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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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Brandon Blog Post

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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Brandon Blog Post

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.

Call a Trustee Now!