Tag: Consumer Proposal

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INCOME TAX DEBT RELIEF: DO YOU KNOW THE WAY TO INCOME TAX DEBT RELIEF?

income tax debt reliefIncome tax debt relief: Introduction

As 2018 draws to a close, I want to wish all of our readers a very happy, healthy and prosperous New Year. I hope that 2019 will be a great year for all of us. You have no doubt been bombarded so far with emails, articles, and programs on getting income tax debt relief for 2018 by making sure that you have taken advantage of all possible deductions before the year ends tonight. I thought I would take a slightly different approach to talk about another rich and famous person who is in hot water with the IRS.

Income tax debt relief: Even the rich and famous have income tax debt problems

We have previously written about rich and famous people who have debt problems and who have filed for bankruptcy. Their debt problems arose mainly out of irresponsible spending, financial mismanagement and income tax problems. These blogs were written to show you that it is not only ordinary people who run into trouble. People who many would think to have “all the money in the world” can also have financial problems. Financial mismanagement is not only an illness of the poor or middle class. It can strike anywhere or anyone.

Income tax debt relief: Some of our past rich and famous financial disaster blogs

Our previous financial mismanagement of the rich and famous includes:

FAMOUS CELEBRITY BANKRUPTCIES HAPPEN TOO

In this blog, I pointed out that many rich and famous people have gone bankrupt, including:

  • Samuel Clemens (Mark Twain)
  • Michael Jackson
  • Abraham Lincoln
  • Dorothy Hamill – Gold Medal Skater
  • Johnny Unitas – Football Hall of Fame
  • Milton Hershey – Founder Hershey’s
  • H.J. Heinz – Founder Heinz
  • Marvin Gaye
  • Mick Fleetwood – Fleetwood Mac
  • Walt Disney
  • Larry King
  • Burt Reynolds
  • PT Barnum
  • Tom Petty
  • David Cassidy
  • David Crosby
  • Ed McMahon
  • Henry Ford
  • M.C. Hammer
  • Toni Braxton
  • Natalie Cole
  • Robin Williams
  • 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce within two years of retirement.
  • The National Endowment for Financial Education says that 70% of all people who suddenly receive large amounts of money will lose it within a few years.

FORMER PRO ATHLETES WHO ARE BROKE: EARN OVER $400 MILLION & GO BANKRUPT?

In this blog, I talked about former pro athletes who are broke. Former NBA star and broadcaster Charles Barkley estimates that 60% – 70% of professional athletes go broke for all or any of the following reasons:

  • Buying lavish gifts and giving money to family and friends
  • Unsupportable lifestyles
  • Mansions around the world
  • Yachts
  • Exotic cars
  • Bad business ventures
  • Bad money managers
  • Not understanding financial matters
  • Zero savings
  • No rainy day fund
  • No retirement plan

DEBT FORGIVENESS CRA: CANADA REVENUE AGENCY BEATS DONOVAN BAILEY

In this blog, I wrote about Canadian Olympian. Donovan Bailey and his income tax debt problems with Canada Revenue Agency (CRA). We also described his income tax debt relief settlement plan to cut his income tax debt.. It seems that Mr. Bailey was not able to outrun CRA. Therefore he needed a formal debt settlement plan.

DEBT SETTLEMENT VS CONSUMER PROPOSAL CANADA: ENGLISH REALITY TV STAR KATIE PRICE NEEDS

This blog was about UK celebrity Katie Price who had many financial problems. I spoke about her financial issues and her UK bankruptcy proceedings.

Income tax debt relief: Dionne Warwick

Grammy Award-winning vocalist Dionne Warwick has filed for bankruptcy because she was in need of income tax debt relief. The 72-year-old vocalist, well-known for hits such as “Do You Know the Way to San Jose” and “That’s What Friends Are For” submitted the bankruptcy documents in New Jersey, where she lives.

She listed assets of $25,500 and liabilities of greater than $10.7 million in her bankruptcy filing. Her largest debt is income tax debt of near $7 million owed in back tax obligations to the Internal Revenue Service (IRS) as well as greater than $3 million in tax obligations to the state of California. This includes interest and penalties.

She declared her present income as $20,950 a month, with monthly expenditures just $10 less than that. Dionne Warwick’s press agent, Kevin Sasaki, claimed that the vocalist’s personal bankruptcy was primarily the outcome of “irresponsible and gross financial mismanagement” in the late 1980s to the mid-1990s.

Income tax debt relief: Start 2019 off the right way

No one likes to pay taxes, but everyone hates having CRA tax debt problems. Do you require CRA debt forgiveness? If you’re considering bankruptcy because of income tax debt, or for any reason. We can show you bankruptcy alternatives to get CRA debt forgiveness. We can end your debt pain through a consumer proposal, debt consolidation, and credit counselling. Contact a professional that you can trust – Ira Smith Trustee & Receiver Inc.

The Ira Smith Team has decades and generations of experience dealing with diverse issues and complex files, including negotiating with CRA. We deliver the highest quality of professional service. Don’t settle for less. Give us a call today and Starting Over, Starting Now you can overcome your financial difficulties.

Again I wish all of you a healthy, happy and prosperous New Year.

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CONSUMER PROPOSAL CANADA PART OF BANKRUPTCIES LAWS IN ONTARIO?

Introduction

I prepared this vlog to explain the differences between a consumer proposal (CP), one of the bankruptcies laws in Ontario and bankruptcy. This discussion is based on the inquiries that we are asked often. Hopefully, this information will help you understand better specifically what a CP debt settlement strategy is and how it will certainly assist you to remove all your financial obligations. All this while AVOIDING personal bankruptcy.

