Tag: consumer proposal ontario

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Brandon Blog Post

5 Steps to Stop Wage Garnishment in Ontario

A person feeling relieved while looking at a laptop in a professional Toronto office after eliminating a wage garnishment through a consumer proposal

A professional office setting where a person looks relieved at their laptop, symbolizing the end of financial stress.

Hello. If you are reading this, you might have just opened your paystub only to find that a significant portion of your hard-earned money has vanished before it even reached your bank account due to a wage garnishment. Perhaps you’ve received a daunting legal notice in the mail, or your HR department has pulled you aside to discuss a court order.

First, I want you to take a deep breath. You are safe, and more importantly, there is a way out. At Ira Smith Trustee & Receiver Inc., we know the immense tension put upon you when your livelihood is threatened. Wage garnishment isn’t just a financial burden; it feels like an invasion of your privacy and a blow to your dignity.

We are here to tell you: It is not your fault. Economic shifts, unexpected life events, and rising costs in the GTA can happen to anyone. Our philosophy is “Starting Over, Starting Now,” and that starts with understanding how to protect your paycheck.

Key Takeaways

  • Act quickly. The sooner you respond to a wage garnishment, the more of your income you may be able to protect.
  • Ontario law sets limits. Most creditors can garnish up to 20% of your gross wages, although exceptions apply.
  • Negotiation may help, but it is not always enough. Creditors do not always agree to stop a garnishment once a court order is in place.
  • A consumer proposal or personal bankruptcy can trigger a Stay of Proceedings. This legal protection can stop most wage garnishments immediately.
  • A Licensed Insolvency Trustee can guide you. We can help you understand your options and take fast, practical steps toward relief.

In this guide, we will walk you through the exact steps to stop wage garnishment in Ontario and regain the control you deserve.

Highlights

  1. Step 1: Don’t Panic but Act Fast
  2. Step 2: Understand the Limits of the Wages Act
  3. Step 3: Attempt Direct Negotiation (With Caution)
  4. Step 4: Invoke the Legal “Stay of Proceedings”
  5. Step 5: Contact a Licensed Insolvency Trustee in Toronto
  6. Moving Forward: Your Fresh Start

Step 1: Don’t Panic but Act Fast

When you first discover a Notice of Garnishment, your instinct might be to hide the letter or hope the problem goes away. However, in the world of debt relief, time is your most valuable asset.

A wage garnishment is a legal process where a creditor (someone you owe money to) obtains a court order requiring your employer to withhold a portion of your wages and send it directly to the creditor to pay off a debt.

Why you must act now:
Once a wage garnishment starts, it usually continues until the entire debt, including mounting interest and legal fees, is paid in full. The difference between taking action this week versus next month could be thousands of dollars in lost income. While we can stop future deductions, it is very difficult (and often impossible) to recover money that has already been sent to a creditor.

At Ira Smith Trustee & Receiver Inc., we specialize in financial crisis management, providing immediate, actionable plans to stop these drains on your bank account before they cause further damage to your quality of life.

A close-up of a legal Notice of Garnishment document, representing the seriousness of the situation.

Step 2: Understand the Limits of the Wages Act

Did you know that there are legal limits to how much a creditor can take from you? In Ontario, the Wages Act sets the rules for how wage garnishment works.

Generally, a creditor can only garnish 20% of your gross wages. However, there are some critical exceptions you need to be aware of:

  • Standard Debts: For most consumer debts (credit cards, personal loans), the limit is 20%.
  • Family Responsibility Office (FRO): If the garnishment is for child support or alimony, they can take up to 50%.
  • The CRA Advantage: The Canada Revenue Agency (CRA) does not need a court order to garnish your wages. They can issue a Requirement to Pay and take significantly more than a standard creditor, sometimes up to 50% or more, if they feel it is necessary to collect tax debt.

Assets and income protected by law are often referred to as exempt assets or protected income. Understanding these limits is the first step in realizing that the law actually provides you with some protections, even when things feel out of control.

Wait, can they garnish my whole paycheck?
No. Under the Wages Act, you must be left with enough to maintain a basic standard of living. If a 20% garnishment is causing you extreme financial hardship (preventing you from buying food or paying rent), you can actually apply to the court to have the percentage reduced. However, this is a slow and often expensive legal process.

Step 3: Attempt Direct Negotiation (With Caution)

In some cases, you can stop a garnishment by contacting the creditor directly and offering a voluntary payment plan.

The Pro: If they agree, they may withdraw the garnishment order.
The Con: Most creditors who have gone through the legal trouble of getting a court order are unlikely to stop unless they believe they will get paid faster through a voluntary agreement.

If you choose this route, ensure you:

  1. Get everything in writing. Never rely on a verbal promise from a collection agent.
  2. Don’t over-promise. Only agree to a payment you can realistically afford.
  3. Be aware of the CRA. The CRA is notoriously difficult to negotiate with once they have started a garnishment. They usually require a full disclosure of your financial situation before they even consider a “payment arrangement.”

If negotiation fails: which it often does once the legal gears are in motion: don’t lose hope. There is a much more powerful legal tool available to you.

This is the most effective “lifeline” for residents of the GTA facing debt. Under the federal Bankruptcy and Insolvency Act (BIA), filing a Consumer Proposal or Personal Bankruptcy triggers what is known as a Stay of Proceedings.

