Tag: bankruptcy process

BANKRUPTCY MEANING: OUR POWER LIST OF DUTIES OF THE BANKRUPT AND OTHERS

Post author By Brandon Smith
Post date October 19, 2020

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

If you would prefer to listen to an audio version of this bankruptcy meaning Brandon’s Blog, please scroll down to the bottom and click on the podcast.

Bankruptcy meaning introduction

I recently read a decision of the Supreme Court of Nova Scotia in Bankruptcy and Insolvency. It was an interesting decision about a bankrupt who essentially absented himself and became AWOL after filing for bankruptcy. I will describe the case below. However, it did get me thinking that perhaps Brandon’s Blog about the duties of the various stakeholders in the bankruptcy process would be of interest. Put another way, if everyone does not do their part, what is the bankruptcy meaning?

The Merriam-Webster dictionary provides a bankruptcy meaning definition as:

“1a: a debtor (such as an individual or an organization) whose property is subject to voluntary or involuntary administration under the bankruptcy laws for the benefit of the debtor’s creditors

b: a person who becomes insolvent

2: a person who is completely lacking in a particular desirable quality or attribute

a moral bankrupt”

In this bankruptcy meaning Brandon’s Blog, I will focus on the first definition, as that is the one I am qualified to answer.

Bankruptcy meaning: The stakeholders

There are various players in the bankruptcy process. The primary ones are:

The person or company, the debtor, who is now bankrupt.
The licensed insolvency trustee (formerly called a trustee in bankruptcy) (Trustee) who administers the bankruptcy process.
The creditors who are owed money.
The Office of the Superintendent of Bankruptcy (Canada) (OSB) who regulates and supervises all administrations under the Bankruptcy and Insolvency Act (Canada) (BIA) in Canada.

I will leave the duties of the bankrupt until the end. That description in the bankruptcy meaning list will flow nicely into my description of the Nova Scotia bankruptcy court case.

Bankruptcy meaning: Duties of the Trustee

There are of course various statutory steps that a Trustee must take in any bankruptcy administration. It is also obvious that the Trustee must perform those steps properly.

In addition, the OSB has established a Code of Ethics for Trustees. The Code of Ethics for Trustees is an integral part of the BIA General Rules.

The Code establishes a standard for services to be provided by Trustees. It addresses:

the information that Trustees must provide to creditors;
the treatment of funds entrusted to Trustees;
conflicts of interest; and
the sale and purchase of the property of a business or individual who has filed for bankruptcy.

It also contains standards for advertising by Trustees and for maintaining the good reputation of the Trustee community.

Rules 34 through 53 inclusive of the BIA General Rules contain what the bankruptcy meaning of the Code of Ethics for Trustees is. You can read them by clicking on this Code of Ethics for Trustees link.

There are also various Directives issued by the OSB that guide the statutory steps that a Trustee must take. Examples of these Directives are:

Directive No. 1R2 Counselling in Insolvency Matters – This Directive deals with how the Trustee should conduct the required financial counselling sessions.
Directive No. 4R Delegation of Tasks – A Directive about when certain Trustee or administrator tasks can be delegated to others.
Directive No. 5R4 – Estate Funds and Banking – How a Trustee must handle estate trust funds.
Directive No. 6R3 – Assessment of an Individual Debtor – The steps to be taken in assessing the financial situation of the debtor, explaining the various options available and what bankruptcy duties are.
Directive No. 11R – Surplus Income – When assessing the financial situation of the debtor who becomes bankrupt, how to calculate the surplus income payments obligation of the bankrupt person.
Directive No. 17 – Retention of Documents by the Trustee – This one is self-explanatory.

These are but a handful of the Directives issued by the OSB that Trustees must follow.

Bankruptcy meaning: Duties of creditors

In the bankruptcy meaning context, creditors have certain duties which can better be described as rights. Creditors are always invited and welcome to participate in the bankruptcy process. It begins with filing a Form 31 Proof of Claim as evidence of the debt owed to them by the bankrupt.

Once they file their claim in the bankruptcy estate, the creditor now has the status to fully participate in the administration of the bankruptcy estate. The filing of the proof of claim allows the creditor to vote, either in person or by proxy. They now have the authority to participate and vote at the First Meeting of Creditors. They can vote for the appointment of Inspectors.

A creditor may notify the Trustee of any kind of inappropriate activities or transactions on the part of the bankrupt that hurt the interests of the creditors. For instance, a creditor may have knowledge of assets or deals that the bankrupt failed to declare. In many cases, creditors who have dealt with the debtor over many years will have better information than the Trustee initially can gain. A Trustee always welcomes this kind of assistance from creditors. If a creditor thinks there is misconduct or illegal activities on the part of the insolvent the creditor should advise the Trustee and the OSB.

A creditor can oppose a personal bankrupt’s discharge from bankruptcy. The grounds for opposing are set out in section 173 of the BIA. The creditor must inform the Trustee and the bankrupt of the opposition and the reasons in the proper form.

By filing the opposition, the bankrupt’s discharge hearing must now go to court to be adjudicated. The Trustee cannot provide the bankrupt with an automatic discharge, even if they have fulfilled all of their duties. The creditor will provide its evidence to the court to support the opposition. The Trustee must file a report on the conduct of the bankrupt both before and during the bankruptcy administration.

Based on all the evidence, the court will then decide what kind of discharge the personal bankrupt is entitled to; absolute discharge, conditional, and/or a suspended discharge. In certain cases, the court may issue a refusal to the bankrupt. That is what happened in the Nova Scotia case I will shortly describe.

This is what the bankruptcy meaning for the rights and duties of creditors are.

bankruptcy meaning

Bankruptcy meaning: Advising the bankrupt or the officer of the bankrupt corporation of duties

The Trustee must explain to the bankrupt or the officer of a bankrupt company, his/her responsibilities. The responsibilities are found in sections 158 and 159 of the BIA. The Trustee must also explain the bankruptcy offences. Those are outlined in sections 198, 199, 200, and 204 of the BIA.

The minimum level of information a Trustee can give to the bankrupt or the officer of a bankrupt corporation is (as applicable):

information on bankruptcy for consumer debtors;

the above essential passages from the Act;

responsibilities of a bankrupt or the officer of the bankrupt company; and

debtor financial information (type and guide).

In all cases, the bankrupt or the officer of the bankrupt company has to be served with a copy of the relevant sections of the BIA. The Trustee must also get an acknowledgment from the bankrupt, or officer of the bankrupt corporation, that she or he has actually been provided with, and understands his/her obligations. The signoff by the bankrupt/the company’s officer needs to be kept on file by the Trustee.

If a bankrupt or officer of the bankrupt company declines to sign, regardless of being offered, Trustees have to keep in their file details of the refusal (i.e. evidence of service as well as details as to the refusal).

Bankruptcy meaning: The duties of the bankrupt or the officer of the bankrupt corporation

The focus of the BIA is for personal bankrupt, to return the honest but unfortunate debtor back to society free of his or her debts. The premise is that the bankrupt, or the officer of the bankrupt corporation, will fulfill their duties with integrity and honesty. The duties are outlined in the OSB’s Directive No. 26. If you are interested, you can read them HERE.

But what if they don’t? What if the individual bankrupt does not fulfill all of their duties and essentially absents themself from the process once they have filed their assignment in bankruptcy. In that case, the Trustee has an obligation to oppose the bankrupt’s application for discharge and bring the matter to court. What is the bankruptcy meaning in such a case?

That is what happened in the Nova Scotia case that I will tell you about now. I believe it is very instructive.

Bankruptcy meaning: Why a bankrupt’s discharge hearing may come to court

The substantial majority of bankrupts execute their obligations under the BIA. As a result, only a minority of bankruptcies end up in court. Mr. Jewkes’ case is one of them.

