Tag: bankruptcy process

Categories
Brandon Blog Post

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

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.

  1. Child Support
  2. Spousal Support
  3. Child Care Expense
  4. Expenses associated with medical condition
  5. Court imposed fines or penalties that are in process of being paid
  6. Expenses permitted by Income Tax Act that are a condition of employment
  7. 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.

surplus income limits for 2015, starting over starting now, licensed insolvency trustee, ira smith trustee, a farber, hoyes michalos, david sklar, bankruptcy alternatives, consumer proposals, debt consolidation credit counselling, bankruptcy, consumer proposal, bankruptcy and insolvency act, bia, surplus income calculation for 2016, bankruptcy process, personal bankruptcy toronto, personal bankruptcy canada, eBook, surplus income threshold 2015, surplus income 2012, surplus income calculator, surplus income payments, surplus income calculator bc, surplus income guidelines 2014, hud income limits 2015, ssi income limits 2015

Categories
Brandon Blog Post

BANKRUPTCY TRUSTEE TORONTO: HELPING YOU STARTING OVER, STARTING NOW

living paycheque to paycheque, alternatives to bankruptcy, bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy faqs, bankruptcy process, bankruptcy trustee in toronto, bankruptcy trustee toronto, collection agencies, credit, credit counselling, credit score, consumer proposal, debt consolidation, rebuild your credit, starting over starting now, wages, bankruptcy trustee torontoA bankruptcy trustee Toronto understands that insolvency and filing for bankruptcy can be a very distressing time in someone’s life. Many people feel like failures at this time and need to have someone to whom they can turn to help them understand their options. People filing for bankruptcy can choose a federally regulated bankruptcy trustee Toronto they feel the most comfortable with to assist them in the process.

When Bankruptcy Becomes Necessary

When a person becomes insolvent, they cannot pay back what they owe to their creditors; in fact, what they owe may far outweigh the assets that they have. At this point, an individual may consider declaring bankruptcy. There are several clues, such as the following, that indicate that one is nearing this point of no return and should consult with a bankruptcy trustee Toronto:

▪ Garnished wages from each paycheque

▪ Contact from one or more collection agencies

▪ Utilities or household services that have been stopped from lack of payment

▪ You can no longer make ends meet living paycheque to paycheque

Bankruptcy and Its Benefits

Although it should be noted that bankruptcy is not the perfect solution for everyone because it will be quite costly and destructive to one’s credit score, it does have several advantages. Of course, there will be no more harassment from creditors or collection agencies during and following the bankruptcy process, and the person involved will be able to feel a greater peace of mind. In addition, many times people are allowed to keep their homes and property during bankruptcy. Finally, employers cannot discriminate against individuals who file for bankruptcy.

What a Bankruptcy Trustee Toronto Does

Anyone filing for bankruptcy in the GTA can choose the bankruptcy trustee Toronto they feel the most comfortable with to assist them. A bankruptcy trustee Toronto has numerous tasks. In general, the trustee is an impartial intermediary who will make sure that every part of the process is performed correctly, that there is no fraud and that assets are liquidated appropriately. Before the actual bankruptcy filing, he or she will meet with the person to review the individual’s situation, consider all alternatives to bankruptcy, including credit counselling, debt consolidation and consumer proposals.

After this initial assessment, if bankruptcy is the best option, the federally regulated bankruptcy trustee will explain the bankruptcy process to you, prepare and look over any paperwork before it is filed, if necessary will hold a meeting of creditors for the individual and will ensure that creditors are paid their pro rata share in accordance with the provisions of the Bankruptcy and Insolvency Act.

Some people fear that a bankruptcy trustee Toronto will make their lives miserable each step of the way. However, although the trustee may have some difficult and painful tasks to fulfill, they will ensure that each step of the process is performed thoroughly, accurately and with complete professionalism. Those people who are in a position to benefit from declaring bankruptcy will find the work of a trustee to be invaluable and allow you after your discharge from bankruptcy to rebuild your credit.

Bankruptcy Trustee Toronto

If you feel you are a candidate for bankruptcy, you can first do some self-study by reviewing our bankruptcy faqs. After reviewing the bankruptcy alternatives, if the best solution for you is bankruptcy, you should feel comfortable that your choice of trustee will treat you with the compassion and respect you deserve. Contact Ira Smith Trustee & Receiver Inc. and Starting Over Starting Now you’ll be on your way to living a debt free life.

Categories
Brandon Blog Post

SENIOR CREDIT CARD DEBT RELIEF OR DECLARE BANKRUPTCY-SENIORS IN DEBT, PART 3

senior credit card debt relief, should seniors file a consumer proposal, bankruptcy, personal bankruptcy, declare bankruptcy, trustee, bankruptcy alternatives, bankruptcy process, credit counselling, debt consolidation, consumer proposals, wagesLast week we discussed why the majority of seniors are in debt. This week we’ll be addressing if seniors should try and pay off their debts to obtain senior credit card debt relief or declare bankruptcy.

Life is very difficult for many seniors who anticipated that their golden years would be a carefree retirement. Instead, according to the Vanier Institute for the Family, Canadians over the age of 65 have the highest insolvency and bankruptcy rates in the country. With increasing expenses and a significantly reduced income and return on investments, more seniors are contemplating bankruptcy; but is it the best and/or only option?

