumer proposal vs debt settlement

Consumer proposal vs debt settlement vs. debt settlement companies

If you have serious financial problems, there is an option available to you to avoid debt settlement companies and bankruptcy. In fact, more Canadians are now choosing consumer proposals instead of declaring personal bankruptcy. The purpose of this Brandon’s Blog is to explain the benefit of consumer proposal vs. debt settlement companies.

The advantages of consumer proposals with a Trustee can save you from debt settlement companies. Here’s how. Unlike a trustee in bankruptcy, debt settlement
companies have long been a hot-button issue and as a result, we’ve posted several blogs on the subject:

How successful is consumer proposal vs. debt settlement companies?

One of the advantages of consumer proposals vs. debt settlement companies is a high chance of success. Consumer proposals filed by a trustee have an excellent chance of being accepted by creditors. The consumer proposals our office files have experienced almost 100% acceptance by creditors. We know of other trustees who say their success rate with consumer proposals is in the high 90% range.

According to the Canadian Bankers Association, only 10% of offers received from debt settlement companies are accepted and it’s estimated that only 3% are successfully completed. As you can see, consumer proposals vs. debt settlement win hands down!

Advantages of using a licensed trustee in a consumer proposal vs debt settlement company

The reason for the advantages of consumer proposals is because a licensed trustee understands the behaviour of your creditors, is obligated to check all options with you and explain why a consumer proposal is a better option than other ones available, including personal bankruptcy. A trustee can recommend you properly on how to reach a mutually satisfactory compromise on your debt that you can actually complete it successfully, taking your family income and situation into consideration.

If you are considering consumer proposal vs. debt settlement companies

The advantages of consumer proposal vs. debt settlement companies are simple; a trained, educated, licensed financial services professional delivers results. Contact Ira Smith Trustee & Receiver Inc. for sound, professional advice and a solid financial plan for Starting Over, Starting Now.

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ECONOMIC DOWNTURN CAUSES MORE PEOPLE TO CONSIDER BANKRUPTCY OR PERSONAL BANKRUPTCY ALTERNATIVES

bankruptcy, alternative to bankruptcy, personal bankruptcy alternatives, alternatives to personal bankruptcy, Bankruptcy and Insolvency Act , BIA, bankruptcy solutions, lines of credit, credit card debt, credit counselling, debt consolidation, consumer proposals, budget, student loan debt, trustee, economic downturn, starting over starting now, information about bankruptcy, Toronto bankruptcy trusteeWhen do people generally want information about personal bankruptcy alternatives?

Personal bankruptcy alternatives are always sought after an economic downturn. The economic downturn is causing more people to rely on credit to supplement their income and/or their lifestyle. This mountain of debt will ultimately result in bankruptcy or hopefully, an alternative to bankruptcy.

What Bank of Montreal and Statistics Canada say about Canadian household debt

In BMO’s Annual Debt Report, the average household debt of those surveyed is $92,699, more than $4,000 higher than the four-year average dating back to 2012. And servicing that debt, which includes mortgages, lines of credit and credit card debt, is costing $1,165 a month.

According to Statistics Canada:

  • The debt-to-income ratio of Canadian households is 163.3% which means for every dollar Canadians earn, they owe $1.63 in debt
  • Canadian households now owe $1.841 trillion in various forms of debt
  • More than $1.1 trillion is from mortgages
  • $519 billion is consumer debt, like credit cards

Debt + More Debt = a Solution?

Adding debt to more debt is not a solution to the problem; it compounds the problem. If you are using credit cards to supplement your income or your lifestyle, you have a serious problem that needs professional help. Don’t wait until bankruptcy is your only option. You should be learning about personal bankruptcy alternatives before it is too late.

Is there such a thing as bankruptcy solutions?

We are asked this question all the time. Before even considering bankruptcy, I always want to discuss 3 formal alternatives to personal bankruptcy:

  1. Credit Counselling
    Credit counselling is in reality debt counselling. Professionals provide assistance with a host of issues related to debt including budgeting, finding debt solutions, working with your creditors and rebuilding credit.
  2. Debt Consolidation
    Debt consolidation is a single loan that allows you to repay your debts to several or all of your creditors at once, leaving you with only one outstanding loan.
  3. Consumer Proposals
    Consumer proposals are formal offers made to your creditors under the Bankruptcy and Insolvency Act (BIA) to modify your payments. e.g. paying a lesser amount each month for a longer period of time and paying a total lesser amount than you owe, all on an interest-free basis!

In addition there are informal personal bankruptcy alternatives including budget review, contacting your creditors (including your mortgage lender), selling an asset and contacting the Federal Government’s Repayment Assistance Plan (if you’re having difficulty repaying your student loan debt).

Just ask your Toronto bankruptcy trustee

A professional trustee can open up a world of possibilities for you. Contact Ira Smith Trustee & Receiver Inc. for help with your financial problems. With just one phone call you can be well on your way to a debt free life Starting Over, Starting Now.

 

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ALTERNATIVES TO BANKRUPTCY IF YOUR INCOME DECLINES SUBSTANTIALLY

alternatives to bankruptcy, bankruptcy, trustee, alternatives to personal bankruptcy, credit counselling, debt consolidation, consumer proposals, budget, balanced budget, financial, insolvency, personal insolvency, starting over starting nowAlternatives to bankruptcy

Our insolvency clients, be they personal or corporate, usually want to start a consultation by asking us bankruptcy questions. However, I first start by obtaining a full understanding of the person’s or company’s financial challenges, so that we may consider all of the realistic options before discussing the topic of bankruptcy. I first wish to find the best alternative to bankruptcy.

I am finding now that many families, even high earners, are struggling in the “new economy”. We’ve spoken about their plight in our blogs:

There is yet another group that is now in great danger of bankruptcy – families whose previously very healthy income has taken a serious downturn and are now struggling to maintain a lifestyle they can no longer support. These families need to act fast and consider their alternatives to bankruptcy before it is too late to take remedial action. The natural inclination is to tough it out and hope for better times, but serious financial times demand serious financial decisions, not a hope and a prayer. As these families wait for better times to come they are burning through whatever savings they have, going further into debt by living off credit and will eventually run out of both money and credit.

This is not the best approach. At the first sign of financial trouble, these families should seek the advice of their legal counsel or accountant. These trusted professionals will be able to refer the families in financial trouble to a trustee in bankruptcy that they trust. With the trust factor bridge now in place with the trustee, that trustee can review the situation and provide the families with their realistic alternatives to bankruptcy.

If you’re struggling to support a lifestyle you can no longer afford, take immediate action and contact a professional trustee and explore your alternatives to bankruptcy. There are alternatives to personal bankruptcy – credit counselling, debt consolidation and consumer proposals. However, regardless of the choice that’s right for you, a balanced budget is always part of the equation. As we’ve stressed before, a balanced budget is to financial health what a balanced diet is to physical health. You’ll have to take a realistic look at your lifestyle and a serious look at your big ticket items – luxury home(s), exotic vacations, luxury cars, designer clothes and expensive entertaining and start living within your budget in order to benefit from one of the alternatives to bankruptcy .

The Ira Smith team approaches every file with the attitude that corporate or personal financial problems can be solved given immediate action and the right plan. Contact us today and Starting Over, Starting Now you can be on the path to a debt free life.

http://youtu.be/qcr1ga9Jtw4
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