The usual factors for a bankruptcy case needing to involve the court include:

outstanding financial disclosure; and/or
surplus income payment obligations.

Discharges for third or more bankruptcy filings also need to come to court for a discharge hearing. Occasionally, a creditor objects to the bankrupt’s discharge. All matters are listened to on their merits and a decision is rendered as appropriate for the particular bankruptcy meaning.

Sometimes, there has actually been a lack of action in a bankruptcy file due to a bankrupt’s own difficulties. She or he may have a mental or physical illness. They may have not have been able to communicate with the Trustee for completely valid reasons. They might have genuinely misunderstood the obligations incumbent upon them. It is the responsibility of the Trustee and, that falling short, the court, to set things straight.

And then there is Mr. Jewkes. None of the factors where the Trustee or the court could excuse him for a simple oversight or mistake which can easily be corrected were present.

Bankruptcy meaning: The Nova Scotia case

Mr. Jewkes filed an assignment in bankruptcy in 2019. He cited “relationship breakdown” as the reason for his bankruptcy. This was his first bankruptcy. He showed income on filing to put him just below the OSB’s guidelines for paying surplus income. His assets were minimal, although he did identify the sale of his old vehicle and a mobile home with little or no equity just prior to his bankruptcy.

His creditors were the normal run of the mill kind of creditors in consumer files:

credit cards;
an unsecured line of credit;
a collection agency was after him, possibly for another credit card debt;
two mobile phone accounts; and
a utility company.

And that is where it ended. He has actually not provided the required income and expense information. He has not offered the Trustee with details required to prepare and file his pre-bankruptcy or post-bankruptcy income tax returns. He has not gone to his two mandatory credit counselling sessions. He has not complied with his payment arrangement for the Trustee’s fee. He has not given corroboration or accounting for his pre-bankruptcy vehicle and mobile home sales. His discharge hearing was held in August 2020. He did not show up for his own discharge hearing either by video or telephone.

The Trustee requested that the hearing be adjourned. The Registrar in bankruptcy court was not prepared to use more court resources and he denied the Trustee’s request.

Rather, he had enough and let his feelings be known. The bankrupt got his stay of proceedings. Notice of the bankruptcy was mailed out to the creditors. The collection calls from creditors or collection agencies stopped.

Garnishments, if such existed, ended. After that, this bankrupt went on with life and took the attitude that everyone else can take a hike.

Bankruptcy meaning: The Registrar’s decision

The Registrar wanted to send a bankruptcy meaning message that this kind of behaviour will not be tolerated. The Registrar decided that this bankruptcy meaning message will be sent by the:

bankrupt’s application for discharge being refused;
bankrupt having leave to apply on his own for discharge once he has fulfilled all of his duties;
Trustee finishing the administration and applying for its discharge forthwith;
Trustee being directed, upon its discharge, to write to all known creditors advising of the Trustee’s discharge and that the effect under the BIA is that the stay of proceedings protecting the bankrupt has ended and all creditors are free to begin or resume collection action against him.

This fourth point is not normal. It is obvious that the Registrar was fed up with this bankrupt and others who feel they can avoid performing their duties. The Registrar wanted to send a strong bankruptcy meaning message.

bankruptcy meaning

Bankruptcy meaning summary

I hope you have enjoyed this bankruptcy meaning Brandon’s Blog. Hopefully, you have better insight now into the fact that a sick insolvent company’s business can be saved by doing a sale of its assets to a healthy organization.

Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. 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 in 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.

Tags assignment in bankruptcy, bankrptcy, bankrptcy and insolvency act, bankruptcy meaning, bankruptcy process, BIA, code of ethics for trustees, duties of the bankrupt, financial counselling, Ira Smith Trustee, licensed insolvency trustee, Office of the Superintendent of Bankruptcy, officer of the bankrupt corporation, OSB, trustee, trustee in bankruptcy

Brandon Blog Post

BANKRUPTCY PROCESS: RIDICULOUS BUT TRUE BANKRUPTCY CHAPTER 11 CASE AND ONTARIO RESTITUTION LAW DEBT

Post author By Brandon Smith
Post date June 17, 2020

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

Bankruptcy process introduction

This week two totally unrelated items caught my attention when thinking about the bankruptcy process. The first is about Hertz Global Holdings Inc. (Hertz) bankruptcy Chapter 11 case in the United States. An update to my recent blog about Hertz titled HOW HERTZ TEACHES US MODERN AND RISKY RULES OF BUSINESS BANKRUPTCY IN CANADA AND THE USA.

The second item that caught my eye is a decision of the Court of Appeal for Ontario. The decision really didn’t have anything to do with bankruptcy. However, the Court of Appeal did reference the Bankruptcy and Insolvency Act (Canada) (BIA) in its decision. It really is about restitution law and the resultant debt.

The zany twist to the Hertz bankruptcy Chapter 11 case

In my June 8 blog about the bankruptcy process used by Hertz, I wrote about the irrational behaviour of investors in trading Hertz stock. Legendary investor Carl Icahn sold his entire Hertz holdings at $0.72 per share. The stock had touched a low of $0.40. For some reason, investors bid the stock up to $5.53. The stock at the time of writing this blog is just under $2.

This made no sense at all. The only thing I can attribute it to is that investors saw an opportunity to buy in during upward momentum, sell-off with a profit, and leave someone else holding the bag. Hertz debentures are selling for pennies on the dollar. The assumption being that those creditors will largely get wiped out as part of the bankruptcy chapter 11 case. If creditors get next to nothing, then for sure shareholders are going to get wiped out. That is what happens in these bankruptcy process cases.

This activity did not escape Hertz’s attention. Now the restructuring team got an idea. What if we could sell more stock, given the interest in our shares. If we sold $1 billion worth, while telling everyone it was worthless, then we would have the necessary cash to fund our restructuring. Better yet, Hertz would not have to borrow money with high rate debtor-in-possession financing. All they needed was to convince the court to approve it. It sounds like a Mel Brooks comedy script!

June 19, 2020 UPDATE: Late yesterday, Hertz announced that it has determined to end a questionable stock sale of as much as $500 million since the Securities and Exchange Commission questioned and put a hold on the insolvent company’s plans. Hertz is currently in talks for a debtor-in-possession bankruptcy loan of up to $1 billion to fund its business reorg.

On June 11, 2020, Hertz filed its motion for court approval to issue more of its common stock. Since the common shares are being actively traded, Hertz filed its emergency motion to seek emergency relief from the court to allow the Debtor to try to capture value for the unissued Hertz shares for the benefit of the bankruptcy process Estate.

The approval sought from the court was approval to participate in a sale arrangement with Jefferies LLC (Jefferies), to act as the sales representative. Under the sale contract, Hertz might offer and sell common shares of Hertz having an aggregate offering value not to surpass $1 billion. Hertz has 246,775,008 unissued common stock shares. Jefferies will use its best efforts to market, as the sales representative the unissued shares of common stock.

In support of their motion, Hertz advised the court that:

The recent market prices of the trading quantities in Hertz’s ordinary shares creates a special possibility for Hertz to raise funding on terms that are much superior to any kind of debtor-in-possession funding.
If successful, Hertz might possibly offer up to and an aggregate of $1.0 billion of ordinary shares.
Unlike regular debtor-in-possession funding, the issuance of the ordinary shares would certainly not enforce restrictions on Hertz or its bankruptcy process restructuring efforts and would certainly not hinder any of the creditors.
Additionally, the stock issuance would bring no repayment obligations to Hertz.
Other than the Jeffries fee, there would be no other significant costs to obtain the funding through the sale of shares.
Hertz would include disclosure in any prospectus for the sale of the unissued common shares highlighting that a financial investment in these Hertz’s shares involves substantial dangers. This includes the danger that the common stock can inevitably be worthless (emphasis added).

