bankruptcy alternative Archives - Page 3 of 3 - Ira SmithTrustee & Receiver Inc.

There are many reasons why Canadians are struggling with debt and ultimately not avoiding bankruptcy. However it is widely agreed upon that lower interest rates have encouraged us to purchase big ticket items like cars and houses. The good news is that according to a CIBC report, personal bankruptcies have returned to pre-recession levels, to four insolvencies per 1,000 adults, from an all-time high reached during the recession of six per 1,000. However, that doesn’t really tell the story because the number of Canadians striking consumer proposals has grown to 40% of total insolvency cases, from about 15% in 2006 – an increase that underscores a major shift in how consumers are avoiding the full bankruptcy route. In fact consumer proposals now make up 50% of total insolvencies in Ontario.

According to the Office of the Superintendent of Bankruptcy (OSB) here are the top 10 reasons that Canadians go bankrupt:

Overextension of Credit: 22%
Seasonal Employment: 15%
Job Loss: 12.8%
Medical Problems: 11.3%
Relationship Breakdown: 10.3%
Money Mismanagement: 9.2%
Failed Business: 9.1%
Failure to Pay Taxes: 3.6%
Gambling Addiction: 2%
Inadequate Pension: 1.4%

The Bank of Canada’s Review of Household Insolvency in Canada (Winter 2011 – 2012) reports that the largest unsecured liabilities are credit card debt and bank loans.

LIABILITY TYPE – BANKRUPTCY/ RENTER	PERCENTAGE

Individuals/Doctors/Lawyers/Gov.	24.71
Credit Cards (bank/trust co. issuers)	18.99
Bank Loans (except mortgages)	17.26
Taxes	16.59
Credit Cards (other issuers)	8.19
Finance Co. Loans	7.92
Real Property Mortgages	3.28
Student Loans	2.83
Payday Loans	0.23

LIABILITY TYPE – BANKRUPTCY OWNER	PERCENTAGE

Real Property Mortgages	56.55
Individuals/Doctors/Lawyers/Gov.	13.52
Bank Loans (except mortgages)	11.26
Credit Cards (bank/trust co. issuers)	6.29
Finance Co. Loans	4.52
Taxes	4.34
Credit Cards (other issuers)	3.10
Student Loans	0.31
Payday Loans	0.11

Many Canadians are dealing with serious debt issues. Whether you decide to declare bankruptcy or opt for a bankruptcy alternative – Credit Counselling, Debt Consolidation, Consumer Proposals – you need the help of a professional trustee. Contact Ira Smith Trustee & Receiver Inc. as soon as possible for advice and a plan to tackle your financial difficulties. Starting Over, Starting Now you can live a debt free life.

Back in February we did a blog warning the public to Beware of Debt Settlement Companies. At the time the U.S. Federal Trade Commission had effectively shut down debt settlement companies, but no action had been taken in Canada. Although there have been numerous consumer alerts issued about debt settlement companies by the Financial Consumer Agency of Canada (FCAC), many people are still falling victim to them. Consumers are taken in by false claims offering to settle your debts for pennies on the dollar quickly and easily. The reality is that when something seems too good to be true, it usually is. Debt settlement companies exist for only one reason – to take your money! They will not help you solve your debt problems. There is no instant or quick fix for serious debt issues.

Finally this spring the Ontario Ministry of Consumer Services publicly declared it is moving ahead with tough legislative measures to protect consumers from these unscrupulous companies know as debt settlement companies, debt reduction companies, debt relief companies and debt negotiation companies. The Ontario Ministry of Consumer Services intends to introduce legislation that will:

Ban companies from charging upfront fees for debt settlement services
Limit the amount of fees consumers are charged
Require clear, easy-to-understand contracts
Establish a 10-day cooling-off period, providing consumers more time to consider their agreements
Allow the licenses of non-compliant debt settlement companies to be revoked

The best advice that we can offer is beware! There are currently 60 debt settlement companies operating in Ontario just waiting to take advantage of your situation.

If you are experiencing serious debt problems, there is help available. Contact Ira Smith Trustee & Receiver Inc. We are licensed by the Government of Canada and subject to a stringent code of ethics. As trustees in bankruptcy we will evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. If ultimately consumer proposals or bankruptcy is the best option for you, you will have to use a trustee in bankruptcy. Contact us today and take your first step towards living a debt free life Starting Over, Starting Now.