A Stay of Proceedings is a powerful legal shield that immediately stops almost all legal actions against you, including:

  • Wage garnishments.
  • Lawsuits from creditors.
  • Harassing collection calls.
  • Utility shut-offs.

How a Consumer Proposal Ontario stops the bleeding:
A consumer proposal is a formal, legally binding agreement where you offer to pay your creditors a percentage of what you owe over a period of up to five years. Once your Licensed Insolvency Trustee Toronto files the proposal, your employer is legally required to stop the garnishment deductions immediately.

The best part? A consumer proposal can often reduce your total debt by up to 80%, leaving you with one affordable monthly payment and the peace of mind that your full paycheck is finally coming home to you.

Heavy iron chains being broken, symbolizing the freedom that comes from stopping wage garnishment.

Step 5: Contact a Licensed Insolvency Trustee in Toronto

The final and most important step is to speak with a professional. Only a Licensed Insolvency Trustee (LIT) is authorized by the federal government to administer consumer proposals and bankruptcies.

When you meet with us at Ira Smith Trustee & Receiver Inc., we don’t just look at numbers. We look at your life. We offer a compassionate, results-oriented approach that turns catastrophic situations into manageable, debt-free outcomes.

What happens during our first meeting?

  • Assessment: We review your income, expenses, and who you owe money to.
  • Options: We explain the difference between a consumer proposal and bankruptcy, helping you choose the path that best protects your exempt assets.
  • Immediate Action: Once you decide to move forward, we handle the paperwork and notify your employer and creditors. We take the “starting over” part of our philosophy seriously: we want the garnishment stopped now.

We know the shame that often comes with debt, but we want to remind you that these programs exist specifically to give honest, hard-working people a second chance.

A professional and supportive consultation between a Licensed Insolvency Trustee and a client.

Moving Forward: Your Fresh Start

Wage garnishment is a loud wake-up call, but it doesn’t have to be the end of your financial story. By following these 5 steps, you can move from a state of fear to a state of control.

Why choose Ira Smith Trustee & Receiver Inc.?
We are more than just debt consultants. We are your partners in restructuring your life. Whether you are a business owner facing corporate insolvency or an individual in the GTA struggling with credit card debt, we provide the expertise needed to stabilize your operations and your home life.

Starting Over, Starting Now.
Don’t let another pay period go by with a garnished cheque. Reach out to us today for a free, no-obligation consultation. We will listen to your story, respect your situation, and provide the roadmap you need to become debt-free.

Helpful Resources:

Frequently Asked Questions (FAQ)

Can a consumer proposal stop wage garnishment in Ontario right away?
In most cases, yes. Once we file a consumer proposal under the Bankruptcy and Insolvency Act, an automatic Stay of Proceedings comes into effect. That legal stay usually stops most wage garnishments immediately. This matters because it can give you breathing room fast and help restore control over your cash flow.

Can the CRA keep garnishing my wages if I file?
A properly filed consumer proposal or personal bankruptcy will generally stop CRA wage garnishments as well. The CRA is a powerful creditor, but it is still subject to the stay in most personal insolvency proceedings. This is one reason why getting professional advice quickly can be such an important lifeline.

Will my employer find out if I file a consumer proposal or bankruptcy?
If your wages are already being garnished, your employer is already involved in the process. If we file to stop that garnishment, your employer will receive notice that the deductions must stop. We know this can feel stressful, but you are not alone, and we handle these communications professionally and discreetly.

Should I try to negotiate with the creditor before speaking with a Licensed Insolvency Trustee?
You can, and sometimes that works. But once a creditor has a court order, they often have little incentive to stop. Speaking with a Licensed Insolvency Trustee early helps you understand all of your options before you commit to a payment arrangement you may not be able to maintain. The benefit is clarity, speed, and a real plan.

Book a Free Consultation

If you are dealing with wage garnishment and want clear answers, we invite you to book a free, no-obligation consultation with our team at Ira Smith Trustee & Receiver Inc. Our philosophy is Starting Over, Starting Now, and that means taking immediate, practical action when your income is under threat. We will review your situation, explain your options in plain language, and help you take the next step toward relief with confidence.

Ira Smith Trustee & Receiver Inc. is licensed by the Office of the Superintendent of Bankruptcy and is a member of the Canadian Association of Insolvency and Restructuring Professionals.

  • Phone: 905.738.4167
  • Toronto line: 647.799.3312
  • Email: brandon@irasmithinc.com

Remember: You don’t have to face this alone. We are here to help you regain your quality of life.

——————————————————————————–

Professional Disclaimer

This blog post is provided for general informational purposes only and does not constitute legal, insolvency, tax, or financial advice. Every situation is different. Ira Smith Trustee & Receiver Inc. is licensed by the Office of the Superintendent of Bankruptcy (OSB) to act as a Licensed Insolvency Trustee, and Ira Smith and Brandon Smith are members of CAIRP (the Canadian Association of Insolvency and Restructuring Professionals). Please speak directly with a Licensed Insolvency Trustee or another qualified professional before making any decision based on your specific circumstances.

About the Author

Brandon Smith is a Senior Vice-President at Ira Smith Trustee & Receiver Inc. and a Licensed Insolvency Trustee serving clients across Ontario. His experience includes consumer insolvency and complex court-ordered receivership and corporate bankruptcy administration, giving him practical insight into navigating challenging financial situations to achieve optimal outcomes for businesses, creditors, and professionals. Brandon stays current with landmark developments in Canadian insolvency law, ensuring his clients benefit from a cutting-edge understanding of their rights and options.