What the court said

After deliberating on the issue, on June 12, 2020, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware granted Hertz’s motion. She ordered that:

Hertz is allowed, but not required, to enter into the Sale Arrangement with Jeffries and perform all obligations called for in the agreement.
Hertz may, but again is not required to, market the unissued common shares.
Jeffries may earn its fee in accordance with the Sale Agreement.

This is truly novel, yet whacky. Anyone who would buy these shares must be gambling on the fact that market activity will remain hot and that they will be able to sell the shares for a profit.

As I mentioned above, creditors are going to be given a haircut. So how can shareholders expect a return on their investment? Any savvy creditor being asked to agree to a bankruptcy process restructuring plan certainly will insist that creditors must receive payments on account of what they are agreeing to give up, should funds become available, before shareholders see one penny.

Lots of people are going to be left without a chair when the music stops. It will be fascinating to see how this all works out.

Restitution law

This matter is totally unrelated to the Hertz bankruptcy process. It is in Ontario and I found the Court of Appeal for Ontario’s decision very interesting. Especially so because it really didn’t have anything to do with insolvency or bankruptcy either.

On June 11, 2020, the appellate court issued its decision in a matter dealing with restitution law. The case involved a 32-year-old man with high school education. In between September 30 and November 6, 2018, he went on a drug-fuelled rampage, that included the robbery of 10 businesses. He was sentenced to 4.5 years in jail and subject to a restitution order in the amount of $15,000. It was the restitution payment that was appealed.

His lawyer argued that the sentencing judge erred by not taking into consideration whether he had the ability to make restitution before imposing the restitution. They also argued that it will likely hinder his possibilities of rehabilitation. They said that the restitution order ought to be vacated.

The appeal court agreed. In allowing the appeal, the appeal court stated that the purpose of a restitution order is not intended to undermine the culprit’s chance for rehabilitation. The appeal court then went on to equate the rehabilitative aspects of restitution law with the rehabilitation intention of Canadian bankruptcies laws in the Bankruptcy and Insolvency Act (Canada). The Court of Appeal for Ontario also correctly stated that a restitution order made by a sentencing judge will survive through any type of bankruptcy of the criminal. This suggests it is there for life and restitution is not meant to be a life sentence.

That is what caught my attention. I never would have equated restitution with bankruptcy or rehabilitation.

Summary

The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

I hope you have found this bankruptcy process Brandon’s Blog interesting. I will eagerly watch what happens in the Hertz common share sale and the subsequent trading in the shares. I also never thought of criminal restitution as part of rehabilitation. I also for sure never thought of it in the area of bankruptcy and insolvency.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Income, revenue and cash flow shortages are critical issues facing entrepreneurs, their companies and individual Canadians. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

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

Tags Bankruptcy and Insolvency Act, bankruptcy process, BIA, canadian bankruptcies laws, common shares, common stock, Court of Appeal for Ontario, Debt, debt relief, Hertz, Hertz Bankruptcy (Re), Hertz Global Holdings Inc., Ira Smith Trustee, restitution law, restructuring, restructuring plan

Brandon Blog Post

LICENSED INSOLVENCY TRUSTEES: CAN MY BASIC BANKRUPTCY DISCHARGE BE REVERSED?

Post author By Brandon Smith
Post date July 22, 2019

If you would prefer to listen to an audio version of this licensed insolvency trustees Brandon’s Blog, please scroll to the bottom and click on the podcast.

Licensed insolvency trustees introduction

From time to time I am asked an interesting question about licensed insolvency trustees and the bankruptcy process. The question is, can a bankruptcy discharge be reversed? The simple answer is, yes.

Most people then wonder how this could be possible. In order to understand how we should have a discussion of the bankruptcy discharge process. The best way is through a recent Court case I recently read.

Licensed insolvency trustees: The discharge process

It is the discharge when the person’s debts are erased. The debts are not “discharged” until that time. In order to get a discharge, the bankrupt has to live up to all of his or her duties.

The duties of a bankrupt include:

make disclosure of and deliver possession of all his or her assets (other than for certain provincial exemptions) that is under his or her possession or control to the licensed insolvency trustee (Trustee) or to anyone the Trustee so directs;
in such scenarios as are defined by the Office of the Superintendent of Bankruptcy, provide to the Trustee, for termination, all credit cards;
supply to the Trustee all documents or files relating to the property of the person who has filed for bankruptcy;
make full disclosure of all assets and liabilities to the Trustee by completing the sworn statement of affairs within 5 days of the date of bankruptcy;
assist the Trustee in making an inventory of all property; make full disclosure to the Trustee concerning all property sold or otherwise transferred within 1 year prior to the date of bankruptcy;
disclose any property sold or transferred at undervalue within 5 years prior to the date of filing;
attend the first meeting of creditors if held;
disclose current income and expense and continue monthly disclosure until discharged in order for the Trustee to calculate any surplus income requirement;
if there is surplus income, to make all such payments to the Trustee in full; and
to perform any other acts required by the Trustee or the Court, including, fulfilling any conditions of discharge issued by the Court.

Failure to perform any of the duties laid out in the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA), will result in the Trustee, and perhaps one or more creditors, opposing the bankrupt’s discharge. When there is an opposition, the Trustee will schedule a Court hearing date.

At the Court hearing, the Court can issue an absolute order of discharge, provide a discharge but with conditions to be fulfilled or even suspend the bankrupt’s discharge. Sometimes, there may be both a condition and a suspension, depending on the circumstances. In rare and bad circumstances, the Court could even refuse to hear the bankrupt’s application for discharge. Licensed insolvency trustees are expected to assist the Court by making a recommendation. llicensed insolvency trustees

Mark Daniel MacFarlane bankruptcy

Section 180 (1) and (2) of the BIA states:

“Court may annul discharge

180 (1) Where a bankrupt after his discharge fails to perform the duties imposed on him by this Act, the court may, on the application, annul his discharge.

Annulment of discharge obtained by fraud

(2) Where it appears to the court that the discharge of a bankrupt was obtained by fraud, the court may, on the application, annul his discharge.”

On June 24, 2019, the Supreme Court of Nova Scotia In Bankruptcy and Insolvency released its decision in the bankruptcy case of Mark Daniel MacFarlane (Citation: MacFarlane (Re), 2019 NSSC 201).

This case is not complex. However, it does clearly shows that the answer to the question, “can a bankruptcy discharge be reversed?” is clearly yes.

Mr. MacFarlane had a surplus income obligation to pay to the Trustee for the benefit of his creditors the amount of $3,823.05. At the time he was entitled to a discharge, he still owed the Trustee the amount of $2,879.05. In every personal bankruptcy, licensed insolvency trustees must do the surplus income calculation. If it turns out that the bankruptcy is required to contribute to his or her bankruptcy estate through surplus income payments, licensed insolvency trustees must report to the Court if the bankrupt made all the required payments.

The bankrupt also owned at the date of bankruptcy, an automobile that the Trustee estimated had a forced liquidation value of $17,500. The Trustee had disallowed the claim of a creditor claiming security over the vehicle. That creditor did not appeal the Trustee’s decision.

So, equity in the vehicle was available. In such cases, licensed insolvency trustees must obtain that value. For some reason that the Trustee could not fully explain, he agreed to sell the vehicle to Mr. MacFarlane for $15,702.50 plus HST. The Trustee did not sell it for all cash, but rather, entered into a conditional sale agreement with the bankrupt. In other words, the Trustee gave him financing.