While it’s true that bankruptcy can eliminate many of your debts, people typically file personal bankruptcy as a means of protection from creditors. If you are working, bankruptcy will protect you from creditors garnisheeing your wages. However, if you are retired and your sole source of income is your pension, then there are no wages to garnishee. It is very difficult for a creditor to garnishee a pension with one notable exception. If you owe the CRA (Canada Revenue Agency) for unpaid taxes, they are permitted to garnishee all types of pension income under Section 224.1 of the Income Tax Act. It is rare that the CRA will garnishee your pension income, but it is a possibility. If you have a significant tax debt and the CRA has threatened a pension garnishment, the bankruptcy process is an option that has to be considered.

The right debt relief option you ultimately decide upon will depend on whether or not you have assets, who you owe money to, and how much you owe. For seniors in debt there are bankruptcy alternatives – credit counselling, debt consolidation, consumer proposals – which in many cases are better options than declaring personal bankruptcy. In our next blog, we will be considering various options, including should seniors file a consumer proposal?

Unfortunately too few Canadians are properly prepared for the financial reality of retirement. They get caught up in a downward financial spiral and some pass away leaving significant debt. The family is then left with the unpleasant options of paying the debt themselves or bankrupting the estate. If you are a senior in serious debt, consult a professional Trustee as soon as possible. Contact Ira Smith Trustee & Receiver Inc. for professional advice and an action plan that’s right for you. Starting Over, Starting Now we can give you the help that you need to deal with your financial problems, and peace of mind.

Watch for our next blog when we’ll be discussing some advice we have for seniors in debt.

Categories
Brandon Blog Post

IF MY EX DECLARES BANKRUPTCY, HOW WILL IT AFFECT ME?

joint accounts, divorce, bankruptcy, bankruptcy process, bankruptcy and insolvency act, debt, trustee, divorce and bankruptcy,ex declares bankruptcyIn last week’s blog we talked about Divorce And Bankruptcy – Which Comes First? Sadly, divorce and bankruptcy are indelibly intertwined. The number one reason couples get divorced is financial issues and 1/3 of all people in Ontario facing bankruptcy are there because they are also going through a divorce or a separation. The issue of divorce and bankruptcy is a potential minefield and there are many issues that can arise if you are already divorced and your ex declares bankruptcy.

Will I still owe for debts and credit cards that I co-signed with my ex? Unfortunately, yes. You will be held responsible for any debts that you did sign for. In fact after your ex files for bankruptcy he/she will no longer be responsible for the debts, but the debts for any loans and credit cards will be 100% yours.

My divorce decree assigned the debts to my ex, so why are the creditors coming after me for payment? A divorce decree is a legally binding agreement between you and your ex but it in no way binds any creditors. If you’re a co-signor with your ex on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex.

Will my ex’s bankruptcy affect my credit score? Your ex’s bankruptcy process can affect your credit score if:

  • You and your ex still have joint accounts
  • You are now responsible for debts that you co-signed for

What will happen to my alimony and child support? The good news is that any support – alimony or child support is non-dischargeable (the debt can’t be eliminated) in bankruptcy by the Bankruptcy and Insolvency Act. However, as a result of the bankruptcy process, if your ex is having trouble in making these payments in full and on time, there will be an obvious affect.

If you’re experiencing serious debt problems, contact Ira Smith Trustee & Receiver Inc. as soon as possible. There is help available and Starting Over, Starting Now we can help you to live a life that is not consumed by financial stress.

Categories
Brandon Blog Post

CAN YOU REALLY HAVE SURPLUS INCOME IF YOU’RE BANKRUPT?

bankruptcy faqs, surplus income, bankruptcy, bankrupt, bankruptcy process, trustee, bankruptcy alternatives, Vaughan bankruptcy, Richmond Hill One of the things that seems to confuse many people when it comes to the bankruptcy process is “surplus income”. It’s hard to wrap yourself around the concept of surplus income when you are considering or are involved in a bankruptcy. Can you really have surplus income if you’re bankrupt?

What is surplus income? Surplus income in a bankruptcy refers to an amount that a bankrupt must pay to the Trustee monthly. It is part of the goals of the Canadian insolvency system that balances the elimination of debt with the rights of creditors to be paid. To allow Canadians to maintain a reasonable standard of living during the bankruptcy process, the government has set thresholds or guidelines on net earnings (after taxes and deductions) intended to allow a bankrupt to maintain a reasonable standard of living during the bankruptcy process. The Office of the Superintendent of Bankruptcy sets the threshold limits each year and these limits are indexed to inflation.

How are surplus income payment amounts calculated?

Surplus Income payments are calculated based on a prescribed formula set by the Federal Government and applies across Canada, with no distinction for the region a person lives in. To find out what your surplus income is, contact your Trustee.

Surplus Income thresholds are based off of nationwide “poverty line” statistics and the thresholds are fixed regardless of what the cost of living may be in your region. Although the dictionary definition of “surplus” is excess or leftover, Surplus Income has nothing to do with what you have left over every month in your budget. It is a government formula that looks at only your income, certain non-discretionary spending and your family size, and imposes a duty to make a payment to your trustee.

There are many questions people have when contemplating bankruptcy. If you are in financial distress, contact Ira Smith Trustee & Receiver Inc. We will make sure that you have a clear understanding of every step of the bankruptcy process and alternatives to bankruptcy. Also check out our bankruptcy faqs. Starting Over, Starting Now you can take your first step towards living debt free life.

Call a Trustee Now!