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CONSUMER PROPOSAL ONTARIO: THE ONLY POST-CERB GUILT-FREE GOVT APPROVED DEBT ELIMINATION PLAN

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.

Consumer proposal Ontario: Introduction

The Canada Emergency Response Benefit (CERB) has actually ended. Even more, people are calling me to ask about a consumer proposal Ontario. This is the only Canadian federal government licensed program for people to lower their consumer debt.

In this Brandon’s Blog, I answer the 11 most asked questions about consumer proposal Ontario.

1. What is a consumer proposal in Ontario?

A consumer proposal in Ontario is the same as anywhere else in Canada. It is a proceeding under the Bankruptcy and Insolvency Act (Canada) (BIA). However, it differs from bankruptcy. Such proposals are offered to people whose unsecured financial commitments do not exceed $250,000, not including debts secured by their primary residence.

Collaborating with a licensed insolvency trustee (Trustee) acting as the Administrator, you make it to:

  • Pay your unsecured creditors a portion of what you owe them over a specific duration not surpassing 60 months.
  • Raise the time you need to work it out and pay the amount you agreed to (less than 100% of what you owe)
  • Or a mix of both.

Your payments are made to the Trustee, and the Trustee makes use of that cash to pay each of your creditors their pro-rata share. The consumer proposal Ontario shall end up within 5 years from the day of declaration. The full completion of your plan is what gets you the debt relief you are craving.

Also, the BIA says that it needs to give the insolvent individual’s unsecured creditors a better return than they would certainly obtain under the person’s bankruptcy.

The proposal is not made for a holder of secured debt. Assuming they have valid security against the asset and you are keeping it, like your house, then you just pay what you originally agreed to pay on that loan.

2. How much do you pay in a consumer proposal Ontario?

When I work with people in Ontario who want to file a consumer proposal Ontario, I need to determine what a reasonable deal to your creditors will be, based upon your financial situation.

I usually find that the minimum amount that creditors tend to accept is around 25% to 30% of what you currently owe all your unsecured creditors. You make the same monthly payment for the full time it takes to fully pay off your debt settlement plan.

As I mentioned above, the BIA says that the offer in a proposal must be a better alternative for your creditors than your bankruptcy. So first, I do a calculation of what your creditors can expect to receive in your bankruptcy. That calculation involves two pars:

  • the liquidation value of your non-exempt assets; and
  • the amount of surplus income, if any, you would need to pay in a bankruptcy.

The starting point of what to offer your creditors is something slightly better than the result of your bankruptcy calculation.

3. Can I keep my credit card if I file a consumer proposal Ontario?

I have both good news and bad news. The good news is that there is no requirement for the licensed insolvency trustee to collect your credit cards from you when you file a consumer proposal Ontario. However, every unsecured creditor at the time of your filing, including credit card issuers, receive a notice of your filing and a form 31 proof of claim form to complete.

So now for the bad news. Every credit card issuer you owe money to and therefore gets notice that you filed a proposal, will certainly cut you off. They will not let you keep using the card while not paying them in full.

So, you will be able to keep your credit card, but it won’t work anymore. If you need a credit card, you will have to get a new secured credit card.

4. Can I pay off my consumer proposal early?

A consumer proposal Ontario is like an interest-free loan at an amount much less than you originally owed your unsecured creditors. So it may be helpful to you not to pay it off early to get the full benefit of it.

However, we write all of ours in a way that gives you flexibility. You can take the full 5 years if you need to. If you are able to pay it off early and you have good reasons for wanting to do so, then you can. We word our proposals to say that you promise to pay the total amount in no more than 60 months. So you can take all 60 months or not. The choice is yours.

By wording it this way, we don’t need to go back to the creditors or the court to vary anything. It is built right in. Also, unlike other loans, there is no penalty for paying it off early.

5. How much does a consumer proposal cost in Ontario?

The expense is established by the federal government and is laid out in the proposal rules section of the BIA. The Trustee’s fee is a fixed amount called a tariff.

How much an individual pays in their debt settlement plan is entirely unassociated with the allowable federal government tariff. I explained the calculation the Trustee goes through in determining the amount of your consumer proposal Ontario so that it is a better return than in your bankruptcy.

The Trustee is allowed to take the fee from the amount you agreed to pay right into your financial obligation debt restructuring plan.

So, how much does a proposal cost? My cost is FREE!

6. Consumer proposal Ontario: Is a consumer proposal worth it?

There are benefits for you to file such a financial debt settlement strategy. Initially, you do not give up your assets. Next off, an authorized proposal binds all creditors to the arrangement.

We start with having you complete the standard intake form that we call, the Debt Relief Worksheet. When totally filled out, it gives us a listing of your assets, liabilities, earnings and expenses. Using that details, I have the ability to formulate a proposal based upon your capability to pay.

The proposal is submitted to the Office of the Superintendent of Bankruptcy (OSB). As soon as submitted, you can quit paying your unsecured creditors. If creditors are garnishing your earnings or suing you, those are stopped.

Your credit score will be negatively affected. If you are considering a consumer proposal vs. bankruptcy vs. doing nothing, given all the positives, I say it is worth it.

consumer proposal ontario
consumer proposal ontario

7. Consumer proposal Ontario: How bad is a consumer proposal?

Given all the relief you can get with a consumer proposal Ontario, I would say that it is not bad at all.

