Tag: bankruptcy in ontario

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FILING FOR BANKRUPTCY IN ONTARIO: 3RD TIME SHOULD NOT BE A CHARM

Filing for bankruptcy in Ontario introduction

We have all heard the expression “third time’s a charm” or “third time lucky”. You say this when someone is successful the third time they try something after they failed the first two times. This expression is not meant to apply to the world of Canadian insolvency or a desperate financial situation. Certainly not for filing for bankruptcy in Ontario.

On December 9, 2019, the Toronto Star published an article by investigative reporters Jesse McLean and David Bruser titled “Rack up debt. Declare bankruptcy. Repeat. And repeat again. How thousands of Canadians are doing it and costing the rest of us”. The article talks about four specific people who file for bankruptcy multiple times.

In this Brandon’s Blog, I want to describe how filing for bankruptcy in Ontario works. Thankfully, the article does state that in the Toronto Bankruptcy CourtFreme, it is much tougher to get away with multiple bankruptcies, as it should be.

Filing for bankruptcy in Ontario: How do I declare bankruptcy in Canada?

Filing for bankruptcy in Ontario begins with a no-cost consultation with a licensed insolvency trustee (formerly called a bankruptcy trustee ) (Trustee). In that consultation, the Trustee will want to get a good understanding of your assets, liabilities, income and expenses. That way, the Trustee will be able to discuss with you all the available options and help you narrow them down to the most viable options to solve your debt problems.

At the end of the meeting, the Trustee will give you the standard intake form. By completing the form fully, you will provide the Trustee with the proper information needed for your filing for bankruptcy in Ontario. My Firm calls our standard intake form the Debt Relief Worksheet The information is then used in order for the Trustee to finalize his or her recommendations to you for dealing with your debt. The options available in general for dealing with personal debt are:

A consumer proposal is an insolvency process which is one of the best of all the alternatives to bankruptcy. It is much preferable than filing for bankruptcy in Ontario. In a consumer proposal, you are able to compromise your debt. You make an offer to pay less than the total you owe. You then make the monthly payment to the Trustee until you have paid the total you agreed to.

If you end up deciding on either a consumer proposal or bankruptcy, the Trustee will prepare the required documentation. This is the case for consumer proposal documents or those necessary for filing for bankruptcy in Ontario.

The Licensed Insolvency Trustee then takes the fully completed worksheet and all additional documents in support of your information. The information is then used in order to prepare the documentation necessary for filing for bankruptcy in Ontario. The documents include your Statement of Affairs and your Statement of Income and Expenses.

The Statement of Affairs used for filing is attested to by the debtor as to its accuracy. This statement includes a listing of all of the person’s assets and indicates which are exempt from seizure and which are not. The asset exemptions are guided by provincial law. As there are some variations between provinces, in this blog I will only be referring to bankruptcy process Ontario exemptions.

The assets not exempt from a seizure will be surrendered to the Trustee to be sold. The statement also lists all the names of the creditors, their respective addresses and the amount owed to each.

The Statement of Income and Expenses, as the name suggests, shows the monthly income and expenses of the household. It also shows whether or not the person will be subject to surplus income payments to the Trustee or not.

When all the documents are ready, the Trustee electronically files them with the Office of the Superintendent of Bankruptcy (OSB). The local OSB representative reviews the filing. If everything is in order, the OSB issues a Bankruptcy Certificate. The issuance of that certificate is the moment the person is now bankrupt.

Filing for bankruptcy in Ontario: How long does bankruptcy last in Ontario?

The Canadian bankruptcy system is administered under the Bankruptcy and Insolvency Act (Canada). This is a federal statute and bankruptcy is a complex legal process. Bankruptcy allows you to compromise the debts to your unsecured creditors. It does not deal with the debt owing to a secured creditor if you are able and wish to keep the asset.

So the question is not how long does bankruptcy last in Ontario? Rather, it really is how long does bankruptcy last in Canada?