Main benefits of a CP

Take into consideration several of the benefits of the CP vs. bankruptcy:

    • Unlike informal debt negotiation, the CP creates a forum where every one of your unsecured creditors must take part in for your debt restructuring.
    • You keep your property.
    • Legal actions against you on your property and debts, such as wage garnishments, cannot continue.
    • You do not require to file an assignment in bankruptcy

CP vs. bankruptcy

How do I recognize if I have a financial problem?

If you are having difficulty satisfying your debts or have actually quit paying them, you are probably insolvent. Another sign of insolvency is that if your assets if liquidated, will not bring in enough money to pay off your debts. When you are all stressed out over the money you owe, for sure you will know that you have financial problems.

How do I know if I qualify for either a CP or bankruptcy?

Any person that is insolvent and owes greater than $1,000 is qualified to file either a CP or an assignment in bankruptcy in Canada.

Will I have to give up my assets?

As soon as you file for bankruptcy you will certainly have to give up your non-exempt property to the Trustee. These possessions will be marketed and sold. The cash from the sale of your property will be used to pay for the cost of the bankruptcy administration. The balance will be dispersed among your creditors.

In CP, you will not be giving up your assets. You are making an offer to your creditors less than the total amount you owe. According to the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA), your CP has to be a better result for your unsecured creditors than they would receive in your bankruptcy.

What occurs to my wages or salary?

Nothing. You receive it as normal.

In a CP that has been (deemed) accepted by your creditors and approved by the Court, you begin to make your payments. There are no other requirements for your income in CP.

In bankruptcy, nothing happens to your income either. However, in a bankruptcy, unlike a CP, your Trustee at the outset has to decide if you are required to make voluntary contributions to your bankruptcy case based off of your income. If so, this is called a surplus income requirement. Also, you will have to file monthly statements of income and expense with the Trustee. Your surplus income requirement can change, depending on if your income goes up or down. There is no such requirement in CP.

Canada Revenue Agency (CRA) has frozen my bank account and has garnished my earnings. Exactly how can I deal with that?

As stated above, once you file a CP, there is a stay of proceedings. Upon receiving notice from the Trustee, CRA stops the garnishee process and lifts the freeze on your account(s). The same is true in bankruptcy.

Will I still owe money after I declare bankruptcy or file a CP?

Perhaps, because of neither a CP nor bankruptcy covers:

How much time will I be under the insolvency proceeding?

The duration of time in bankruptcy will depend on whether this is an initial or 2nd (or more) bankruptcy, whether you have to pay surplus income and if your discharge is opposed or not. Depending on your circumstances, it can be anywhere from 9 months to many years.

In a CP, you can take up to 60 months to pay the total amount you promised to pay. Payments in a CP are required monthly.

Will anyone find out that I have filed either a CP or for bankruptcy?

As soon as you file for bankruptcy or a CP, your Trustee must file a notification with the Office of the Superintendent of Bankruptcy Canada (OSB) to start either process. The OSB does run a public database showing the status of all files.

In either a CP or bankruptcy, your Trustee must send a notice to all of your creditors. So they will know.

In a CP or a shortened summary administration bankruptcy, the Trustee does not place a legal notice in the local newspaper advertising that you filed. In an ordinary administration bankruptcy, the Trustee must publish a notice.

Generally, it is only the OSB, your Trustee and your creditors who are aware of your filing.

Is my partner or spouse impacted by my CP or bankruptcy?

Your partner/spouse will not be impacted by your CP or bankruptcy unless he/she co-signed as a borrower or has guaranteed payment for any of your debts. If they have guaranteed some or all of your debts, then those specific creditors can ask your spouse for payment in full.

NOTE: There is a body of case-law to suggest that if your CP is fully performed, then there is no debt left for your guarantor to make good on. That type of discussion is too technical for this general blog. If you are in this situation, your spouse should get legal advice before agreeing to pay anything. No such argument could even be considered in a bankruptcy situation.

Just how will my CP or bankruptcy impact my existing divorce case?

In Canada, CP and bankruptcy filings do not conflict with the majority of the divorce procedures. In a bankruptcy, the Trustee will stand in the shoes of the bankrupt spouse. Ontario is an equalization Province; not a division of assets Province. If the bankrupt spouse is entitled to an equalization payment, that will come to the Trustee.

In a CP, the Trustee does not get involved at all in any way. The BIA does not interfere at all with non-financial divorce issues such as custody. It also does not have any effect on support or alimony.

Consumer Proposal Canada or bankruptcy: Conclusion

I hope this consumer proposal discussion about the differences between a Consumer Proposal Canada and bankruptcy has been helpful to you.

Do you have severe debt and don’t know where to begin to fix it? Are your debt issues causing you to lose sleep? Is too much debt triggering stress and anxiety, discomfort and pain? We know that discomfort better than anyone and we can get it out of your life.

If so, call the Ira Smith Team today. We have years and generations of experience helping people and companies seeking financial restructuring or a debt settlement strategy. As a licensed insolvency trustee, we are the only specialists recognized, accredited and supervised by the Federal government to give insolvency advice and remedies to assist you and to prevent bankruptcy.

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

You can have a no-cost appointment to assist you so we can fix your debt troubles. Call the Ira Smith Team today. This will certainly allow you to make a fresh start, Starting Over Starting Now.

consumer proposal bankruptcies laws in ontario

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INSOLVENT DEFINITION: A NEW FOCUS FOR TORONTO BANKRUPTCY TRUSTEE

JUNE 17, 2019 UPDATE: The Court of Appeal for Ontario reversed this lower court decision. You can read all about it in our blog update – INSOLVENT DEFINITION RESTORED IN COURT OF APPEAL FOR ONTARIO

Insolvent definition: Introduction

The basis of the Canadian insolvency system is to assist the honest but unfortunate person or company shed their debt (with certain limitations) and start over fresh. There are many terms defined in the Canadian insolvency legislation. The most basic one is the insolvent definition.