Mr. MacFarlane paid made various payments totalling $7,040.00, both before and after his discharge, leaving a balance of $8,662.50.

Mark Daniel MacFarlane discharge

Although now stated explicitly in the Court decision, it appears that when it came time for Mr. MacFarlane’s application for discharge, the Trustee opposed it. On June 1, 2018, the Trustee applied for his discharge.

For some unexplained reason, the Trustee decided to not collect the balance of the surplus income requirement. The Trustee asked the Court for his outright discharge. The Court gave Mr. MacFarlane his absolute discharge.

So now the bankrupt is discharged, but he still owed the outstanding money for the vehicle that was sold to him by the Trustee under a conditional sale agreement. Rather than paying off the amount owing, Mr. MacFarlane sold the vehicle out of province and pocketed the cash. llicensed insolvency trustees

Licensed insolvency trustees can apply to Court to have a discharge reversed

So now the Trustee makes an application to Court to have Mr. MacFarlane’s discharge reversed. Officially, it is called having the discharge annulled. An annulment makes it as if the discharge never happened. So, if the Trustee is successful, Mr. MacFarlane will be back in bankruptcy. The Trustee also asked that the Court order the payment of the balance of what is owing on the vehicle, for a suspension of the discharge and an amount for costs and disbursements. Mr. MacFarlane represented himself in Court.

The Court was not overly impressed with either Mr. MacFarlane or the Trustee. The Court felt that not did he fail to carry out his responsibilities under the BIA, he actually acted in such a way to deny himself the advantage of any type of latitude the Court might have given him relative to those obligations.

The Court went on to say that his responsibilities under the BIA are not pointers or activities to be carried out when convenient or if life does not get in the way. It was obviously not his place to choose what he would and would not do. Concerning the automobile, it was not his to just sell it, pocket the cash, and tell the Trustee (and by extension his creditors) to go take a hike.

The Court was not too happy with the Trustee

The Court was at a loss to some of the Trustee’s behaviour also. There was no explanation given as to why the Trustee merely gave up on collecting all of the surplus income requirement. Likewise, there was no explanation why the Trustee would have given the bankrupt a discount off of the liquidation value of the vehicle. Such a look is not good for licensed insolvency trustees.

Quite rightly, the Court pointed out that in such situation, licensed insolvency trustees, and specifically this Trustee, should not have recommended to the Court that Mr. MacFarlane receive an absolute order of discharge. Rather, the Trustee should have insisted on a conditional order of discharge. The conditions would have been that the bankrupt pay off both the surplus income balance and the amount owing on the vehicle before being entitled to an absolute order of discharge. llicensed insolvency trustees

The Court’s decision

The Court ordered that:

Mr. MacFarlane’s discharge from bankruptcy be annulled, so now he is once again an undischarged bankrupt.
He must pay the Trustee the $8,662.50 owing on the vehicle.
The Trustee will collect $500 for disbursements in tracing what happened to the vehicle from Mr. MacFarlane also.
There will not be an automatic discharge once he pays the $9,162.50 to the Trustee. Rather, the bankrupt will have to apply to the Court for his discharge and there will be another discharge hearing.
Since the Court was not asked to revisit the balance owing on surplus income, the Court didn’t review that again.
The request of the Trustee for $5,000 as a censure of the bankrupt’s behaviour was denied. The Court said that this situation was caused in part by the Trustee allowing the surplus income requirement to be waived and agreeing to an absolute discharge.

Although not part of the Order, the Court strongly stated that any costs in the additional work done by the Trustee now, and the disposition of the amount to be received once finally paid, will be reviewed by the Court.

The Court emphatically intimated that since the Trustee’s actions were in part to blame for this situation, the Court was going to make sure that part of the $9,162.50 will go to the creditors when the Trustee comes back to Court to have its accounts taxed.

Licensed insolvency trustees conclusion

So there you have it on licensed insolvency trustees. Can a bankruptcy discharge be reversed or revoked? As we see in this case if the discharge was improperly obtained because the bankrupt did not fulfill all of his or her duties, YES. Similarly, if it can be shown that a discharge was obtained through fraud or fraudulent conduct, the discharge can be annulled in that case also.

Whenever I sit down with a person to talk about his or her insolvency, or with an owner of a company to discuss business financial problems, I make sure that we have an entire discussion. I not only talk to them about what process I recommend for their unique situation, but I also walk them through the entire process and what all the rights and responsibilities are. For personal insolvency, this includes the discharge process.

Are you or your business experiencing money troubles? Are you on the verge of bankruptcy? Do not wait till it is far too late to understand how you can restructure your financial affairs and avoid bankruptcy. You do not need to be one more person or company declaring bankruptcy in Canada.

As licensed insolvency trustees, we are the only specialists certified, accredited and overseen by the federal government to provide insolvency guidance and to apply remedies under the BIA. We will certainly help you to choose what is best for you to release you from your debt problems.

Call the Ira Smith Team today so we can get rid you of the stress, anxiety, pain and discomfort that your money issues have created. With the distinct roadmap, we establish simply for you, we will without delay return you right into a healthy and balanced problem-free life, Starting Over Staring Now. Call the Ira Smith Team today.

Tags absolute discharge, annul, Bankruptcy and Insolvency Act, bankruptcy discharge, bankruptcy process, BIA, conditional discharge, court, date of bankruptcy, Ira Smith Trustee, licensed insolvency trustee, licensed insolvency trustees, Office of the Superintendent of Bankruptcy, surplus income, suspended discharge, trustee

Brandon Blog Post

PERSONAL BANKRUPTCY CANADA FAQ: VIDEO – PERSONAL BANKRUPTCY FAQ CANADA

Post author By Brandon Smith
Post date May 16, 2018

Personal bankruptcy Canada FAQ: Introduction

Last week I provided you with my infographic, video and blog to give you information on the Canadian corporate bankruptcy Canada process. I focussed on how an incorporated business files for a voluntary bankruptcy in Canada. This week, I want to describe how an individual files for voluntary bankruptcy. I also want to answer what I have found to be the personal bankruptcy Canada faq. So look at the infographic and watch the video below. Feel free to read in more detail below the video.

Personal bankruptcy Canada faq: Personal bankruptcy process in Canada

One of the most asked questions is “What is the bankruptcy process in Canada?”. Last week our infographic and video described the corporate bankruptcy process in Canada. This week’s video describes the personal bankruptcy process in Canada.

VIDEO – Personal bankruptcy Canada faq

Personal bankruptcy Canada faq # 1 – How do I recognize if I am in financial trouble?

If you are having difficulty paying your debts or have actually quit paying them altogether then you are in financial difficulty. Call an expert, a government qualified trustee to check your choices for reducing your debt and eliminating your stress and pain.

Personal bankruptcy Canada faq # 2 – Is bankruptcy my only alternative to get relief from debt?

The short answer is no; there are other options. You should always start first with a free consultation with a licensed insolvency trustee (LIT or Trustee). A LIT is a private party licensed by Industry Canada to carry out the restructuring and liquidation rules under the Canadian Bankruptcy and Insolvency Act (BIA). The LIT will discuss options with you to first avoid bankruptcy. These options include:

Bankruptcy does not deal with debts such as home mortgages, vehicle loan, spousal support or child support. Debt settlement firms try to bargain with your lenders to lower the amount owing. They also prepare a payment plan for you to settle the debt; they do not “erase your debt”.

The Canadian government is in the process of implementing new rules to curb the activities of some debt settlement companies. Some of them charge you for reviews that a licensed insolvency trustee performs for free. They also sell you products you don’t need, under the guise of helping you improve your credit score.