The Toronto Star investigative article talks about the length of a bankruptcy. It correctly states that a first-time bankrupt, that does not need to pay surplus income, is entitled to an automatic discharge after 9 months. This assumes that they have lived up to all of their commitments as an undischarged bankrupt as well as completely cooperated with the Trustee.

If a first-time bankrupt surplus income, they must pay it for 21 months prior to qualifying for a discharge. This again assumes that they have fully cooperated with the Trustee. In both cases, if neither the Trustee nor a creditor opposes the discharge of the bankrupt, the Trustee can issue the discharge certificate.

In a second time bankruptcy, with no surplus income, the bankrupt has to wait for 24 months before being eligible for a discharge. Again, if the bankrupt has completed all duties and has cooperated fully, and no creditor opposes the discharge, the Trustee can issue the discharge certificate. If there is a surplus income requirement, then the minimum period before being eligible for a discharge is 36 months. Under the same conditions, the Trustee can issue the discharge certificate if there is no opposition.

The article highlights, correctly, that if it is the person’s third or more bankruptcy, the Trustee cannot issue a discharge certificate. The discharge hearing must be held in Court, even if the Trustee is not opposing. The reason for this is because the Canadian bankruptcy system is supposed to financially rehabilitate the honest but unfortunate debtor.

So in a third or more bankruptcy, the Court wants to review the circumstances of the person’s bankruptcy and why rehabilitation has not been accomplished yet. If there is a Trustee or creditor opposition to discharge, the hearing becomes more complicated.

I have written several blogs previously on the bankruptcy discharge process. You can search for them up above in the search function. If you wish to find out more about the bankruptcy process, you can CLICK HERE and read our filing for bankruptcy in Ontario faq.

What about my credit cards when filing for bankruptcy in Ontario?

When filing for bankruptcy in Ontario, you have to do the following:

  • disclose to the Trustee information regarding every one of your assets and financial debts;
  • disclose to the Trustee any transactions where you sold or transferred any of your property in the last 5 years;
  • surrender your credit cards to the Licensed Insolvency Trustee;
  • attend the initial meeting of creditors (if required);
  • attend 1 credit counselling session near the beginning of the insolvency process and another 1 credit counselling session later on in the administration;
  • keep the bankruptcy Trustee informed of any address change; and
  • assist the Trustee whenever asked for information, documents or property

What about my credit report when filing for bankruptcy in Ontario?

The information in your credit report that affects your credit score is usually eliminated after a specific period of time. Generally, it will be removed after six or 7 years for initial bankruptcy. The time frame is a bit less in a consumer proposal.

Sometimes you may hear people say that you remain in bankruptcy for seven years. That is not true. What that time frame really is all about when filing for bankruptcy in Ontario is the amount of time it takes for the notation of your bankruptcy to affect your credit rating and to be eliminated from your credit record. However, even before you are discharged from bankruptcy, or finish your consumer proposal, there are steps you can take to begin rebuilding your credit score and credit report.

filing for bankruptcy in ontario

How bankruptcies work in Canada – Filing for bankruptcy in Ontario multiple times

The investigative reporting in the Toronto Star details the multiple bankruptcies of four different people. These people range from being in their third to fifth bankruptcy. The article states that the Province of Quebec has the most people who have gone bankrupt multiple times. The article, of course, and rightly so, takes a very dim view of people who “game the system” with multiple bankruptcies.

As I mentioned earlier, the article clearly states that from their research in Ontario and Quebec, the writers found that the Toronto bankruptcy court takes the dimmest view of people with multiple bankruptcies when they come up for their discharge hearing.

Being a serial bankrupt is not a good thing. The reporting is fair and balanced. It does admit that some people just get a curveball thrown at them in life and have no choice but for filing for bankruptcy in Ontario. However, there are two themes stressed in the article which I don’t think are accurate. They are:

“Unpaid taxes owed by repeat bankrupts make up a portion of the nearly $4 billion the Canada Revenue Agency (CRA) has written off since 2009 because of consumer and commercial insolvencies. In Quebec, the provincial tax agency has lost nearly $2 billion to insolvencies in the last five years alone.” While this is true, it assumes that the taxes would have been paid if the people did not file for bankruptcy multiple times.