Last week I reviewed a decision of the Ontario bankruptcy Court that really did give me a new focus. It doesn’t change the bottom line of the advice I would give an insolvent debtor, but it did change my focus. That is one of the things I love about being a licensed insolvency trustee (formerly called a bankruptcy trustee). I never stop learning.

Insolvent definition: Two examples

The Oxford dictionary definition is:

“insolvent

ADJECTIVE

Unable to pay debts owed.

‘the company became insolvent’”

Section 2 of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA) defines an insolvent person as:

“insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

(a) who is for any reason unable to meet his obligations as they generally become due,

(b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

(c) the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due;”

Insolvent definition: The concept of net worth

Insolvent person refers to both people and companies. The BIA definition incorporates the common English definition. The BIA definition also incorporates the accounting concept of net worth. Net worth = Assets – Liabilities. If the difference is positive, you have a positive net worth. If the difference is negative, you have negative or no net worth.

For those that want to read more about the concept of net worth, look at the Addendum I wrote which is at the bottom of this blog. Since many of you already have an advanced understanding of net, I don’t want to insert it in here.

When giving our free first consultation, my advice to anyone with lots of debt but positive net worth is that in bankruptcy, they will lose their non-exempt assets. If the major asset providing the positive net worth value is their home, I advise the person that they will lose their equity in their home which is not a good outcome. So, my first advice is always to see if the person can either refinance the home or sell it. Then they can use the funds to pay off their debts. In a sale, any balance can be used as a down payment on a smaller home or can set them up nicely to rent.

I normally don’t think of part (c) of the BIA insolvent definition as being mutually exclusive. However, after reading the Court decision and looking again at the BIA definition, I am reminded that it really is. Let me describe the Court’s decision to explain.

Insolvent definition: Kormos v. Fast, 2018 ONSC 6044 (CanLII)

Mr. and Mrs. Kormos got a judgment against their neighbours, Mr. and Mrs. Fast. The Small Claims Court at St. Catherines issued the judgment for $25,565.64. This judgment comes about from problems arising from flooding in their home which was triggered by the Fasts.

After the judgment was given, the Fasts were contacted by Mr. Kormos’ licensed insolvency trustee (Trustee). The Trustee advised that Mr. Fast had submitted a consumer proposal under the BIA many months previously, on August 24, 2016. Mr. Fast did not previously mention anything about his consumer proposal or his later filing of an assignment in bankruptcy.

Fifteen days after the Kormos plaintiffs started enforcement of the judgment by serving a notice of examination on Mrs. Fast, she made an assignment in bankruptcy under the BIA on April 25, 2017.

In their different bankruptcy filings, each of the Fasts attested in their respective sworn Statement of Affairs, that their home in Queenston, Ontario (Home) was worth $630,000.

Mr. and Mrs. Kormos provided evidence by way of an expert witness appraisal who also testified in Court, showing that the Home was considerably underestimated in the BIA filings by Mr. Fast on August 24, 2016, and Mrs. Fast on April 25, 2017, when she made an assignment in bankruptcy.

The Kormos’ lawyer stated that when a reasonable value is designated to the Home, neither Mr. Fast nor Mrs. Fast was insolvent when their corresponding filings were made under the BIA. They were obviously relying on the fact that each of Mr. and Mrs. Fast really had a positive net worth.

Mr. and Mrs. Kormos were looking for an Order under the BIA (i) annulling Mr. Fast’s consumer proposal as well as, if required, his 2014 bankruptcy; as well as (ii) annulling Mrs. Fast’s bankruptcy.

Insolvent definition: The Court’s analysis

Mr. and Mrs. Kormos wanted:

  1. An Order according to s. 66.3(1) of the BIA annulling the consumer proposal submitted by Mr. Fast.
  2. Since an outcome of such an annulment would be that Mr. Fast is considered to make an assignment in bankruptcy under s. 66.3(5) of the BIA, they also were looking for an annulment of his bankruptcy on the ground that Mr. Fast is not presently insolvent.
  3. An order according to ss. 181(1) as well as 187(5) of the BIA annulling the bankruptcy of Mrs. Fast.
  4. An Order according to Rule 60.07 of the Rules of Civil Procedure issuing a writ of seizure and sale of the Home.

The Fasts did not challenge the expert appraisal opinion. The Court accepted the expert’s appraisal as being the value of the Home on the relevant dates of Mr. and Mrs. Fast’s respective filings under the BIA.

The Court looked at the insolvent definition in the BIA, which again is:

“insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

(a) who is for any reason unable to meet his obligations as they generally become due,

(b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

(c) the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due;”

In her bankruptcy filing, Mrs. Fast filed her statement of monthly income and expenses. According to the statement, her monthly expenses exceed her monthly income by $2,010. When looking at the definition of an insolvent, the Court concluded that Mrs. Fast was unable to meet her obligations and had stopped paying her current obligations. Notwithstanding that the Court found that Mrs. Fast probably understated the value of her interest in the Home, the Court was not persuaded to annul her bankruptcy as she met the definition of an insolvent person.

As for Mr. Fast, the Court decided it would not annul his consumer proposal. The Judge went on to say that even if he was persuaded to do so, Mr. Fast was still a bankrupt and the Judge had no evidence for the proposition that his bankruptcy should also be annulled.

So, the Judge did not grant the application, the Fasts are under their respective BIA proceedings and Mr. and Mrs. Kormos can file their claim with the Fasts’ Trustee.

Insolvent definition: The Trustee

Now the Trustee has an interesting situation. The Trustee is now aware of the expert valuation of the Home. The Trustee will have to use that information to decide if the Fasts have equity in their home. If yes, then as far as Mrs. Fast, her equity will have to be realized upon because she is bankrupt. Her equity in the Home devolves to the Trustee as an asset (if it is more than the minuscule provincial exemption).