Personal bankruptcy Canada faq # 3 – I have actually seen advertisements from Debt Settlement firms stating they could erase my debt without making use of a Trustee in bankruptcy. Just how does that work?

They don’t and their ads are misleading. If you first have a free consultation with a LIT, you will learn that a number of choices available to you that include yet are not restricted to debt reduction including a consumer proposal.

Understand that these debt settlement firms are not licensed trustees. Eventually, they stop charging you for things a LIT would do for free. Then they ultimately hand you over to a LIT for either a consumer proposal or bankruptcy. You could have just gone to see a professionally licensed Trustee to start with!

Personal bankruptcy Canada faq # 4 – Do I get approved for bankruptcy?

You qualify for individual bankruptcy in Canada if you are financially troubled, insolvent and owe greater than $1,000.

Personal bankruptcy Canada faq # 5 – Should I file bankruptcy?

Without the detailed information of your unique circumstance, that decision cannot be made. Get In touch With Ira Smith Trustee & Receiver Inc. for a complimentary no commitment session so you will understand your options for ending your debt pains, Starting Over, Starting Now.

Personal bankruptcy Canada faq # 6 – If I declare bankruptcy, will I lose my house and car?

There are certain claims that are not released by your discharge from bankruptcy. Examples are home mortgages and car loans, if you choose to keep them. It comes down to what is your equity in those assets. The answer to that question and your ability to cash-flow those debts will be the determining factor. There is a list of items that are exempt from seizure. Call Ira Smith Trustee & Receiver Inc. to find out more.

Personal bankruptcy Canada faq # 7 – Once I file bankruptcy, exactly what occurs to the money I owe?

Once you declare bankruptcy you will be required to surrender certain non-exempt assets to the Trustee. These assets will then be sold and the money earned from the sale of the assets distributed among your creditors.

Personal bankruptcy Canada faq # 8 – Even though I have not located work in my field, I still owe on my student loans. Will my bankruptcy get rid of that debt?

Is your date of bankruptcy within 7 years of when you discontinued to be a full or part-time student? If so, your student loan debt will not be released by your discharge from bankruptcy. In particular instances, you could be able to apply to the court for a discharge of your student debt obligations under the “hardship provision”.

Personal bankruptcy Canada faq # 9 – What takes place to my salary or wages throughout a bankruptcy?

Salaries and wages are not influenced by bankruptcy. However you will need to complete an Income and Expense Form noting your household earnings as well as costs. This becomes part of your budgeting procedure. If your earnings goes beyond specific requirements developed by the Office of the Superintendent of Bankruptcy (OSB) (“surplus income”), you will be required to pay part of the surplus income into the bankruptcy estate through the trustee.

Personal bankruptcy Canada faq # 10 – Canada Revenue Agency has actually frozen my bank accounts and has a garnishee with my employer on my earnings. Just how can I stop all that?

If you have filed personal bankruptcy, personal income tax debt is an unsecured debt. As soon as you’ve declared bankruptcy or made a consumer proposal, Canada Revenue Agency (CRA) cannot start or continue taking any kind of enforcement activity versus you, consisting of wage garnishment or freezing your assets. Your Trustee will alert CRA once you file. The LIT will also advise both CRA and your bank and employer that any enforcement activity against you for your debt cannot continue.

Personal bankruptcy Canada faq # 11 – Will I still owe loan after I state bankruptcy?

Maybe, due to the fact that bankruptcy does not cover secured lenders – home mortgages, auto loan, student loans (if it is less than 7 years given that you discontinued to be a full or part-time student). It also does not cover certain other debts:

penalties or fines enforced by the court;
spousal support;
child support; or
debts arising from fraud.

Personal bankruptcy Canada faq # 12 – How long will I be bankrupt?

The time you spend in bankruptcy will depend on whether this is a first or 2nd bankruptcy and if you have surplus income. Get In touch with Ira Smith Trustee & Receiver Inc. to find out more.

Personal bankruptcy Canada faq # 13 – Who will know that I have declared bankruptcy?

As soon as you declare bankruptcy your Trustee will tell your creditors, CRA, and the Superintendent of Bankruptcy. The two Canadian credit bureaus, Equifax and TransUnion, obtain filing records from the Superintendent of Bankruptcy, so it will be on your credit report.

Bankruptcy filings are a public document. On top of that particular personal bankruptcies, those with non-exempt assets estimated to realize more than $15,000, need an ad in the “legal” section of a local newspaper.

Personal bankruptcy Canada faq # 14 – How will bankruptcy influence my credit score ranking?

An individual that files bankruptcy gets the lowest credit score ranking. Details of your bankruptcy that influences your credit report is inevitably eliminated many years after your discharge from bankruptcy.

Personal bankruptcy Canada faq # 15 – What does a LIT/Trustee do?

A Trustee is an individual or company licensed by the OSB to carry out mandates under the BIA such as bankruptcy, proposal, consumer proposal, summary administration bankruptcy and business reorganizations. A LIT is an officer of the Court. The Trustee has a duty of care for the rights of both the debtor and the creditors.

The LIT also makes certain that the legal rights of the insolvent/bankrupt are not abused.

Here is a listing of standard steps taken by a Trustee:

Reviews and counsels debtors on available alternatives
Prepares official documentation that is both filed with the OSB and used to tell creditors
Ensures the validity of creditors’ claims
Ensures that debtors are provided with mandatory counselling and access to mediation services if there is a dispute about any income they are required to contribute
Sells the debtor’s assets, except those exempt from seizure by provincial and federal laws, and hold the proceeds in trust for distribution to creditors
Administers the bankrupt estate from beginning to end
Assesses the debtor’s conduct both before and during a bankruptcy, as well as the cause(s) of the bankruptcy; and
Arranges for (and if necessary reports all the above to the Court) for the bankrupt’s application for a discharge (in the case of personal debtors)

Personal bankruptcy Canada faq # 16 – How do I pick the ideal Trustee?

Make an appointment for your free consultation. Meet with the Trustee and ask any questions you might have about alternatives to bankruptcy, consumer proposal, debt settlement/restructuring, bankruptcy and/or the bankruptcy procedure. Get a feel for not only the answers you receive, but how interested does the Trustee seem in you as a person. Can you see yourself relating well to that person. Does the Trustee make you feel comfortable and the type of person you want to work with.

If not, consult with a different Trustee firm and repeat the procedure until you find a Trustee that you really feel comfy working with.

Personal bankruptcy Canada faq # 17 – Is my spouse/partner impacted by my bankruptcy?

Your partner/spouse will not be financially affected by your bankruptcy unless they have co-signed a debt or own assets jointly with you. A creditor could pursue your spouse/partner for any debt that they have co-signed for. This includes a mortgage on your jointly owned home.

Personal bankruptcy Canada faq # 18 – How will my bankruptcy impact my present divorce case?

In Canada, the bankruptcy process does not interfere with the majority of the divorce proceeding. The Trustee will stand in the shoes of the bankrupt spouse when it comes to the rights for either the equalization payment or the division of property. All issues about spouse and child support and child custody issues carry on as if there was no bankruptcy at all.

Personal bankruptcy Canada faq # 19 – What is Chapter 7?

Chapter 7 is not applicable in Canada. It is the liquidation section of the U.S. Bankruptcy Code, the federal law governing bankruptcy in America.

Personal bankruptcy Canada faq # 20 – What is Chapter 11?

Chapter 11 is not applicable in Canada. It is the corporate restructuring section of the U.S. Bankruptcy Code, the federal law governing bankruptcy protection in America.

Personal bankruptcy Canada faq – What Now?

I hope that you have found this information helpful. Bankruptcy is the last thing we try to do for a person in financial difficulty. If caught early enough, we can get involved in a debt settlement restructuring program for you.