My belief is that people who go bankrupt multiple times have their affairs arranged in such a way that they do not have much to lose in bankruptcy. If they don’t have much to lose in a bankruptcy, then there isn’t much for CRA to seize if the person is not bankrupt. So the reality is that there is a class of Canadians that will not pay their fair share no matter what. This is clearly unfair to society as a whole, but it isn’t bankruptcy that causes it.

“Meanwhile, credit card lenders absorb the cost of bankrupts who do not pay their bills by charging high-interest rates to their customers who do pay their debts.”

The fact that credit card companies charge high-interest rates is true. However, in my experience, customers who do pay their credit card debt are not incurring interest charges. They pay their credit card balance off monthly.

Those who only make the minimum payment are the ones who are incurring high-interest charges. Ultimately, those people cannot afford to make all their debt payments and they ultimately invoke an insolvency process, being either a consumer proposal or bankruptcy.

So even a one-time-only bankrupt pushes a loss onto a credit card company. Hence the high-interest rates charged. By the way, who is it that makes the credit decision to extend new credit to a multiple time bankrupt? It isn’t the bankruptcy system, it is the credit card issuer. Perhaps they should not give a credit card to someone who has demonstrated many times that they cannot handle the credit responsibly.

Filing for bankruptcy in Ontario – Rack up debt

The statistics quoted in the article shows that although there has been an increase over the years in multiple time bankrupts, this is somewhat of a self-fulfilling prophecy. By definition, if a certain segment of the Canadian population goes bankrupt multiple times, then the statistics have to show an increase.

The statistics used in the article shows the following regarding the percentage between 1st and 2nd + out of total personal bankruptcies between 2011 through 2018:

YearTotal # bankruptcies1st time

%

2nd + time

%

2011

77,99384.41

15.59

2012

71,49583.83

16.17

2013

69,22482.74

17.26

2014

64,83981.31

18.69

2015

63,40680.52

19.48

2016

63,37280.10

19.90

2017

57,96979.23

20.77

2018

55,09178.99

21.01

My takeaways from these statistics are:

  1. Personal bankruptcies in Canada dropped by 29.4% between 2011 and 2018. I believe there are two main reasons. First, fewer Canadians are opting for an insolvency process in an era of unprecedented low-interest rates. Second, those requiring an insolvency process, have sufficient income to perform a successful consumer proposal thereby being able to avoid bankruptcy.
  2. The increase in second and more time bankrupts is just under 5%. I believe most of the increase is as mentioned above, somewhat self-fulfilling. Every time the same person goes bankrupt, the statistic has to increase! So, what percentage increase is because of the actual mathematical formula, and what percentage increase is because there are actually more people in raw numbers are filing for bankruptcy more than one time?

Filing for bankruptcy in Ontario – The bankruptcy discharge

A discharge from bankruptcy releases you from the legal commitment to pay off your debts you had as of the day you applied for bankruptcy, with certain exceptions. Examples of certain exceptions are alimony, child support, certain student loans (if you stopped being a student less than seven years before filing), court-ordered penalties or fines and financial debts as a result of a fraud finding against you.

Of course, the ultimate objective for those filing for bankruptcy in Ontario is to receive the most sought after discharge from bankruptcy after you have performed all of your duties. The bankruptcy discharge releases a person from the majority of his or her debts as indicated above.

While many people thinking about bankruptcy currently have a poor credit score, it’s usually not irreparable. Declaring personal bankruptcy, nevertheless, will drop it to an R9 rating. This is the worst possible score there is. Unfortunately, this rating will last for about 6 years post-discharge. As I have already mentioned, there are steps you can take to start rebuilding your credit score.