Is Mr. Fast’s consumer proposal has already been (deemed) accepted by the creditors and (deemed) approved by the Court. If yes, then he will just have to keep making the agreed payments to fully complete his consumer proposal and get out of bankruptcy. If not, the Trustee will now have to take his real equity in the Home into account. The Trustee will have to decide if the consumer proposal can still be recommended to the creditors, or if it must be improved because of the increased total asset value.

Insolvent definition: Are you insolvent?

Are you unable to pay your debts as they come due? Are your bills past due and you don’t know how you are going to pay them? If so, then you are insolvent, and we can help end your pain.

Licensed Insolvency Trustees (formerly called bankruptcy trustees) are the only experts accredited, licensed and supervised by the federal government to handle debt restructuring. As a licensed insolvency trustee, our personalized strategy will assist you to know all your alternatives. The alternative you choose based on our recommendations will take away the stress and pain you are feeling because of your debt problems.

The Ira Smith Team has decades and generations of experience people and companies in financial trouble. Whether it is a consumer proposal debt settlement plan, a larger personal or corporate restructuring proposal debt settlement plan, or as a last resort, bankruptcy, we have the experience.

Our approach for each file is to create a result where Starting Over, Starting Now takes place. This starts the minute you are at our front door. You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life. Call us today for your free consultation.

Insolvent definition: NET WORTH ADDENDUM

Regularly monitoring your finances reveals invaluable lessons. A most important aspect of building wealth is to find it. People that constantly increase their net worth track it to direct it. So, the starting point is understanding what the net worth definition for a person is.

Seeing the measurable results of your spending and investing decisions is the first step to take control of them. Contrarily, people in the worst monetary shape have no concept where their money is spent and are too afraid to know what their net worth might be since it will not be pretty.

Which extreme more closely matches your mindset? You can’t handle what you don’t measure. Consider it: if you were seriously rich, you’d invest a long time weekly handling some element of your finances.

A beginner variation of a financial tracking approach is needed to begin improving your financial condition.. In addition, the more money you build up, the more financial assets and liabilities to keep an eye on. I ‘d wager that you won’t own them for long if you don’t have your financial tracking system set up before you acquire them. If you don’t see and feel the gains and losses of your monetary choices–you are playing the complex money-game of life without any scorecard.

This is how so many people with good income still find their way into financial trouble. You need to have navigation reference points to know if you are going toward developing wealth or ruining wealth. It is by monitoring your net worth that you’ll begin to discover the monetary impact and effects of your decisions.

The beginning point for financial measuring is a simple statement of net worth (or balance sheet). It is a list of the current market price of whatever you own and what you owe to others. Your net worth is the difference between these 2 numbers. This is the number that you want to measure and increase every month. As with a business, as soon as you start determining the monetary repercussions of your habits you can begin making your own individual financial guidance. Basic insights and rules like these will help increase your net worth. This will lead to bigger insights and develop into bigger gains.

If you find that you have a lot of debt that is reducing your net worth, or possibly a negative net worth, then what guidance about debt are you going to develop for yourself? Think about including a guideline to read a new personal finance book each year. Your money rules and net worth statements can be as advanced or as basic as you wish to make them.

When you have computed your calculation of net worth, you begin having the ability to plan for purchases and payments. As an easy example, if your auto insurance coverage costs get paid annually, you can calculate just how much cash that you must to set aside monthly to easily pay it when the bill arrives. Or if you are getting a new car, you’ll be a lot better prepared for the first costs before you get squeezed at the end of the month and wind up paying a couple of bills late.

After you get comfortable with a net worth statement, you can move on to an income & expense sheet. How much net worth will you need by when? The answer is based upon the financial routines, tools and education you will establish. However, it can all start with your very first net worth statement.

JUNE 17, 2019 UPDATE: The Court of Appeal for Ontario reversed this lower court decision. You can read all about it in our blog update – INSOLVENT DEFINITION RESTORED IN COURT OF APPEAL FOR ONTARIO insolvent definition

 

 

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HOLIDAY SPENDING IN CANADA: 5 HOLIDAY SPENDING TIPS TO STOP HOLIDAY DEBT

holiday spending in canada

We are trying something new. At the bottom of this holiday spending in Canada tips blog is an audiogram of this Brandon’s blog. If you would prefer to listen to it, and not read it, scroll down to the bottom and press on the play button. Let us know what you think by sending us a message in the Question box below.

Holiday spending in Canada: Introduction

Black Friday and Cyber Monday are over. You may feel you have a tendency to go overboard on your holiday spending and that will put you in a bad place going into 2019. So we have put together our holiday spending in Canada list to try to help with your budgeting for the holidays. Hopefully, by following our tips, you won’t enter the new year with even more debt. You will have avoided the most common holiday spending mistakes.

Holiday spending in Canada: Budgeting for the holidays

So, the first hint already is when I said budgeting for the holidays. It is so important that you actually think out your holiday budget before you start spending. I believe there are three main categories to your Christmas holiday budget: (i) gifts; (ii) food and beverage in your home when hosting; and (iii) tree and decorations.

To start setting your holiday budget, you need to set three separate mini-budgets; one for each group. For gifts, the first thing is to list out everyone you feel you want to buy a gift for. Then figure out who on the list you need to buy a gift for. You may not be able to afford your “wants”, but only your “needs”. The other categories will be easier to set.

Now, look at your monthly income and expenses and any savings you may have allocated for holiday spending to understand how much you can afford to spend in total without going into holiday debt. Just figure out the total amount you can safely spend. With that total, you should then estimate the spend on the food and beverage and tree and decorations categories. What you have left over in total will be your gifts budget. Nothing is set in stone. If you feel you need to adjust the allocations among the three categories, go right ahead. Eventually, you will be left with your gift total budget.