The Ira Smith Team knows that you are worried because you are facing significant financial challenges. The stress placed upon you is enormous. We understand your pain points.

Contact the Ira Smith Team today. We know how to solve your financial challenges, remove your pain and put things back on a healthy path. Contact us today for your free consultation so that we can save your life, Starting Over Starting Now.

personal bankruptcy canada faq

Brandon Blog Post

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

Post author By Brandon Smith
Post date November 23, 2016

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

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.
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).
The trustee notifies your creditors of the bankruptcy.
You attend a meeting of creditors if one is called.
You attend two counselling sessions.
Subject to your provincial exemptions, the trustee sells your assets; you may also have to make surplus income payments to the trustee.
In certain circumstances, you may have to attend an examination by an officer at the OSB.
The Trustee prepares a report to the OSB describing your actions during the bankruptcy.
You attend the discharge hearing if required.
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

Tags alternative to bankruptcy, Bankruptcy, Bankruptcy and Insolvency Act, bankruptcy options, bankruptcy process, BIA, Consumer Proposal, consumer proposal vs bankruptcy, Debt, division 1 proposal, Holiday Shopping, holiday spending, Ira Smith Trustee, licensed insolvency trustee, OSB, Superintendent of Bankruptcy, trustee

Brandon Blog Post

# VIDEO-DIVORCE DURING BANKRUPTCY CANADA WHICH COMES FIRST?

Post author By Brandon Smith
Post date October 26, 2016

The conundrum

Divorce during bankruptcy Canada is the same as the old conundrum, “which arrived first; the chicken or maybe the egg”, how would one answer, marital breakdown and insolvency: which comes first? Nobody has a definitive answer because excellent arguments can be produced for both. The same is true for “divorce and personal bankruptcy which comes first”?

Every case is decided based on its unique facts. Marital breakdown and insolvency, and bankruptcy and divorce, often go hand in hand. However, a marital breakdown will not always lead to divorce if the marriage can be salvaged. However, personal bankruptcy and divorce are two separate legal processes that can be at odds with each other.

A few indisputable facts

In this divorce during bankruptcy Canada Brandon’s Blog you will find 5 indisputable facts:

The number one reason for marital breakdown and divorce is financial issues. Divorce.com
In a recently available study one out of every seven people who made an insolvency filing in Canada listed separation, divorce or marital breakdown as a contributing factor to their financial problems.
One-third of all people facing insolvency problems are also going through relationship breakdown and divorce in Ontario or {a splitting up. Gail Vaz-Oxlade
Bankruptcy won’t end all divorce financial obligations. e. g. It does indeed not end alimony or child support.
Declaring personal bankruptcy on joint debts, even debts in a divorce will impact the other debtor.

Are you looking to reduce grief?

If creating minimal interruption on the children of the family during a marital breakdown and personal bankruptcy features prime importance to the spouse with the debts (and presumably that will be just like the spouse making the support payments), it makes sense to have at least the support terms of the divorce decided, including the making of the support order and then do an insolvency filing. The marital breakdown and bankruptcy process will not disturb any in good faith arrangements for support, but keep in mind it will affect property not already dealt with by the family law court.

What about joint debts?

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

Divorce during bankruptcy Canada: What should you do if you have both marital breakdown and too much debt?

Marital breakdown and bankruptcy is an extremely complicated process, made even more complicated when put together with divorce and requires a qualified licensed Trustee to work with your family law legal professional to work with your individual situation and give practical alternatives and an action plan. If you have serious debt problems, are considering bankruptcy and divorce, or perhaps wish to know more about marital breakdown and bankruptcy, then contact Ira Smith Trustee & Receiver Inc. as soon as possible. Starting Over, Starting Now, we can help you get your life back again on track, even with marital breakdown and personal bankruptcy looming.

Tags Bankruptcy, bankruptcy and divorce, Bankruptcy and Insolvency Act, bankruptcy process, debt problems, divorce, divorce and personal bankruptcy, divorce during bankruptcy canada, Ira Smith Trustee, marital breakdown, personal bankruptcy, personal bankruptcy and divorce

Brandon Blog Post

OUR 5 TOP TIPS IN CHOOSING A BANKRUPTCY TRUSTEE

Post author By Brandon Smith
Post date July 4, 2016

A bankruptcy trustee is now called a licensed insolvency trustee

A bankruptcy trustee is now called a licensed insolvency trustee (LIT). Last week we discussed why you need a licensed insolvency trustee if you or your company has too much debt, even if you do not wish to file for bankruptcy. You should first see a LIT even if you would prefer one of the many alternatives to bankruptcy. This week we’re going to give you some pointers on how to choose a LIT.

Many people are under the mistaken impression that the LIT works only for you, but that’s not right. Although you can choose your LIT and you’ll be making payments to them, the LIT doesn’t technically work for you.

Who does the LIT act for?

The LIT is an independent third party officially appointed by the local Office of the Superintendent of Bankruptcy to manage the bankruptcy process. Their main job is to make sure that the bankruptcy administration to make sure that the assets are properly liquidated and that both you and your creditors follow all the bankruptcy rules.

How do I choose a LIT?

Here are 5 tips for choosing a LIT:

If you have a friend, family member or colleague who has a bankruptcy trustee to recommend, that’s a great place to start.
There’s a list of all licensed insolvency trustees and licensed insolvency trustee firms on the website of the Office of the Superintendent of Bankruptcy Canada. Always check this list to make sure that a trustee you’re interested in working with is on this list. There are unscrupulous, unlicensed debt settlement consultants and companies out there who make themselves appear as though they’re licensed trustees, but they’re not. They will either try to convince you that they can settle with your creditors on your behalf or act as a middleman (for a fee of course) and refer you to a licensed trustee.
The Office of the Superintendent of Bankruptcy Canada publishes professional misconduct decisions on its website. Check to see that your trustee has a clean record.
Set up a free, no-obligation consultation with a bankruptcy trustee. Ask questions and make sure that you’re comfortable with the trustee and satisfied with the answers to your questions. If not, you can move to another LIT. A consultation doesn’t obligate you to stay with the trustee unless you’ve signed the paperwork.
Do research ahead of time so that you will know the right things to ask the LIT during your free consultation. A great place to start is by watching our video 12 THINGS A LICENSED INSOLVENCY TRUSTEE MAY NOT TELL YOU.

What should you do if you have too much debt?

Ira Smith Trustee & Receiver Inc. has a great reputation and a cumulative 50+ years of experience dealing with diverse issues and complex files. We deliver the highest quality of professional service. Give us a call today and Starting Over, Starting Now you will be well on your way to solving your debt problems.

Tags alternatives to bankruptcy, bankruptcy process, bankruptcy trustee, Ira Smith Trustee, licensed insolvency trustee, Office of the Superintendent of Bankruptcy, official receiver, trustee

Brandon Blog Post

#VIDEO – HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY?#

Post author By Brandon Smith
Post date June 29, 2016

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

NOT MUCH!

We are always asked, how much do you have to owe to file bankruptcy? The real question is, here are my assets and my debts, what are my options? In Canada, the Bankruptcy and Insolvency Act (Canada) (“BIA”) states that you must owe at least $1,000 of unsecured debt to file for bankruptcy. The same holds true if someone owes you money. They must owe you at least $1,000 on an unsecured basis to apply to the Court to make an Order judging a person or company into bankruptcy. As you can see, the threshold is not very high.

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

ARE YOU INSOLVENT?

Facing serious financial difficulties is devastating, especially if you believe that personal bankruptcy is your only option. In fact many people mistakenly believe that dire financial problems automatically mean personal bankruptcy. If you are having problems meeting your financial obligations or have stopped meeting those financial obligations as they come due you are actually insolvent, not bankrupt. Insolvent is a financial condition; bankruptcy is a legal state.