Filing for bankruptcy in Ontario summary

I hope you found this Brandon’s Blog on filing for bankruptcy in Ontario useful. Sometimes things are too far gone and more drastic and immediate triage action is required.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. We can help with your personal debt situation. We can also help with insolvency for business.

However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

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.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team . That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. 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.

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BANKRUPTCY IN ONTARIO CANADA SECRETS REVEALED

Bankruptcy in Ontario Canada: Introduction

Most people are afraid of filing for bankruptcy in Ontario Canada and rightly so. It should be a last resort. There are many options available to people in financial trouble. All of them should be canvassed before deciding to declare bankruptcy.

In my professional practice, during the first free consultation appointment, we look at all options with the person to avoid bankruptcy. We naturally have a discussion about what it is and how it will affect the person. That way, the potential client is aware of all the options and can make an educated decision.

In this Brandon’s Blog, I discuss the questions that I am most often asked about the process. Hopefully, by the end of this blog, I will have demystified the process for you and helped in aiding your understanding.

The secrets we will show

Bankruptcy in Ontario Canada is definitely something nobody wants to talk about. So, therefore, it makes it seem very mysterious and secretive. It is also very scary. Therefore, from now on in this blog, so as not to scare you unnecessarily, I will try to refer to it only as “the B word”. I will only use the B word if the context requires it. This Brandon’s Blog will hopefully pull back the curtain in answering the most often asked questions thereby reducing the mystique and hopefully, your anxiety about this topic.

Where do I begin?

The first step is recognizing that you have financial problems and that bankruptcy in Ontario Canada might be your new reality. If you are having difficulty meeting all of your financial responsibilities or have actually quit paying all of your bills on time, you have a financial problem. As a licensed insolvency trustee (Trustee) we are the only professional licensed and supervised by the Federal government – Industry Canada (OSB).

If you are having financial problems, you must contact a Trustee as soon as possible, to have a free consultation to check your situation and to understand all the options available to you, including the B word. In that free appointment, you will learn that the B word may not be your only alternative to leave your debt behind. There are a number of choices that include, however, are not restricted to:

Should I declare the B word and what happens immediately if I do?

Declaring the B word is obviously a very serious step and a difficult personal choice. If the Trustee has properly explained all the realistic options available to you, it will make your choice much less scary. The first question is do you even qualify to file for the B word. You must be insolvent, owe more than $1,000 in unsecured debt to qualify for it in Canada.

As far as filing for the B word in Premier Doug Ford’s province, you must have:

  1. carried on business in the province during the year immediately preceding your B word; or
  2. lived in the province during the year before your B word; or
  3. where 1 or 2 above don’t apply, the majority of your property is in the province.

Note that the first test is that you are actually insolvent. Insolvent or insolvency is a financial condition. It means that you are:

  1. Unable to meet your obligations generally as they become due.
  2. You have ceased paying your current debts as they come due.
  3. The fair value of all of your assets is less than the total amount of your debts.

The B word is a legal state. Insolvency is a financial condition.

If I go for the B word, will I lose everything?

If you declare the B word, no, you will certainly not lose everything. There is a listing of things that are excluded from seizure in Ontario. The list is:

  • Necessary clothing for you and your dependants.
  • Home furnishings and appliances that are of a worth not more than $13,150.
  • Tools and various other personal effects not worth more than $11,300, made use to earn revenue from your business. If you are an Ontario farmer, this amount increases to $29,100 for everything, including your livestock.
  • One car or truck that is worth not more than $6,600.
  • The cash surrender value of life insurance if your beneficiary is what is called a “Designated Beneficiary”.
  • Your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or Deferred Profit Sharing Plan (DPSP) other than for any amounts contributed in the 12 months immediately preceding your date of bankruptcy.
  • $10,000 of equity in your home but only if your share of the equity is less than $10,000 in total.

So if you go the way of the B word, based on this listing, you won’t lose everything. However, as you can see, if your share of the equity in your home is significant, the B word very likely is not for you. One of the other options is probably more suitable and you should pursue one of them.