Now spread the total gift budget among the people. Your individual amounts have to add up to a number not greater than the total you already set up as your total gift spending amount. So you should now have actually three different worksheets, adding up to the total amount of money you can safely spend. With the budgeting worksheets finished, it is now time to go shopping!

Holiday spending in Canada: A new kind of shopping

You will now be able to do a new kind of shopping. In the past, you may have just gone to the mall or local stores and then just wander around until something that reminds me of the person that you are shopping for pops up.

The new shopping method will have you shopping for each group already knowing how much you can spend. Do not overspend!!

Holiday spending in Canada: Here are our 5-holiday spending tips

  1. Purchase with purpose – You have already determined how much you can safely spend on each person. Find the right gift that meets your spending goal. You don’t have to think about cost any more, because you will stick to your individual gift limits. You can now concentrate only on appropriateness within your budget limits. Although the Farberware cookware may be wonderful, you can only buy gifts that fit within your budget.
  2. Only buy with cash – You will be tempted to buy with your credit cards. Using plastic will cause you to overspend because you won’t feel the purchase. To really feel the purchase, only use cash. When you feel it, you don’t overspend. You will also avoid the nasty surprise in January because you won’t receive an out of control credit card statement that you won’t be able to repay. You will not only feel great in December but in January too.
  3. Think of a family gift to save money – If you feel you won’t be able to afford individual gifts, think of members of the same family and look for a family gift. A gift card for the family to go see a movie or a family pass for admission to an upcoming event or tourist site may prove cheaper than the total of the individual gifts. Don’t forget to check out that option. Or perhaps one item for the house that you know all family members will enjoy. There are many possibilities for a group gift.
  4. Give of yourself, not just your money – Don’t think that the only gift that counts is one that costs money. You have many skills and talents. Perhaps one or more would make a great gift. If you can’t think of anything unique you can provide that would make a great gift, how about your time. Think to babysit for nieces or nephews, taking out for an afternoon an ageing relative who can’t get out much but has appointments or errands to get to or doing someone’s grocery shopping (with their money). These can all count as valuable gifts that won’t cost you anything or much at all. Your time and theirs are much more valuable than any gift you would purchase in a store.
  5. Think outside of the decoration box – If you don’t already have a box of ornaments from years past to use, think creatively. The ornaments purchased at a Dollar Store will look just as nice on your tree as ones purchased at a more expensive store. Or, use your own creativity to make your own decorations. If you aren’t sure where to start, I am sure that there are many videos online to show you how to make great looking decorations that don’t cost too much for materials. Your labour, of course, is free.

2 BONUS TIPS to help with your holiday money management:

HOLIDAY SPENDING TIPS BONUS #1 Save all year for your holiday spending budget – Now that you have your spending budget, start saving for next Christmas in January. Take the total budgeted amount that you spent this year and divide it by 12. Starting in January, set up a separate savings account and deposit into it every month the monthly amount needed that will add up to your total budget by next December. Avoid the temptation to dip into that fund during the year. By the time you get to next Christmas, you will already have all of your holiday spending cash.

HOLIDAY SPENDING TIPS BONUS #2 Do you have reward points you either don’t see using or will soon expire? You have been collecting the points. You obviously thought they would give you something extra you might not otherwise be able to afford. Now you might lose them or even if not, you don’t see yourself able to take advantage of what the points can provide. So, why not buy a proper gift or gifts for those you need to buy for using some points. You will feel good about giving this way because you will be using the points for someone valuable in your life. You will also feel good about not allowing them to either expire or lay dormant. The people you buy the gifts for will hopefully cherish your gift, never knowing that you didn’t have to lay out any cash for them. It is a win-win all the way around.

I wish all of our readers a very Merry Christmas, Happy Chanukah and a healthy, happy and prosperous New Year.

Holiday spending in Canada: What if you already have too much debt?

Licensed Insolvency Trustees (previously called bankruptcy trustees) are the only specialists approved, certified and monitored by the federal government to deal with debt restructuring. As a licensed insolvency trustee, our individualized method will certainly help you learn every one of your bankruptcy alternative options. The choice you choose based upon our suggestions will certainly end the stress, anxiety and discomfort you are really feeling due to your debt troubles.

The Ira Smith Team has years and generations of experience assisting people and companies in a financial problem. Whether it is a consumer proposal debt negotiation strategy, a bigger individual or business restructuring proposal debt negotiation, or as a last resource, bankruptcy, we have the experience.

Our method for every case is to produce an outcome where Starting Over, Starting Now occurs. This begins the moment you come through our front door. You’re just one telephone call from taking the essential actions to return to leading a healthy, well-balanced life. Call us today for your free consultation.

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DEBT CONSOLIDATION: DEBT CONSOLIDATION LOAN MAY START PLAYING HARD TO GET

 

Debt consolidation

Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. This commonly refers to a personal finance process

Introduction

On November 16, 2018, the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) issued a press release on the state of consumer insolvencies in Canada. Hidden in the information was data which leads me to believe that debt consolidation may be tougher in 2019 and certainly in 2020.

A perfect storm is brewing

A historically low rate of interest and accessibility to credit have enabled some Canadians to stay up to date with debt and debt payments that would otherwise have gone into default. Interest rates are now rising and it is expected that the Bank of Canada will continue to raise its benchmark rate into 2019. Canadian household debt is on average at its highest level ever and is forecast to continue to rise. Rising household debt combined with rising interest rates is not a good combination.

Until now, Canadian real estate values have continued to rise, so consumers have been able to combine unsecured credit card and other debt into new mortgage or home equity line of credit debt secured by Canadian real estate. However, times have changed. Effective January 1, 2018, a new mortgage stress test came into effect. We described it in our blog “CANADA MORTGAGE STRESS TEST: WE EXPOSE THE SECRET TO TURN YOU FROM ZERO TO HERO”.

