Tag: bankruptcy faqs

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407 ETR FAIRNESS-ONTARIO COURT OF APPEAL ENSURES 407 ETR FRESH START

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consumer proposal bankruptcy alternatives trustee bankruptcy and insolvency act vaughan trustee 407 407ETR bankruptcy ontario Ira Smith trustee Receiver Inc1

 

407 ETR407 ETR found out that bankruptcy law is complicated. It not only deals with the facts, but with the spirit of the law. Canada (Superintendent of Bankruptcy) v. 407 ETR Concession Company Limited, 2013 ONCA 769 (Bankruptcy and Insolvency Act CanLII) is a very interesting case.

It involves Matthew David Moore, a truck driver who owned two vehicles and was a frequent user of this toll highway. Mr. Moore owed the money for usage of the toll Highway which he failed to pay. In March 2005 and December 2006, 407ETR sent notices of his non-payment relating to two separate vehicles to the Registrar of Motor Vehicles for the Province of Ontario (the “Registrar”). As a result, when the vehicle permit for one of the vehicles expired in August 2005, it could not be renewed. However, Mr. Moore continued to use Highway 407 for another 18 months and as of October 2007, he owed $34,977.06.

In November 2007 Mr. Moore made an assignment into bankruptcy. The 407ETR was listed as a creditor but it did not file a proof of claim which would have enabled the 407ETR to make submissions at any hearing into Moore’s discharge from bankruptcy and to share rateably with Moore’s other unsecured creditors in the bankruptcy. After declaring bankruptcy Mr. Moore had an accident and retrained to become a car salesman, which is what he now does for a living. He gave evidence that he needs a vehicle permit in order to do his job and earn a living. In February 2011 Mr. Moore obtained a conditional discharge from bankruptcy. He requested an Ontario Ministry of Transportation (“MTO”) vehicle permit but the MTO refused his request due to his outstanding indebtedness to this Highway concession company. On June 21, 2011, Mr. Moore obtained an absolute discharge from bankruptcy. Even though he was discharged from bankruptcy, the MTO refused to issue Mr. Moore a vehicle permit. The alleged conflict, in this case, is between s. 178(2) of the BIA, which releases the discharged bankrupt from most claims, and s. 22(4) of the 407 Act, which permits 407ETR to initiate a process by which the debtor will be denied a vehicle permit until he or she discharges the debt to 407ETR. A lot of legal wrangling ensued and eventually, this matter went to appeal. The issues on appeal were:

(i) Does s. 22(4) of the 407 Act conflict with the operation of s. 178 (2) of the BIA?

(ii) Does s. 22(4) of the 407 Act conflict with the purpose of the bankruptcy and insolvency system because it (a) thwarts the objective of providing the bankrupt with a fresh start or (b) creates a new class of debt that survives bankruptcy and frustrates Parliament’s intention to treat all unsecured creditors equally?

What was the 407 etr ruling?

“For these reasons, I would allow the appeal and, as requested by the appellant, set aside the order of the motions judge. In its place, I would substitute an order that:

(1) the discharge of Moore dated June 21, 2011, released him from all claims provable in bankruptcy, including the toll highway debt as at November 10, 2007, and

(2) the Ministry of Transportation is hereby directed to issue license plates to Moore upon payment of the usual licensing fees.

Further, I would declare that s. 22(4) of the 407 Act is inoperative to the extent that it thwarts the purpose of providing a discharged bankrupt with a fresh start.”

This decision ensured that bankruptcy did provide Mr. Moore with a fresh start. If you are experiencing serious financial problems and are looking for a fresh start, contact Ira Smith Trustee & Receiver Inc. today. You can even do some self-study with our bankruptcy faqs. Upon review of your situation, we will provide you with a solid plan for moving forward. Starting Over, Starting Now you can get your life back on track and live a happy and productive life.