As soon as the appropriate files are eFiled with the OSB, I after that send out the proposal to every one of your unsecured creditors. The creditors then have 45 days to accept or reject the offer. If creditors are dissatisfied with the proposal, as the Trustee I can work out adjustments. Nevertheless, everything is based upon what you can still take care of to securely pay.

As soon as we get approval, you are then accountable for making regular payments to the licensed insolvency trustee. The Trustee will absolutely use that cash to pay your creditors as well as the tariff.

As part of the consumer proposal procedure, you will be required to meet with me for 2 counselling sessions. Once you totally finish your payment plan, you will be legitimately released from all of your unsecured debt responsibilities that existed at the date of filing.

There is always an emotional element to filing a consumer proposal Ontario. However, given all of its benefits, including fixing your credit rating over time and allowing you to eliminate your consumer debt, that is why I say that it is not bad at all.

8. How long does a consumer proposal stay on your credit report in Ontario?

A notation that you filed a consumer proposal Ontario, or elsewhere in Canada usually stays on your credit report for 3 to 4 years after you have successfully completed it. It does negatively affect your credit rating. It obviously shows up on your credit history.

However, as part of the counselling sessions, I hold with my clients, I do explain to them ways in which they can start improving their credit rating right away.

9. How long does it take to rebuild credit after a consumer proposal Ontario?

As mentioned above, I counsel my clients on how they can start rebuilding their credit right away after filing a consumer proposal Ontario. No one needs to wait until after they have successfully completed their plan to start rebuilding credit.

Good habits like paying your monthly bills on time, or taking out a small RRSP loan and repaying it within 1 year, all go to rebuilding your credit. Another way is getting a secured credit card and paying it off in full each month.

By doing these small things, your credit rating will start rebuilding sooner than you expected. Soon, your negative credit history will be a thing of the past.

10. Can I buy a house after consumer proposal Ontario?

There are no prohibitions to buying a house after you successfully complete a proposal. There is no law that says you cannot buy a house. As with any major financial purchase, you will probably need to apply for a mortgage. Your ability to buy the house will depend on your ability to get a mortgage.

Being able to qualify for a mortgage depends on many factors. The value of the home, the amount of your down payment that you have saved up, how large a mortgage you need, your credit score, your credit report, can you afford the proposed monthly payment, are there any co-signers or guarantors of your mortgage debt?

It is possible to achieve your dream of home ownership after your CP is over. The chance of qualifying before you successfully complete it is of course much less.

People go through insolvency proceedings for many different factors yet the goal of obtaining a fresh start is the same for everyone. If part of your objectives for the future includes home ownership, we will talk about it in your 2 mandatory counselling sessions. There are steps that you will need to take. It might not be quick or easy, but it is feasible to buy a home after successfully completing a consumer proposal Ontario.

11. How many consumer proposals can you file?

Once you successfully complete your first consumer proposal, there is no law that stops you from filing another sometime in the future. However, you should know that creditors are quite likely to excuse you and let you get a fresh start your first time. Each subsequent time means that you didn’t learn anything from the first one. You were not financially rehabilitated, which is one of the goals of the Canadian insolvency system. So creditors are not so forgiving the second time around.

So, although you can file a new one after successfully completing your first one, it will mean that something went wrong. I would not recommend getting into financial trouble a second time.

Consumer proposal Ontario summary

I hope you have enjoyed this Brandon’s Blog.

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 about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

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.

consumer proposal ontario
consumer proposal ontario
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CREDIT COUNSELLING CANADA: VERY BUSY WITH BANKRUPTCY ONLINE CHATTER

credit counselling canada
credit counselling canada

If you would prefer to listen to the audio version of this credit counselling Canada Brandon’s Blog, please scroll down to the bottom and click on the podcast

Introduction

Like many people, I have set up various Google News alerts. Mine are mostly on the topic of insolvency. I have done this so that whenever a news article is posted on the topic, I will be alerted. One of the alerts I have set up is for the term “credit counselling Canada”. Last week I have noticed that a fair bit of bankruptcy online chatter.

The posts being promoted include:

I have taken a look at the posts. Generally, they are very accurate.

Unscrupulous debt consultants

I was very happy to see some of the posts warning against going to the unscrupulous debt consultants that I have written about before. The Office of the Superintendent of Bankruptcy (OSB) has also warned against them.

The purpose of this Brandon’s Blog is to comment and shed light on several comments in their recent busy online articles that I think are slightly misleading.

Consumer Proposal Ontario

In the Ontario consumer proposal blog, it is stated that a consumer proposal can only be arranged and administered by a bankruptcy trustee (now called a licensed insolvency trustee) (Trustee) which is true. They then go on to state what the cost of a consumer proposal is, that you need to pay an initial setup fee. They also state that the Trustee will also keep 20% of all of your consumer proposal payments.

This is misleading. The way I read it, is they claim you will have to pay a Trustee a setup fee, their fee and an additional 20%. This is not correct. In reality, the Trustee’s fee is a fixed tariff set by the Bankruptcy and Insolvency Act (Canada) (BIA). The fee and disbursements of the Trustee are set in the statute. It is illegal, for the Trustee to collect anything above and beyond the statutory tariff.

The reality is that the Trustee’s fee and disbursements, set by a tariff, come out of the person’s consumer proposal payments. The consumer proposal payments are calculated off of what your creditors can expect in that person’s bankruptcy. Whatever that amount is, the bankruptcy law says that the amount offered in the consumer proposal must be higher. Therefore, the amount a person must offer to get creditor buy-in to accept the consumer proposal has zero relationships to the Trustee’s fee and disbursements.