The mortgage stress test has resulted in one of its prime goals; a noticeable downturn in new mortgage loans. The second result is a slowing down of the runaway real estate markets in Vancouver and Toronto. If Canadian household debt continues to rise, interest rates keep rising making debt payments tougher and Canadians can no longer combine their unsecured debts by taking out a new loan by borrowing against their homes, debt defaults are going to rise.

That is why I say that debt consolidation loans may start playing hard to get.

The important relationships to consider

Below is a chart displayed in the CAIRP press release which I have reproduced here.debt consolidation 3

 

CAIRP came to some interesting conclusions about interest rates and consumer insolvencies, based on the trends shown in these charts. However, I believe they overlooked what I think is the central issue.

In the top chart, it shows that insolvency filings increased in the 2009-2010 years. CAIRP surmised that there was a lag between the time interest rates rose in the years 2006 through 2008 and the increased filings. This is true. However, the increase in filings mirrors the increase in unemployment in the 2009-2010 period. My personal view is that the more important finding is that the unemployment rate lagged the interest rate increase and it is the increase in the unemployment rate that produced a higher level of insolvencies.

With higher interest rates, corporations are paying more on their debt. Corporations want to show a steady increase in their profits year over year. If debt costs rise, companies have to find other costs to save. One cost that can be reduced in the short-term is labour costs. The forecast shows that as employees are terminated, the unemployment rate rises. Not everyone can find new work in the same time frame. This leads to increased consumer insolvency filings. In my view, the unemployment rate is a more important relationship to consumer insolvency filings.

Looking at 2019 and 2020

The bottom chart shows the relationship between household debt to income and the inflation rate. As you can see, the household debt to income ratio has kept a steady climb in 1996 through 2017 years. This steady climb has continued in 2018 and is forecast to rise even more in 2019 and 2020. The forecast also shows that inflation will nudge up to the 3% rate in 2020. So prices are expected to rise with inflation, and the household debt to income ratio is expected to rise also. This will put more pressure on Canadians trying to keep up with their debt payments.

The upper chart shows us that in 2019-2020, the forecast is that GDP stays flat, while interest rates continue to rise. In the same time frame, the downward trend in the unemployment rate bottoms out and begins to rise. Again, more unemployment and higher interest rates lead to problems for people trying to pay off debts. If you agree with my hypothesis that Canadians won’t be able to merge debt by borrowing more against their homes, this will lead to more financial problems and presumably an increase in consumer insolvency filings.

What you can do now

All is not doom and gloom. There are many things a person with a lot of debt can do now before things get out of control. There are many things that you can do right now to avoid a disaster down the road. My 5 steps for anyone who wants to resolve debt issues now are:

  1. Review your household budget now and cut spending on “wants” vs. “needs”. If you don’t have a household budget, develop a realistic one NOW!
  2. Rework the budget so that you spend less each month than you are currently spending. Look for ways to economize. Use that extra cash to paying down debt.
  3. Start paying more than the minimum monthly payment on your credit card and other unsecured debt. The more you can pay, the faster you can pay it off.
  4. Pay down the debt with the highest interest rate first. The less you pay in interest the better. That means more is going to pay down the principal debt.
  5. Perhaps you need to consider taking on a part-time extra gig to bring in more income.ira smith trustee

What if I can’t pay off my debts?

For Canadians that discover themselves not able to handle their debt on their own, there is a range of alternatives to take into consideration:

  • striking a deal with each of your major unsecured creditors through an informal debt settlement negotiation;
  • don’t give up on trying to combine all unsecured financial debts into one regular monthly payment;
  • a more formal debt settlement strategy with a consumer proposal; or
  • bankruptcy.

Identifying which choice is most appropriate depends upon a person’s scenarios as well as their unique asset and liability structure.

Debt consolidation: How we can help you

Licensed Insolvency Trustees (formerly called bankruptcy trustees) are the only experts accredited, licensed and supervised by the federal government to handle debt restructuring. As a licensed insolvency trustee, our personalized strategy will assist you to recognize all of your alternatives. The alternative you pick based on our recommendations will take away the stress and pain you are feeling because of your debt problems.

The Ira Smith Team has decades and generations of experience people and companies in financial trouble. Whether it is a consumer proposal debt settlement plan, a larger personal or corporate restructuring proposal debt settlement plan, or as a last resort, bankruptcy, we have the experience.

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 front door. You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life. Call us today for your free consultation.

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BANKRUPTCY TRUSTEE NEAR ME IS NOW A LICENSED INSOLVENCY TRUSTEE NEAR ME

Bankruptcy trustee near me: Introduction

This Brandon’s Blog is about picking a licensed insolvency trustee. As the title suggests, performing an online search for bankruptcy trustee “near me”, based solely on geography, is one way. Being around the corner is certainly convenient, but it may have no place in making a life-altering decision. This isn’t a coffee place you are looking for. If you required life-saving surgery, would you base your decision only upon which surgeon operates out of the hospital closest to your home? I don’t think so.

Bankruptcy trustee near me: Don’t fall into the debt consultant/debt settlement company trap

I am talking about people who actually hold a license issued by the Canadian Superintendent of Bankruptcy to administer the insolvency system in Canada. I am not talking about debt consultants or others who claim to be able to help you avoid bankruptcy and end debt.

There is no government licensing or supervision of debt consultants. They merely charge you for a first intake consultation, that a bankruptcy trustee would do for free. Once they have your information, you have paid them for the visit, and perhaps they have signed you up for more expensive “credit score improvement tools”, they hand you over to the licensed insolvency trustee who now will perform the actual work.

Using this type of arrangement costs you more money than you need to spend. The money you can’t afford to pay! The Superintendent of Bankruptcy is putting new controls in place over licensed insolvency trustees to stop bankruptcy trustees from allowing debt consultants to associate shoddy practices and perhaps even profit based on their relationships with licensed insolvency trustees.