What happens to the money I owe?

Once you go with the B word, all of your unsecured debts are frozen. Creditors cannot begin or continue any legal action against you. Any garnishee on either your wages or your bank account must come off. Normally if you owe money to Canada Revenue Agency (CRA) and have not kept up with a payment plan to them, they will garnishee your bank account which stops you from using it. The B word stops a CRA garnishee against your bank account or salary or wages also.

Similarly, a creditor who sues you and gets a judgement against you cannot continue any execution against your assets.

Once you are in the B word, the Trustee sends a notice to all of your creditors, along with a proof of claim form and instructions. With certain limited exceptions, the only remedy your unsecured creditors have is to file a proof of claim with the Trustee.

This does not apply to any of your debts owed to lenders who hold valid security against a specific asset. Examples would be a bank holding a mortgage against your home in return for the mortgage money or a lender who has security against your car for an auto loan.

What takes place to my salary or wages once I file?

Your income is not impacted by the B word process. You will continue to receive your normal salary or wages as you always have. You will need to complete Income and Expense Forms throughout detailing your and your spouse’s earnings and expenses. This is part of your budgeting procedure to meet one of the aims of the B word process; financial rehabilitation.

If your family income goes beyond specific requirements developed by the OSB, you will need to pay a part to the Trustee. This is called a surplus income payment requirement. In the first free consultation, I always tell potential clients whether they will have such a requirement. We also then look at that requirement, if any, to see if a consumer proposal would be more beneficial to the person than the B word.

Will the B word process get rid of my student loans?

If the B word date is within 7 years of when you stopped being a full-time or part-time student, your student loan debt will not be released by the B word process. Nevertheless, in particular situations, you might have the ability to make an application to the court for a discharge of your student loan financial obligations under the “hardship provision.” It is almost impossible to get that court-ordered discharge, but the slim possibility is there.

Will I still owe money after I file?

Only for a limited amount of debts. A discharge from the B word process does not cover:

  • secured loans – home mortgage or vehicle loan;
  • certain student loans (remember the 7-year rule I just mentioned?);
  • penalties or fines enforced by the court;
  • spousal support and alimony you have to make in your separation agreement or divorce proceedings; and
  • any debts from a fraud.

What length of time will I be in the B word system?

The length of time you will be in the B word system depends on whether this is an initial or 2nd time and whether you have surplus income. The minimum length of time is 9 months. That is if you don’t have any surplus income, none of your creditors oppose your discharge and it is your first time.

If it is your first time, none of your creditors oppose your discharge and you do have surplus income, then the 9 months increases to 21 months.

If it will not be your first time, the length of time before you can get a discharge will depend on many factors. We certainly discuss it during your first free consultation.

Who will find out that I have filed?

As soon as you declare the B word your Trustee will tell your creditors, the CRA, the credit bureaus and the OSB. The filing is public information and it will show up in your credit history.

Where your non-exempt assets given to the Trustee are worth more than $15,000, there must be a legal notice of your B word filing in the local paper.

Exactly how will it impact my credit score?

A person who files drops down to the least favourable credit rating (R9) immediately. After you declare the B word, you must start to work on improving your credit score. Once you are discharged, you will have more options to improve on your credit score and rebuild your credit.

Notice of the B word process will stay on your credit record for 7 years after you get your discharge.

How is my partner or spouse affected by my filing?

Your spouse or partner is not directly impacted by your filing. Your spouse or partner will have to show his or her income as part of your surplus income calculation. The partner or spouse will be liable to repay any loan they have co-signed or guaranteed for you. They will also have to repay any credit card balance on your account for which they have and used a supplementary card to make purchases.

Will my bankruptcy impact my ongoing divorce case?

In Canada, the B word rules do not conflict with most of the family law system and process. So the Trustee will not get involved in your family law proceedings, with two main exceptions.