As the Trustee is entitled to take its capped fee and disbursements from the consumer proposal fund, rather than costing the person, the Trustee’s fee and disbursements are actually free to the insolvent debtor!

Bankruptcy Trustee, Creditor & Debtor

The blog I read on this topic discussed is pretty accurate. The only issue I take is that when describing the role of the Trustee, they pull out the old scare tactic that although the Trustee makes sure that the rights of the debtor are not abused, the Trustee acts for your creditors. This is technically true but overlooks the role of the Trustee as a credit counsellor before the debtor decides whether or not to file either a consumer proposal or for bankruptcy.

In my professional practice, before I allow anyone to file for bankruptcy, I provide an exhaustive and detailed analysis of the person’s financial situation. I first ask the person to explain the issues and financial crisis they are facing which is upending their life. We then together look at their assets, liabilities and income so that I can come up with realistic options. We then discuss the options available and I explain the advantages and disadvantages of each. Then I provide my recommendation. All of this is done in an initial consultation and is no charge to the person.

If they wish to explore the options we discussed more seriously, I then have them complete our standard intake form called the Debt Relief Worksheet. That document when fully completed and provided to me with appropriate backup, allows me to confirm my initial diagnosis and recommendations. Then it is up to the debtor to make their choice as to how they wish to proceed.

After going through this process, with everything fully explained by me, there are no surprises. If the debtor follows my advice, they will have either a successful debt settlement consumer proposal or will discharge their debts through the bankruptcy process. During and after this entire process, the debtor does not feel that I am biased against them in favour of their creditors. Although I have acted formally on behalf of their creditors, the debtor thanks me for saving them and allowing them to restart their lives.

Personal bankruptcy Toronto

The blog I read on personal bankruptcy, part of a credit counselling Canada series, said that people will tell you that bankruptcy eliminated all of their debts. They then ask the question: Did they tell you that it is not possible for everyone? The obvious answer is no because someone who eliminated all of their debts isn’t worried about someone else’s situation and distinctions.

The three types of debts given as examples that cannot be eliminated by a discharge from bankruptcy are:

  • Secured debts, like mortgages and car loans
  • Student loans where you have ceased being a full-time or part-time student less than 7 years ago
  • Child and alimony support payments

This is all true. When I counsel debtors during the free consultation, we review issues like this. We discuss all of the person’s debts, which can be discharged and which cannot be. Just because a certain debt on its face cannot be discharged through bankruptcy, does not mean that the person cannot properly avail themselves of an insolvency process and improve their financial position in life.

Specifically, with secured debt, I attack it from the perspective of can you afford to keep paying that debt, or should you keep paying it. If the home is fully encumbered and there is no or little equity, perhaps renting is a cheaper alternative. We go through the same analysis for a car loan.

In some cases, it might make sense for the person to give up the asset to the mortgagee/lender and allow them to make a demand on the debtor for the shortfall. A shortfall happens when the lender sells the asset but the market will only pay less than the secured debt owing. The lender’s loss is the shortfall. They can pursue the debtor for the loss.

That lender loss, or shortfall, is now an unsecured debt. The person has hopefully found a car they can afford and home, condo or apartment to rent they can afford in their budget. They have now turned the secured debt into an unsecured shortfall claim. That unsecured debt can be discharged through either a consumer proposal or bankruptcy process.

So just because a secured debt cannot be discharged in bankruptcy, it doesn’t mean the person can afford or should keep that debt and continue making payments. They may have a better way to live while then being able to discharge their debts through an insolvency process.

Bankruptcy Discharge in Canada

The blog I read on bankruptcy discharge does not say too much about the bankruptcy discharge process. Rather, they do focus on the dangers of not getting a discharge and remaining undischarged bankrupt.

Everything they say on the topic is true. However, I believe it does leave out a lot of information. In my experience, if someone follows my advice and lives up to all of their obligations during the lifetime of their bankruptcy, then they are not going to have a problem with discharge. It really is only those who try to “game” the system, do not fully cooperate and refuse to make full and transparent disclosure who have problems.

That is how the BIA is designed to work. You are asking your creditors to forgo a lot of the debt you owe them. In return, you have to be fully cooperative and make full disclosure, so that every stakeholder in the bankruptcy process knows that it has been a fair process.

In all of the personal bankruptcies I have administered, it is a very small minority who have a problem with discharge. In all cases, it is their past behaviour or their lack of full disclosure in bankruptcy that has caused the problems, not the bankruptcy process itself.

Summary

I hope you enjoyed this Brandon’s Blog on credit counselling Canada. 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 corporate restructuring. However, more importantly, we understand the needs of the entrepreneur. You are worried because your company is facing significant financial challenges. Your business provides income not only for your family. Many other families rely on you and your company for their well-being.

The stress placed upon you due to your company’s financial challenges is enormous. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your company’s problems; financial and emotional. The way we deal with this problem and devise a corporate restructuring plan, we know that we can help you and your company too.

We know that companies facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a company restructuring process as unique as the financial problems and pain it is 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 your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

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CONSUMER PROPOSAL CALCULATOR REVIEW FOR YOU

consumer proposal calculator

If you would prefer to listen to the audio version of this consumer proposal calculator Brandon’s Blog, please scroll down to the bottom of the page and click on the podcast

Introduction

A consumer proposal calculator is important to figure out what sort of debt settlement plan should be offered to your creditors. But to have a truly successful one, you really need clear language. In Brandon’s Blog, I review a recent court case that explains why.