Bankruptcy trustee near me: There are different types

I am not referring to good or bad when I say there are different types of bankruptcy trustees. I am talking about the type of practice they run. Generally, there are 4 groups; bankruptcy trustees who run:

  1. Only a personal bankruptcy practice out of one site;
  2. A corporate bankruptcy firm out of one or a few strategically placed locations around the greater metropolitan area of your city;
  3. Both a corporate and personal bankruptcy practice out of one or a limited number of locations; or
  4. The personal bankruptcy practice being operated out of many locations following a coffee or fast food restaurant model of being near every street corner.

So obviously you first need to recognize whether your financial issues are those for your company, you personally or both. As I said at the beginning, geography is nice, but it is not the most important criteria. One simple reason is that multi-location bankruptcy trustees do not make every office of theirs a full-time office. In contrast, you will see that they are operating out of either office for daily rent locations, a lawyer’s or accountant’s office, or the worst, a debt consultant’s office.

You cannot stretch yourself too thin over many offices. So, more often than not, even if your first free consultation is with a member of the Trustee’s staff, you may be meeting with an experienced clerk, but not the actual bankruptcy trustee.

My 5 point checklist to find a licensed insolvency trustee

  1. Quality and professionalism.

    Someone around the corner from you may not have the experience you need to solve your financial problems. To begin in selecting the very best bankruptcy trustee for you, look at the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) website. Membership in this professional organization shows a Trustee committed to the industry and staying on top of all the current advancements. Also check the website of the Office of the Superintendent of Bankruptcy, to make sure the bankruptcy trustees you are thinking about are not under suspension or supervision by the regulator.

  2. You need to be able to interact with them on lots of levels.

    In the beginning, you’ll need them to be able to quickly comprehend your needs and desires and they need to offer you a realistic plan that you can follow through on. They also need to be available for you if you have issues or concerns show up. Search for their interest. Are they enthusiastic about their industry? Do you really feel the compassion they have for you? Can you form a bond with this person? This is exactly how you assess enthusiasm. An enthusiastic licensed insolvency trustee will make certain that you are offered the most effective suggestions and solutions. This type of person may not exist within walking distance of your home or workplace.

  3. Can you agree on the same concepts?

    Professional Trustees are not totally free. The price can differ based on how complicated your circumstance is. If you feel that the bankruptcy trustee is simply attempting to make money, you are less likely to trust them. Spend the time to discover those who seem to be on the same page as you for a realistic value for service. That type of licensed insolvency trustee may not be the closest drive from your home.

  4. Bankruptcy trustee websites.

    Today you can type in search terms like “bankruptcy trustee near me” and get various websites to go to. What sort of feel do you get from the website? Do they answer some of your more general questions through a bankruptcy FAQ page? Can you see pictures of people you would deal with? Do they show that they have a deep knowledge base from their blog page? You may not get the best feeling from the website of the licensed insolvency trustee whose place is closest to your home.

  5. Meet with several Trustees.

    You won’t know which one is the best fit for you until you are sitting across the table from him or her. Speak to at least two bankruptcy trustees to compare. The one you feel best about, may or may not be on the next street corner!

Bankruptcy trustee near me: The choice is up to you

Our best relationships are with our clients who were referred to us by someone they know, like or trust. If the referral source is trusted by you, we have already received the highest compliment possible. I am proud to say that we have helped family members of lawyers and accountants who know us. They felt safest referring a loved one to us. That is the best feeling in the world for everyone!

The Ira Smith Team has decades and generations of experience people and companies in financial trouble. Whether it is a consumer proposal debt settlement plan or a larger personal or corporate restructuring proposal debt settlement plan, we have the experience.

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 front door. You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life. Call us today for your free consultation.bankruptcy trustee near me

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407 ETR RATES: THE ONLY GUARANTEED TO WORK 407 ETR DEBT SETTLEMENT PLAN

407 etr rates

We are trying something new. At the bottom is an audiogram of this 407 etr rates Brandon’s blog. If you would prefer to listen to it, and not read it, scroll down to the bottom and press on the play button. Let us know what you think by sending us a message in the Question box below.

407 etr rates: Introduction

The purpose of this 407 etr rates is not to tell you what the new toll rates are. The simple answer is that they are always going up! Rather, it is an update to our earlier blogs for people who are having trouble paying their 407 toll payment.

As you probably know, the 407 etr has an arrangement with the Province of Ontario where if you have unpaid 407 etr charges, you will be put on plate denial the next time you have to renew your vehicle plate. For many, being denied a plate renewal means the end of your ability to earn an income.

Before the update, a bit of history to put everything into perspective for you.

407 etr rates: Our prior blogs

We previously wrote about how the 407 etr was trying to use the provincial law as a collection tool, even when a person filed for a debt settlement restructuring consumer proposal or for personal bankruptcy. Our prior blogs were:

I won’t repeat the history here as you can check those blogs yourself. Suffice to say they argued in Court, unsuccessfully, that the Province had the right to enforce its own plate issuance rules.

The lower Court and the Court of Appeal for Ontario disagreed with their right to enforce the plate issuance rules when it was a blatant action to collect an ordinary unsecured debt caught in the priority scheme of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA). The Courts also found that they were trying to trump Federal law through Provincial law, which is illegal. Finally, the Supreme Court of Canada refused to hear their appeal, so that is where it ended, sort of.

407 etr rates: So that is where it ended, sort of

With those rulings, the 407 etr stated that they would comply and drafted a policy which was an extremely literal wording of the BIA. It technically complied with the Court rulings, but still had the effect of being very draconian and not changing their administrative policy.