Bаnkruрtсу is a legal рrосеѕѕ under the BIA that helps you to resolve уоur debts if they have become unmanageable. If you have relatively few assets and low іnсоmе and dесіdе to file for bаnkruрtсу, you will probably fіlе under the shortened Summary Administration part of the BIA. If you have realizable assets that will produce a value greater than $10,000, then your bankruptcy would be administered under the general administration provisions. Don’t worry about these distinctions now. For now, just know that the streamlined summary administration rules is a simpler process, and the Superintendent of Bankruptcy sets the cost of the bankruptcy administration.

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

THE BANKRUPTCY PROCESS

In either case, you will turn over to your Licensed Insolvency Trustee (“LIT”) all of уоur рrореrtу that is not exempt (protected) by law. The LIT will sell your property and the proceeds used to рау for the bankruptcy administration and then to distribute to уоur сrеdіtоrѕ.

If you have very little property, all of it might be рrоtесtеd so that you will not lose it. How much уоur сrеdіtоrѕ will get in this process dереndѕ on how much уоur unрrоtесtеd property sells fоr and whether you must pay “surplus income” to your LIT.

The last step of your bankruptcy process, will be to get your discharge from your debts, meaning that you will not have to рау them all (with certain exceptions).

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

SEE A TRUSTEE EVEN IF YOU DO NOT WANT TO GO BANKRUPT!

People think that they should only see a LIT if they need to file for bankruptcy. Every LIT will give you a free 1 hour consultation, to go over your situation and offer you your available options. The topics the LIT will discuss with you are:

As you can see, bankruptcy is only one of many topics discussed, in determining what your options are, allowing you to choose the one that makes the most sense to you. No other professional can discuss this full range of topics with you, and especially not for free!

WHAT SHOULD YOU DO IF YOU OR YOUR COMPANY HAS TOO MUCH DEBT?

If you’re dealing with serious financial issues, contact a trustee, who is the Canadian bankruptcy expert. For the reasons already given, you should do this whether or not you’re contemplating bankruptcy. The reason is very simple: the licensed insolvency trustee will assess your situation, offer you all of your available options and will do this for you for free! You can’t find a better deal anywhere.

We’re not only bankruptcy experts; we’re experts in dealing with debt. Contact Ira Smith Trustee & Receiver Inc. today for a free consultation and you will be well on your way to regaining your former quality of life Starting Over, Starting Now.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy process, BIA, Consumer Proposal, credit counselling, credit rating, debt conslidation, debts, file bankruptcy, how much do you have to owe to file bankruptcy, insolvent, Ira Smith Trustee, licensed insolvency trustee, personal bankruptcy, rebuilding credit, trustee

Brandon Blog Post

CANADIAN BANKRUPTCY EXPERT: GO TO A LICENSED INSOLVENCY TRUSTEE

Post author By Brandon Smith
Post date June 27, 2016

Canadian bankruptcy expert introduction

There are several misconceptions when it comes to the Canadian bankruptcy expert known as a licensed insolvency trustee and that the role of the trustee is only for the bankruptcy process. It is true that a licensed insolvency trustee is the Canadian bankruptcy expert, but it is not the case that a licensed insolvency trustee only can administer Canadian bankruptcies.

Misconception # 1 is that trustees only deal with bankruptcy. Although you may know that a trustee is a Canadian bankruptcy expert, they’re also highly trained and educated debt consultants who, depending upon your particular circumstances, can offer you several alternatives which include credit counselling, debt consolidation and consumer proposals.
Misconception # 2 is that because it is a legal process, you need a lawyer. Although you may have heard many radio commercials telling you that you need a lawyer if you’re going to declare bankruptcy, and if you are dealing with income tax debt to keep using a certain lawyer and not a licensed insolvency trustee, this is simply not the case. Even though it is is a legal process, to file bankruptcy in Canada you need the services of a licensed insolvency trustee. In fact, bankruptcies and consumer proposals can only be administered in Canada through a licensed insolvency trustee.

What is the role of a trustee?

The Office of the Superintendent of Bankruptcy (OSB) licenses trustees to administer bankruptcy proceedings. When you file for bankruptcy, the trustee becomes the administrator of your property and assets.

Why use a trustee instead of a debt settlement company?

Debt settlement companies can’t administer a bankruptcy or a consumer proposal – ONLY a licensed insolvency trustee can. In addition a trustee:

is federally regulated
has undergone a background check by the RCMP before being granted a licence
is subject to a stringent code of ethics
maintains his/her competency by completing ongoing mandatory professional development each year
The Federal Government and the Court regulate trustees’ fees and for consumer matters, they are usually less than the fees of the debt settlement companies who make unsubstantiated claims

What should you do if you or your company have too much debt?

If you’re dealing with serious financial issues, contact a trustee, who is the Canadian bankruptcy expert. For the reasons already given, you should do this whether or not you’re contemplating filing. The reason is very simple: the licensed insolvency trustee will assess your situation, offer you all of your available options and will do this for you for free! You can’t find a better deal anywhere.

We’re experts in dealing with debt. Contact Ira Smith Trustee & Receiver Inc. today for a free consultation and you will be well on your way to regaining your former quality of life Starting Over, Starting Now. Read our blog next week when we’ll be discussing how to choose a licensed insolvency trustee.

Tags Bankruptcy, bankruptcy alternatives, bankruptcy expert, bankruptcy experts, bankruptcy experts in on, bankruptcy process, bankruptcy trustee, Canadian bankruptcy expert, consumer proposals, credit counselling, debt consolidation, debt settlement companies, licensed insolvency trustee, Office of the Superintendent of Bankruptcy, OSB

Brandon Blog Post

#VIDEO – SURPLUS INCOME LIMITS FOR 2015, 2016 & BEYOND: YOU WILL REALLY FEEL IT IN YOUR BANKRUPTCY #

Post author By Brandon Smith
Post date April 13, 2016

Our inspiration for this vlog

This vlog was inspired by our new eBook: PERSONAL BANKRUPTCY CANADA – Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track, which is sold on Amazon.com. The eBook explains the Canadian personal insolvency and bankruptcy system, specifically directed to the person stressed out with too much debt.

The most asked question is about surplus income limits

The question we are always asked is: What are the surplus income limits for 2015 and 2016 if I am in bankruptcy? I don’t have any cash left over from each paycheque, so, how can you say that I have surplus income?

What are the surplus income limits for 2015, 2016 and beyond?

Surplus income is the amount of a debtor’s total income that exceeds what is necessary to maintain a reasonable standard of living according to the standards set by the Office of the Superintendent of Bankruptcy (remember, the actual standard is right at the poverty line so don’t get happy when you see words like “reasonable standard of living”). The bankrupt must make payments out of this surplus income to the Licensed Insolvency Trustee for distribution among the creditors.

It is part of the goals of the Canadian insolvency system that tries to balance the elimination of debt with the rights of creditors to be paid. The surplus income limits for 2015, 2016 and beyond, are set to allow Canadians to maintain what the Superintendent of Bankruptcy calls a reasonable standard of living during the bankruptcy process; the government has set thresholds or limits on net earnings (gross earnings after taxes and deductions) during the bankruptcy process. The Office of the Superintendent of Bankruptcy sets the threshold limits each year and these limits are indexed to inflation.

The threshold is set the same across Canada, regardless of what province or city you live in. So, someone living in the Greater Toronto Area, whose costs for shelter and probably transportation are higher than other parts of the country, will find that the threshold for them is essentially at the poverty line.