Shelly Gail Corriveau bankruptcy

I recently read the Reasons for Decision dated June 13, 2019 by Registrar in Bankruptcy L.A. Smart of Court of Queen’s Bench of Alberta. This case is in the matter of the bankruptcy of Shelly Gail Corriveau. The case reference is Corriveau (Re), 2019 ABQB 438 (CanLII).

Ms. Corriveau filed an assignment in bankruptcy in April 2012. She had unsecured creditors of roughly $73,000. The reason for her insolvency was stated as offering monetary help to her child’s business. She was by all accounts a perfect example of an honest but unfortunate debtor. At the time of the bankruptcy, her only asset was her house.

In June 2012, Ms. Corriveau got a gift from her mom of $46,000. It featured instructions that $6,000 of those funds be utilized for children and certain other matters. She spent the $6,000 as instructed, with the balance of the $40,000 being paid to her licensed insolvency trustee (formerly called a trustee in bankruptcy) (the Trustee) for the benefit of her creditors.

The home was sold in October 2012. From the sale, she received her provincial exemption of $40,000 with the balance of $3,916.21 being paid to her bankruptcy estate.

Ms. Corriveau files a consumer proposal

On May 12, 2013, Ms. Corriveau advised her Trustee she had received an inheritance of $15,000 from her Mother’s estate. On May 26, 2013, Ms. Corriveau submitted a consumer proposal. The Trustee served as the Administrator of the consumer proposal.

The proposal in paragraph 4 states:

“4. That the following payments be made to [Name omitted to not embarrass the guilty] Trustee in Bankruptcy, the administrator of the consumer proposal, for the benefit of the unsecured creditors:

Proposal payments to total $10,000.00. The of (sic) funds will be provided to the Administrator as follows – $300.00 filing fee to be paid at time of filing and then a lump sum payment of $9,700.00 due 60 days after the proposal is court approved (all payments to be made within the 60 months proposal period)

The debtor reserves the right to accelerate payments should funds become available.

*** NOTE *** – There will be a significant dividend paid from the bankruptcy administration.”

In accordance with the requirements of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA), the consumer proposal Canada read that the payments must be completed within 60 months.

The Trustee recommended acceptance of the proposal. In his report to creditors he stated:

“This proposal will provide the debtor with relief and allow the debtor’s affairs to be restructured in an orderly fashion. It will allow the debtor to annul her bankruptcy and provide for a greater return to the creditors when compared to the bankruptcy option.”

The consumer proposal was deemed accepted by the creditors and approved by the Court. Ms. Corriveau made all the required payments and received her Certificate of Full Performance on August 2, 2013.

Have you “Noted” the problem yet?

Under the BIA, a bankrupt is allowed to lodge a proposal with the Trustee; either a consumer proposal or a Division I Proposal. In either format, it is a debt settlement plan that the bankrupt is proposing for acceptance by the debtor’s creditors. By definition, if the proposal is fully carried out, then the person or company’s bankruptcy is annulled.

When bankruptcy is annulled, it is declared to have had no legal existence. It is as if it never happened. The annulment of the bankruptcy takes place upon the approval or deemed approved by the court of the consumer proposal. There will never be a distribution to the creditors from the bankruptcy administration. The Trustee, in this case, did not issue any funds from the bankruptcy, yet.

So the Note that the Trustee added, “There will be a significant dividend paid from the bankruptcy administration.” is problematic. Actually, it is more than problematic. It is just plain wrong.

Now the Trustee wishes to complete the bankruptcy administration. The Trustee submits its Statement of Receipts and Disbursements as required to the Superintendent of Bankruptcy (OSB) for approval. This issue came before the Court because of the OSB’s unfavourable comment letter dated June 15, 2018.

The Court’s analysis

Section 66.4(2) of the BIA states:

“Where consumer debtor is bankrupt

(2) Where a consumer proposal is made by a consumer debtor who is a bankrupt,

(a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken thereon;

(b) the consumer debtor must have obtained the assistance of a trustee who shall act as administrator of the proposal in the preparation and execution thereof;

(c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; and

(d) the approval or deemed approval by the court of the consumer proposal operates to annul the bankruptcy and to revest in the consumer debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the consumer debtor, unless the terms of the consumer proposal otherwise provide.”

There is a similar provision for Division I Proposals.

The Court looked at the:

  • Statute
  • wording of the consumer proposal
  • Trustee’s report to the creditors on the consumer proposal; and the
  • Trustee’s actions in administering the proposal.

The Court had to decide if the Note was a term of the proposal or not. The Registrar took all factors into consideration, including that the Trustee issued to Ms. Corriveau the certificate evidencing full completion of the proposal upon her payment of $10,000.

The Registrar decided that the Note was an unfortunate error and that the only intention was for the creditors to share in the distribution from the consumer proposal with a gross value of $10,000.

Now for the treatment of the funds collected by the Trustee under the bankruptcy that is now annulled. The Registrar further concluded that consumer proposals that purport to also include a distribution from the funds held in the bankruptcy administration, must include clear and precise language in the proposal. The Registrar said that the Trustee failed to do so.