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DON’T BE MISLEAD BY ADVERTISING GIVING FINANCIAL ADVICE

tax lawyer, trustee, trustee in bankruptcy, bankruptcy trustee, bankruptcy, bankruptcy alternatives, credit counselling, debt consolidation, consumer proposals, financial restructuring, bankruptcy faqs, insolvency, tax lawyer in canadaHave you heard the radio advertising spots by a tax lawyer in Canada who is trying very hard to make you believe that he is The Rock Star in the world of tax problems and that he and only he can help you? One commercial ends with, “Don’t call a Trustee, call me”. Isn’t it amazing that without knowing anything about you and without a consultation, he knows exactly what your problems are and how to fix them? And, he has no way to know if a Trustee is all you require to solve your serious debt issues. However, fear based advertising must be working for him because he spends fortunes on it.

Don’t take advice from an advertisement. If you have legal issues, absolutely you need a lawyer in Canada. But, the reality is that Canadian bankruptcy law doesn’t differentiate between tax debts and other kinds of unsecured debt, therefore most people can declare bankruptcy on taxes owing. In fact, 50% of the people who file a consumer proposal or declare personal bankruptcy include some form of tax debt. If you are experiencing serious debt problems you must consult with a Trustee before declaring bankruptcy; no doubt you will have many questions about the bankruptcy process. The Trustee will evaluate your case and advise you on all of your alternatives – credit counselling, debt consolidation, consumer proposals, and bankruptcy. Bankruptcy and consumer proposals are administered by a Bankruptcy Trustee, not a lawyer. In fact you cannot declare bankruptcy through a lawyer unless the lawyer is also a Trustee in Bankruptcy.

There are cases in which you may need a lawyer:

  • Tax debts are generally discharged in bankruptcy like other debts. However, if you have tax debts and the CRA (Canada Revenue Agency) is opposing your discharge, it is recommended that you seek legal assistance.
  • In most cases Trustees do not act as your advocate. If you believe you need an advocate, you should consult a lawyer. Communication between you and your lawyer is confidential and privileged.

This is not an advertisement and we’re not telling you that we are Rock Stars. Ira Smith Trustee & Receiver Inc. is a full service insolvency and financial restructuring practice serving companies and individuals throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. We approach every file with the attitude that corporate or personal financial problems can be solved given immediate action and the right plan. Our bankruptcy law is complicated. Canada (Superintendent of Bankruptcy) v. 407 ETR. Also check out our bankruptcy faqs. If you’re having serious debt issues, and yes, even tax debt, contact us today. We can provide you with realistic choices for practical decision-making.

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SERIOUS ILLNESS AND MEDICAL DEBT CAN RUIN YOU FINANCIALLY ON BOTH SIDES OF THE BORDER

bankruptcy, file bankruptcy, medical debt, healthcare costs, credit card debt, group insurance, personal insurance, trustee, bankruptcy faqs, bankruptcy trustee, bankruptcyIn Canada we wrap ourselves in a blanket of socialized healthcare and believe that our provincial medical plans will protect us from financial ruin. People are unaware that serious illness and medical debt can ruin you financially on both sides of the Border. We feel immune from the financial disaster that afflicts many Americans who experience a serious illness. We are bombarded in the news about the financial devastation that many Americans are going through with very little commentary about how Canadians are affected. According to the National Debt Relief Organization in the U.S.:

  • 1.7 million Americans will be forced to file bankruptcy due to medical debt.
  • Over 11 million Americans will burden themselves with more credit card debt to cover their healthcare costs.
  • 56 million Americans will struggle with healthcare related bills.

As Canadians are we immune from the financial devastation of a serious illness? The answer is NO! According to Sun Life Financial:

  • Nearly half of Canadians facing a major health incident like cancer or a stroke are struggling financially as a result of their illnesses.
  • 40% of those surveyed earlier this year reported feeling financially strapped after a serious health event or diagnosis, while 53% of 45 to 54 year olds have been hit hard by unforeseen healthcare costs.
  • Only 13% had money set aside for uncovered healthcare costs.
  • Too many Canadians underestimate out-of-pocket health costs, especially when it comes to prescription drugs.
  • Over the past 12 months Canadians spent an average of $1,354 on medical or healthcare products and additional services; but few set aside money to cover health costs, with more than 81% putting nothing aside.
  • 20% had no group insurance, personal insurance or health expense savings to help absorb the shock.
  • 22% turned to credit cards or personal lines of credit, another 22% tapped into personal savings, 12% borrowed from a loved one and 5% were forced to either remortgage or sell their home.