There is an aspect of your divorce in Ontario that will be affected because Ontario is an equalization province. There are generally only 2 parts of your divorce proceedings your Trustee will certainly get involved in. One is when it pertains to the person who filed legal rights to entitlement to an equalization payment. Second is when the debtor owns property (either jointly with the spouse or alone) and such property has not already been dealt with in the family law proceedings.

How do I choose the right Trustee for me?

Sometimes people just say that “I want to go to the closest Trustee near me”. If travelling or time is an issue for you then that approach is quite legitimate.

The better way is making an appointment for a cost-free no commitment first consultation with a Trustee. If you can, it is best to get a referral from someone you trust. Otherwise, perform an online search and see which Trustee’s website resonates best with you. Ask any kind of questions you might have about your particular situation and the options you may have.

If after that appointment you feel comfortable with the knowledge and demeanour of the Trustee, and you felt confident that you received proper answers to your questions, then great. If not, make an appointment for a free first consultation with a different Trustee. Use that experience to compare both to see who you would like to put your trust in. At the end of the day, you have to know who you will be dealing with and feel comfortable with them. You have to know that your Trustee gets you!

Do you have too much debt? Are you having a problem making your month-to-month bill payments? Is your company dealing with financial obstacles that you just can’t figure the way out of?

If so, call the Ira Smith Team today. We have years and generations of experience aiding individuals and businesses looking for financial restructuring or a debt settlement plan. As a licensed insolvency trustee, we are the only experts recognized, licensed and supervised by the Federal government (the OSB) to provide insolvency recommendations and solutions to help you prevent the B word.

Call the Ira Smith Team today so you can end the stress and anxiety financial problems create. With the special roadmap, we develop unique to you, we will promptly return you right into a healthy and balanced stress-free life.

You can have a no-cost consultation to aid you so we can repair your debt problems. Call the Ira Smith Team today. This will definitely enable you to make a fresh start, Starting Over Starting Now.

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BANKRUPTCY IN ONTARIO CANADA & CONSUMER PROPOSAL ONTARIO

Bankruptcy in Ontario Canada: Introduction

Bankruptcy is sometimes necessary for the financially troubled individual or company. In Canada in 2017, there were 125,807 insolvency filings; 60,669 bankruptcies and 65,138 proposals. Bankruptcy in Ontario Canada accounted for 15,968 of the 2017 filings. The majority of these across Canada filings were people, not companies.

Bankruptcy in Ontario Canada: Not entirely unexpected

This is an expected statistic once you understand the purpose of the Canadian insolvency system to get rid of financial obligations. It is also for the financial rehabilitation of people and companies and if possible, allow them to do so while retaining their assets.

In a down economic climate, even more, debtors use bankruptcy to protect their wide range of interests. Although on a per capita basis Canadians are savers, more recently, especially related to real estate, we are a country of borrowers. A lot of people are overloaded with debt, including credit card debt.

Bankruptcy in Ontario Canada: Bankruptcy is not always right

Any debtor with severe monetary troubles must think about bankruptcy. Bankruptcy isn’t always the right response though. In my practice, we first run through the various options available to avoid bankruptcy.

It is proper only when you have too many financial obligations that you cannot realistically repay, in whole or in part, from your future earnings or from selling your assets. This is the meaning of the financial state of insolvency.

If you make $100,000 a year and your financial obligations are only $20,000 (assuming you have no assets), why go bankrupt? Temporary financial sacrifice on your part could pay off your debts in full. This is definitely more suitable for bankruptcy.

What about a proposal?

Although each case is unique, generally speaking, if your unsecured financial debts are less than 60 percent of your net yearly pay, stay clear of bankruptcy. You could use a self-help remedy to pay off your debts in full. Alternatively, you could look to the proposal or consumer proposal mechanisms under the Bankruptcy and Insolvency Act (Canada).

Under the proposal provisions of the BIA, a person or company could take up to 5 years to pay off part of the debt. A successful proposal forgives the balance of your debt (subject to certain ones indicated below). Many creditors will wait if you show good faith and make organized repayments that provide your creditors with a better result.