Therefore, the Registrar concluded that subject to any entitlement to fees by the Trustee from the bankruptcy administration, the funds held in the annulled bankruptcy are Ms. Corriveau’s property and should be returned to her. Costs of the application will be dealt with at the taxation of the Trustee’s account. The Trustee was directed to arrange a suitable date for that taxation to proceed before that Registrar.

Consumer proposal calculator summary

A proposal must offer the creditors a better result than what they would get in a person or company’s bankruptcy. So although a consumer proposal calculator is important, I think clear language is more important.

Are you in financial distress? Do you not have sufficient funds to pay your commitments as they come due?

Call the Ira Smith Team today so we can remove the anxiety, stress, pain and discomfort from your life that your money troubles have created. With the distinctive roadmap, we establish simply for you, we will quickly return you right into a healthy and balanced problem-free life.

As a Trustee, we are the only experts recognized, licensed and supervised by the federal government to give insolvency recommendations and to carry out insolvency procedures. A consumer proposal is a federal government authorized debt negotiation strategy to do that. We will assist you to choose what is best for you to rid yourself of your debt problems.

Call the Ira Smith Team today. We have years as well as generations of experience helping people and companies searching for debt restructuring, a debt negotiation strategy, or a consumer proposal Ontario to AVOID bankruptcy. You can have a no-cost evaluation so we can aid you to repair your financial problems. Call the Ira Smith Team today. This will let you return to a brand-new healthy and balanced life, Starting Over Starting Now.

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CONSUMER PROPOSAL ONTARIO: AMAZING GOVERNMENT PLAN TO REDUCE CONSUMER DEBT

 


Consumer proposal Ontario: Introduction

I am finding that more people are calling me to ask about a consumer proposal Ontario. This is a Canadian federal government authorized program for people to lower their consumer debt.

What is triggering the boost in these queries?

Consumer proposal Ontario: New Ipsos Canadian consumer debt survey

A brand-new study by Ipsos might assist. It paints an unpleasant scene of just how much debt some Canadians are holding on to. Of those asked 31% claim they do not make an adequate amount to pay their costs monthly. More state they are having a hard time to merely to survive. Ontario residents in this predicament are candidates for consumer proposal Ontario.

The study discovers many people are sorry for the sort of spending they’ve done to find themselves with such debt. Peoples’ incomes aren’t maintaining pace with the increase in their costs. I am not just talking about extras; I am also talking about the basics of life such as food and shelter.

Consumer proposal Ontario: Bank of Canada benchmark interest rate hike

At the very same time, on October 24, 2018, Stephen Poloz, the Governor of the Bank of Canada (BOC) announced the Bank of Canada interest rate hike by a quarter-point to 1.75%. This increases the cost of borrowing for Canadians. This is the 5th bump since the summertime of 2017.

The Bank of Canada states that the Canadian economic situation remains running near capacity and is reasonably broad-based. The rising cost of living is close to target so what stands apart is that the current rate at 1.75% is still negative in actual terms adjusting for inflation.

Since the old Free Trade Agreement, the new USMCA appears to be resolved, several think with this 800-pound gorilla out of the room, it’s most likely to unlock the Bank of Canada’s ability to continue with rate hikes.

Consumer proposal Ontario: How will higher interest rates affect you?

If you stay in a variable price home mortgage or credit line, your rate of interest has risen. What that indicates for your capital is that your month-to-month repayment has actually risen. If your home mortgage is half a million bucks, your month-to-month repayment has actually increased by sixty-five dollars.

It does not feel like a great deal. Nevertheless, if your loan(s) rate of interest rises during the rest of the year and right into 2019, that will certainly maintain raising your repayments.

It isn’t simply your variable price home mortgage. Canadians additionally lug debt with credit lines, automobile financings as well as bank cards. Each rate of interest rise will certainly increase the price of borrowing on those variable price financings.

The raised repayments will certainly maintain consumption in your capital. So for those battling to make ends meet, rates of interest boosts will just make life harder. A consumer proposal Ontario won’t help with secured debt, but it will help eliminate unsecured debt

Consumer proposal Ontario: Higher interest costs lead to belt-tightening

To regulate debt, Canadians need to be aggressive with their budgeting. Individuals need to take ways to boost their monetary scenario, such as:

When talking to a LIT, ask about how a consumer proposal Ontario can help you.

Consumer proposal Ontario: Nonetheless, many Canadians are still seeking help

Many Canadians continue to be haunted by debt. They experience remorse towards their existing and future debt scenario. Fifty percent are not certain that they will not have any kind of debt in retired life, while 44% are not certain they will have the ability to cover all living expenditures in the next year, without taking on additional debt.

Some Canadians are thinking about bankruptcy. Their first step must be to go to a Trustee. A Trustee is an expert that is certified by the Office of the Superintendent of Bankruptcy Canada (OSB). The OSB is the government organization that controls the insolvency system in Canada.

Consumer proposal Ontario: A government-approved strategy to end consumer debt

To most of our potential clients’ shock, I have told many that bankruptcy might not be essential for them. Sometimes I suggest that it is possible to remove their debt via a government-approved strategy to decrease consumer debt called a consumer proposal Ontario.

Your government authorized debt settlement program is an offer made to your creditors. The offer is to repay only a percentage of what you owe, over a duration of no more than 5 years.ira smith trustee

Consumer proposal Ontario: The benefits to you

There are benefits for you to file such a debt settlement plan. First, you keep your assets. Next off, an approved proposal binds all creditors to the arrangement.