Are you facing financial ruin as a result of a serious illness? Contact Ira Smith Trustee & Receiver Inc. as soon as possible. Also do some self-study using our You can do some self-study by checking out our bankruptcy faqs. We can help you get back on your feet financially and let you concentrate your efforts on getting well.

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MARITAL BREAKDOWN AND BANKRUPTCY: WHICH COMES FIRST?

Bankruptcy, bankruptcy and divorce, Bankruptcy and Insolvency Act, bankruptcy faqs, Consumer Proposal, credit counselling, Debt, debt consolidation, debt relief, divorce, family law, if my ex files bankruptcy how will it affect joint accounts, if my ex files for bankruptcy how will it affect joint accounts, marital breakdown and bankruptcyJust like the old conundrum, “which came first; the chicken or the egg” how would one answer, marital breakdown and bankruptcy: which comes first? It has no definitive answer because excellent arguments can be made for both sides. The same holds true for “divorce and bankruptcy; which comes first”?

Each case has to be decided upon its own merit. Although marital breakdown and bankruptcy, and bankruptcy and divorce, often go hand in hand, marital breakdown doesn’t always lead to divorce if the marriage can be salvaged. As family and parental rights lawyers UT have made clear, bankruptcy and divorce are two separate legal processes that can be at odds with each other.

There are however a few indisputable facts:

  • The number one reason for marital breakdown and couples getting divorced is financial issues. Divorce.com
  • In a recent study one out of every seven people who declared bankruptcy in Canada listed separation, divorce or marital breakdown as a contributing factor to their financial problems.
  • One-third of all people facing bankruptcy are there because they are also going through marital breakdown and divorce in Ontario or a separation. Gail Vaz-Oxlade
  • Bankruptcy doesn’t eliminate all divorce debts. E.g. It does not eliminate alimony or child support.
  • Declaring bankruptcy on joint debts, even debts in divorce, will impact the other borrower.

If causing the least disruption on the children of the family during a marital breakdown and bankruptcy is of prime importance to the spouse with the debts (and presumably that will be the same as the spouse making the support payments), it makes sense to have at least the support provisions of the divorce proceedings agreed upon, including the making of the support order and then file for bankruptcy. Marital breakdown and bankruptcy process will not disturb any bona fide arrangements for support, but keep in mind it will affect property not already dealt with by the family law court.

One such area comes up in this common question: “If my ex files for bankruptcy how will it affect joint accounts?”. Family law proceedings are the one area of provincial law that is left relatively untouched by the Bankruptcy and Insolvency Act, which is a federal statute. However, the Supreme Court of Canada has confirmed that in Provinces that are an equalization jurisdiction (as opposed to a division of property jurisdiction), in a unanimous decision, the court upheld defining equalization payments as debts that are a claim provable in bankruptcy, meaning they are wiped off a person’s slate by the bankruptcy process.

Marital breakdown and bankruptcy is an extremely complicated process, made even more complicated when combined with divorce and requires the expertise of a licensed Trustee to work with your family lawyer to assess your individual situation and provide practical solutions and an action plan. If you have serious debt problems, are contemplating bankruptcy and divorce, or just wish to know more about marital breakdown and bankruptcy, just in case, check out our bankruptcy faqs and then contact Ira Smith Trustee & Receiver Inc. as soon as possible. Starting Over, Starting Now we can help you get your life back on track, even with marital breakdown and bankruptcy looming. Watch for our next blog when we’ll be addressing more issues related to marital breakdown and bankruptcy, and divorce and bankruptcy.

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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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