A filing may protect some assets

A bankruptcy or proposal filing may also be necessary to secure your assets; this is especially true for companies looking to restructure. In a BIA filing, all civil actions against you instantly stop— whether they are legal actions, CRA garnishments or secured creditor seizure and enforcement (the last under specific conditions). Every creditor must obey the automatic stay of proceedings imposed by the BIA. A proposal filing gives you the possibility to solve your economic issues with lenders who would certainly otherwise seize and sell your assets.

Timing is everything

I advise every person and company in need of restructuring that timing is crucial. It is human nature for debtors to regularly wait far too long. By waiting too long, they shed possible advantages from an earlier restructuring filing. The longer a person or company waits, the fewer options they have. Also, if you wait too long, the less creative I can be to protect your assets.

5 general tips

  1. Collect your tax refunds prior to your filing. When you file for bankruptcy, any tax refund owing to you prior to the date of bankruptcy belong to your bankruptcy estate. Your licensed insolvency trustee (Trustee) collects the payments.
  2. The insolvency process is meant to treat all creditors fairly and all ordinary unsecured creditors equally. Seek the advice of a Trustee prior to making payments to specific unsecured creditors prior to filing. Your good intentions may prove to have created transactions that the Trustee can attack. The Trustee will then seek recovery from those parties.
  3. Consider how the causes of your insolvency will look to your creditors. Uncontrolled lifestyle spending looks a lot different from ongoing costs due to a mental or physical illness or an addiction. The causes of your insolvency sometimes dictate whether a proposal or bankruptcy filing is preferable.
  4. Have you contributed to an RRSP in the 12 months before filing for bankruptcy? That amount will have to be paid over to your Trustee under bankruptcy or accounted for in what type of proposal can be successful.
  5. If you have student loans, was the last time you were either a full or part-time student more than 7 years prior to your filing? If no, you won’t be able to end the student loan debt. However, it may be enough to relieve yourself of your other unsecured debts to have enough funds every month to start repaying the student loans.

Some debts can’t be discharged

Bankruptcy will not end every debt. There are certain debts that cannot be discharged through bankruptcy. Examples are:

  • student loans as described above
  • child support and alimony under either a court order or written separation agreement
  • fines or restitution ordered by a Court
  • debts arising out of fraud, embezzlement or misappropriation while acting in a fiduciary capacity
  • amounts owing to secured creditors registered against your assets, such as a mortgage or car loan. Any amount still owing after the asset is sold, if any, is an unsecured claim which is discharged in a bankruptcy

Bankruptcy must be your last option

Bankruptcy could be your ideal choice if the amount of your debt and the amount you can realistically repay will not settle it. If you have few possessions to lose in bankruptcy, then a bankruptcy filing may be your best choice. By meeting with a Trustee early to discuss your options, you will get a good understanding of what may be possible.

I always advise every person or company never file for bankruptcy without first striving to solve a case without bankruptcy. Bankruptcy must be your last option, not your very first – avoid bankruptcy if you can.

Think about all readily available options prior to determining that bankruptcy is genuinely the best decision for you and your situation. If you find you are in too deep and can’t dig out fast enough, then you do need professional help.

Seek the advice of a professional trustee

Many people and companies facing serious financial issues don’t know where to go for professional help or are too embarrassed. There’s no shame in seeking professional, financial help. Licensed insolvency trustees evaluate your situation and help you to arrive at the best possible solution for your problems.

Ira Smith Trustee & Receiver Inc. is here to help. We’re federally regulated and subject to a strict code of ethics. We offer a depth of expertise and provide a high quality and cost-effective service. I understand your pain and we can end it. You will find that we use a friendly, non-judgmental method.

Give us a call today and let us help you solve your financial problems Starting Over, Starting Now.bankruptcy in ontario canada

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SHOULD SOCIAL MEDIA BE USED TO DETERMINE YOUR CREDIT SCORE?

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

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

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

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

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

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

Call a Trustee Now!