We begin with having the individual complete the standard intake form that we call, the Debt Relief Worksheet. When totally filled in, it gives us a listing of the individual’s assets as well as what they owe. It additionally aids them to budget their income and expenses. Utilizing that info, I am able to formulate a proposal based on your capacity to pay.

The proposal is submitted to the OSB. Once submitted, you can quit paying your unsecured creditors. If creditors are garnishing your income or suing you, those activities are stopped. As soon as the proper documents are submitted with the OSB, I then send out the proposal to every one of your creditors.

The creditors then have 45 days to approve or decline the deal. If creditors are unhappy with the proposal, as the Trustee I can work out changes such as greater payments. However, it all is based on what you can still manage to safely pay.

I tell people that if the proposal is turned down, the individual will certainly need to consider various other alternatives to resolve their monetary troubles. This might include bankruptcy.

Once we get approval, you are then in charge of making routine payments to the LIT as the proposal administrator. The LIT will certainly use that cash to pay your creditors.

As part of the consumer proposal process, you will need to go to 2 counseling sessions in the LIT’s office. This will aid you to get back on your feet monetarily. If you fully complete your plan, you will certainly be legitimately released from your unsecured financial obligations.

Consumer proposal Ontario: There are 2 consumer proposal FAQs everybody asks me

What this affect my credit score?

Yes, it will certainly be influenced, I tell every person. Once the regards to the proposal are fulfilled, people can begin reconstructing their credit history and their economic future.

Just how much does it cost?

The cost is established by the Federal government. How much an individual pays in for an effective consumer proposal is totally unrelated to the allowable government authorized to charge. The Trustee earns the fee from the amount you pay into your debt settlement restructuring plan. So, that means, the cost is FREE!

Consumer proposal Ontario: That freedom feeling

Our clients who complete their consumer proposal are so pleased to get that letter from us enclosing their Certificate of Full Performance. That is the document that confirms they have become debt-free.

The Ira Smith Team has years of experience of negotiating with creditors for debtors. If you owe less than $250,000, other than for any mortgages against your home, you can enter into a consumer proposal debt settlement plan. If you owe more or are a corporation, we can still negotiate with your creditors and restructure you with a restructuring proposal debt settlement plan.

Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are at our door. You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity.

Call us today for your free consultation.consumer proposal ontario

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BANKRUPTCY IN ONTARIO CANADA & CONSUMER PROPOSAL ONTARIO

Bankruptcy in Ontario Canada: Introduction

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

Bankruptcy in Ontario Canada: Not entirely unexpected

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

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

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

What about a proposal?

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

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

A filing may protect some assets

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

5 general tips

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

Some debts can’t be discharged

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

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

Bankruptcy must be your last option

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

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

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

Seek the advice of a professional trustee

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

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

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

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#VIDEO – CONSUMER PROPOSAL FAQS: SECRETS FOR FENDING OFF BANKRUPTCY #

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Consumer proposal faqs

We have made this video to answer the Consumer Proposal FAQs that we are normally asked. This information will hopefully help you understand better how it can help you clear your debts and AVOID bankruptcy.

In addition to this video, you can also check out other blogs and vlogs we have written on Proposals:

The most asked FAQs

The most asked of the FAQs is – What are the advantages? The main ones are:

  • You keep all of your assets
  • Actions against you by unsecured creditors, such as wage garnishments will be stopped
  • Unlike informal debt settlement, the proposal process is a forum where all of your creditors must deal with your restructuring
  • You don’t have to declare bankruptcy

Too much debt? Get the help you need now!

We hope you enjoy this video about consumer proposal FAQs. Click on this link to find out more. You can also have many of your questions about personal bankruptcy answered by clicking on our Bankruptcy FAQs link.

Instead of going deeper into debt and just putting your head in the sand like an ostrich, heed the advice of your grey divorce support groups and contact us today. Seek the help from a professional trustee, even if you’re not considering bankruptcy at this stage.

A trustee in bankruptcy will evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. With immediate action and the right plan, the Ira Smith Team can solve your financial problems Starting Over, Starting Now. We’re just a phone call away.

consumer proposal faqs

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CONSUMER PROPOSAL ONTARIO: AVOID BANKRUPTCY AND ELIMINATE DEBT NOW

consumer proposal ontarioConsumer Proposal Ontario. Information for you on a Consumer Proposal and how it can help you clear your debts and AVOID bankruptcy. Watch this 4-minute video explaining the bankruptcy alternative of consumer proposals.

In addition to the video about consumer proposal Ontario, you can also check out two other blogs we have written on consumer proposals: CONSUMER PROPOSALS OR PERSONAL BANKRUPTCY; WHICH IS RIGHT FOR YOU? and Are Consumer Proposals Right for You?

The advantages of a consumer proposal Ontario are:

  • You keep all of your assets
  • Actions against you by unsecured creditors, such as wage garnishments will be stopped
  • 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 bankruptcy

We also have more information and you can click on this link to find out more about Consumer Proposals and have many of your questions answered by clicking on our Bankruptcy FAQS link. You can also find out more by clicking on this link – Consumer Proposal Ontario.

 

The reality is that debt is increasing across all demographics and it should not be ignored. Whether their debt originated with student loans, credit card debt or some other issue, it needs to be managed as quickly as possible by a professional trustee. Contact Ira Smith Trustee & Receiver Inc. for professional advice and a solid financial plan so that you can live a debt free life Starting Over, Starting Now.

Call a Trustee Now!