An example of how to apply the surplus income limits for 2015 and 2016

Here is an example of how the surplus income amount is calculated. Let’s assume we have a family of 4: a husband, wife and two young children in school. The husband earns (net of income tax) the annual amount of $46,000 and the wife earns (net of income tax) the annual amount of $18,000. To keep it simple, let’s assume that their monthly take-home pay can is their annual amount divided by 12 or a monthly income of $3,833.33 for the husband and $1,500 for the wife. Let’s assume that only the husband has to go bankrupt and not the wife.

The surplus income calculation for 2015 was:

(($3,833.33 + $1,500.00) – $3,831.00) X ($3,833.33/($3,833.33+$1,500)) = $539.90

This means the bankrupt husband will have to pay $539.90 to the Licensed Insolvency Trustee for a period of 21 months if he has never been bankrupt before, or for 36 months, if he has been bankrupt before, according to the Bankruptcy and Insolvency Act (Canada).

The surplus income calculation for 2016 is:

(($3,833.33 + $1,500.00) – $3,882.00) X ($3,833.33/($3,833.33+$1,500)) = $521.57

This means the bankrupt husband will have to pay $521.57 to the Licensed Insolvency Trustee for a period of 21 months if he has never been bankrupt before, or for 36 months, if he has been bankrupt before, according to the Bankruptcy and Insolvency Act (Canada) (BIA).

You cannot deduct your normal monthly living expenses against the monthly income in order to calculate the surplus income limits for 2015 or any other year. However, if the bankrupt has any of the following types of expenses, they can be deducted from income in calculating the surplus income amount.

Child Support
Spousal Support
Child Care Expense
Expenses associated with medical condition
Court imposed fines or penalties that are in process of being paid
Expenses permitted by Income Tax Act that are a condition of employment
Any other debt where the stay of proceeding has been lifted

The surplus income limits for 2015 and 2016, or put another way, the amount the Superintendent of Bankruptcy believes a family, where there is one bankrupt person in a family of four, should have a take-home monthly income of $3,882 or annual family take home pay of $46,584, before the bankrupt person has to start contributing 50% of his or her income for the benefit of the bankrupt’s creditors. That is why we say the Federal government’s idea of a “reasonable standard of living” is really at the poverty line.

What to do if you have too much debt

If you’re in “survival mode” when it comes to your finances, we’ve got solutions for you. Although many people believe that bankruptcy is the only way out of serious debt, that’s not always the case. Ira Smith Trustee & Receiver Inc. can discuss other bankruptcy alternatives with you which include credit counselling, debt consolidation and consumer proposals.

If we get to see you early enough, at the first sign of trouble, you can utilize and implement one of the bankruptcy alternatives, to free you from the burden of your company’s financial challenges to go on to be a productive, profitable employer allowing management to focus on business growth and not be plagued by debt problems. Come in for a no obligation, no fee consultation and let us help you get back on track to living a debt free life Starting Over, Starting Now. Give us a call today.

Tags Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy process, BIA, Consumer Proposal, consumer proposals, eBook, Ira Smith Trustee, licensed insolvency trustee, starting over starting now, surplus income calculation for 2016, surplus income limits for 2015

Bankruptcy meaning introduction

Bankruptcy meaning: The stakeholders

Bankruptcy meaning: Duties of the Trustee

Bankruptcy meaning: Duties of creditors

Bankruptcy meaning: Advising the bankrupt or the officer of the bankrupt corporation of duties

Bankruptcy meaning: The duties of the bankrupt or the officer of the bankrupt corporation

Bankruptcy meaning: Why a bankrupt’s discharge hearing may come to court

Bankruptcy meaning: The Nova Scotia case

Bankruptcy meaning: The Registrar’s decision

Bankruptcy meaning summary

Bankruptcy process introduction

The zany twist to the Hertz bankruptcy Chapter 11 case

The Hertz bankruptcy process application for share sale approval motion

What the court said

Restitution law

Summary

Licensed insolvency trustees introduction

Licensed insolvency trustees: The discharge process

Mark Daniel MacFarlane bankruptcy

Mark Daniel MacFarlane discharge

Licensed insolvency trustees can apply to Court to have a discharge reversed

The Court was not too happy with the Trustee

The Court’s decision

Licensed insolvency trustees conclusion

Personal bankruptcy Canada FAQ: Introduction

Personal bankruptcy Canada faq: Personal bankruptcy process in Canada

One of the most asked questions is “What is the bankruptcy process in Canada?”. Last week our infographic and video described the corporate bankruptcy process in Canada. This week’s video describes the personal bankruptcy process in Canada.

VIDEO – Personal bankruptcy Canada faq

Personal bankruptcy Canada faq # 1 – How do I recognize if I am in financial trouble?

Personal bankruptcy Canada faq # 2 – Is bankruptcy my only alternative to get relief from debt?

Personal bankruptcy Canada faq # 3 – I have actually seen advertisements from Debt Settlement firms stating they could erase my debt without making use of a Trustee in bankruptcy. Just how does that work?

Personal bankruptcy Canada faq # 4 – Do I get approved for bankruptcy?

Personal bankruptcy Canada faq # 5 – Should I file bankruptcy?

Personal bankruptcy Canada faq # 6 – If I declare bankruptcy, will I lose my house and car?

Personal bankruptcy Canada faq # 7 – Once I file bankruptcy, exactly what occurs to the money I owe?

Personal bankruptcy Canada faq # 8 – Even though I have not located work in my field, I still owe on my student loans. Will my bankruptcy get rid of that debt?

Personal bankruptcy Canada faq # 9 – What takes place to my salary or wages throughout a bankruptcy?

Personal bankruptcy Canada faq # 10 – Canada Revenue Agency has actually frozen my bank accounts and has a garnishee with my employer on my earnings. Just how can I stop all that?

Personal bankruptcy Canada faq # 11 – Will I still owe loan after I state bankruptcy?

Personal bankruptcy Canada faq # 12 – How long will I be bankrupt?

Personal bankruptcy Canada faq # 13 – Who will know that I have declared bankruptcy?

Personal bankruptcy Canada faq # 14 – How will bankruptcy influence my credit score ranking?

Personal bankruptcy Canada faq # 15 – What does a LIT/Trustee do?

Personal bankruptcy Canada faq # 16 – How do I pick the ideal Trustee?

Personal bankruptcy Canada faq # 17 – Is my spouse/partner impacted by my bankruptcy?

Personal bankruptcy Canada faq # 18 – How will my bankruptcy impact my present divorce case?

Personal bankruptcy Canada faq # 19 – What is Chapter 7?

Personal bankruptcy Canada faq # 20 – What is Chapter 11?

Personal bankruptcy Canada faq – What Now?

Consumer proposal vs bankruptcy: Introduction

Consumer proposal vs. bankruptcy: What are consumer proposals?

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

What are the differences in credit history score?

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

Are assets treated differently between a consumer proposal vs bankruptcy?

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

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

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

What do consumer proposals and bankruptcy have in common?

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

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

Consumer proposal vs bankruptcy: The bankruptcy process

Consumer proposal vs bankruptcy: How to file for bankruptcy?

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

Consumer proposal vs bankruptcy: Move on with your life

The conundrum

A few indisputable facts

Are you looking to reduce grief?

What about joint debts?

Divorce during bankruptcy Canada: What should you do if you have both marital breakdown and too much debt?

A bankruptcy trustee is now called a licensed insolvency trustee

Who does the LIT act for?

How do I choose a LIT?

What should you do if you have too much debt?

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

NOT MUCH!

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

ARE YOU INSOLVENT?

HOW MUCH DO YOU HAVE TO OWE TO FILE BANKRUPTCY –

THE BANKRUPTCY PROCESS

**Are assets treated differently between a consumer proposal vs bankruptcy?**

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

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