The debts of an insolvent person, who has made a debt restructuring consumer proposal or bankruptcy filing, are not discharged until the insolvency process is complete. For a debt settlement plan, it is when the person finishes making their payments and receives their Certificate of Full Performance. In a bankruptcy, it is when they receive their absolute discharge.

How those processes work deserves their own blogs. Suffice to say the processes can take anywhere from a minimum of 9 months (first-time bankruptcy, no surplus income, no assets and no discharge opposition) up to 5 years (debt settlement plan). So the plate denial actually stayed in force for a long time.

The 407 etr also set up a very document intensive 407 etr login process that made applying for the eventual rescission of the plate denial very cumbersome.

407 etr rates: The class action lawsuit

The firm that independently runs Highway 407 ETR in the Greater Toronto Area agreed to pay $8 million to clear up this claim. The settlement, approved in November 2016, finishes the litigation that began in 2012.

The lawsuit affirmed that the toll freeway consortium unlawfully used provincial regulations to stop motorists that were insolvent or bankrupt from restoring their automobile permit plates. 407 ETR refutes it did anything incorrect and does not confess obligation in approving the out of court negotiation.

407 etr rates: Now for the update – The only 407 etr debt settlement plan guaranteed to actually work

The licensed insolvency administrator (LIT) acting as either the bankruptcy Trustee or consumer proposal Administrator, acting as either the bankruptcy Trustee or consumer proposal Administrator, will issue the Notice of Bankruptcy or Consumer Proposal. 407 ETR must be listed on your sworn Statement of Affairs as a creditor. It will then be sent a copy of the notice by the LIT.

Upon receipt, 407 ETR will end from plate rejection any amounts still owing from before the date of filing either for bankruptcy or a consumer proposal. This includes toll charges, interest, penalties and costs. They will then advise the Ministry of Transportation to upgrade their documents to show this change ending plate denial. This is a major change. You do not have to have completed your full insolvency process to get the lifting of the plate denial. This is the way fairness dictates it always should have been from the start.

There is a simple rule that you have to follow. It is the same rule that you need to follow in dealing with any leases or secured debt that you wish to continue to carry and that you can afford to. That is, you must not have any amounts owing to 407 etr for charges after your filing date which would qualify for plate denial.

407 etr rates: Are you worried about or need relief from plate denial

  1. Are you under plate denial, or afraid you will be soon?
  2. Will plate denial negatively affect your income and you need debt relief fast?
  3. Do you have other debts that need to be addressed too?
  4. Do you need budgeting help?
  5. Are you already experiencing financial difficulties?

If you answered yes to just one of these questions, you need a professional trustee. If yes, call the Ira Smith Team. 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 front door.

We always offer a free consultation. We listen to your issues and give you a full range of realistic options to help you get out of debt. Finding the best solution for YOU is just the right thing to do to help you meet total debt freedom.

The earlier you contact us, the more options we will have to carry out. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.

You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, ending the pain and stress you are feeling forever. Call Ira Smith Trustee & Receiver Inc. today for your free consultation.

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Brandon Blog Post

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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CANADIAN INTEREST RATE HIKE POSSIBLY SCARIER THAN HALLOWEEN

canadian interest rate hikeCanadian interest rate hike: Introduction

Does Bank of Canada chief Stephen Poloz anticipate good times generally in the Canadian economic climate to continue or is the marketplace an indicator of a problem in advance? The most recent Bank of Canada interest rate announcement was a Canadian interest rate hike boosting its benchmark rate by 25 basis points to 1.75%.

This is the 5th rise given since July 2017. All indicators show the Bank of Canada rate will boost right into 2019.

Canadian interest rate hike: The tale of two economies

There are presently 2 stories about the Canadian economy. The initial one is that the economic climate is doing well. Sufficiently so that we require to be increasing rates of interest. Mr. Poloz thinks there is a requirement to be tightening up that a bit.

At the exact same time, the second one, the other story, points to an economy that isn’t so great. The marketplace has recently made the case for pessimism. That story is that:

  • we’re at the actual end of a long great financial run;
  • a trade battle with China is the precursor of tough times ahead, and
  • investors are frightened that this can be the time that things start to turn down.

Canadian interest rate hike: What does it mean for you?

There’s a great deal of discussion regarding what that indicates specifically for Canadians. It isn’t that the cautions have not been there for a while. The Bank of Canada records that the typical Canadian household debt is around 170 percent of disposable earnings. The ordinary Canadian owes $1.70 for every single dollar of revenue earned each year, after tax.

Twenty years ago, the ratio was at 100%. So as you can see, there has been a steady climb since the 1990’s in Canadians appetite for more debt.

We have among the highest debt proportion of any of the Organisation for Economic Co-operation and Development participant nations. The concern is have we started to learn the message?

Initially, former Bank of Canada Governor Mark Carney and the former Federal Finance Minister, the late Jim Flaherty desired the Canadian consumer to place the economy on their back and march it up this lengthy high hillside. We did and it worked. Nonetheless, this is the result of it.

Currently, we start to see some indicators that the Canadian consumer is thinking of their budgeting. Stats Canada is reporting that retail sales have actually started to see a slowing down. Individuals are thinking of just how their variable priced loans are costing them more.

The sensible people will certainly begin restricting their purchases to just their needs and not give in to their wants. All this to attempt to maintain their debt in check. Rates of interest are rising so debt costs are going up and will set you back even more. Individuals will certainly concentrate on the requirement to bring costs as well as debt under control. This will lead to a cooling off in the Canadian economy.

Canadian interest rate hike: The US situation

I anticipate the very same practices will certainly happen in the United States. President Trump is already disturbed that the United States central banker Jay Powell is currently raising interest rates. However, Trump is disturbed that elevating rates will certainly tinker negatively with the US dollar. It could also slow down the US economy. If that happens, Donald Trump’s fears his worst nightmare. He won’t be able to truthfully boast how well the US economy is doing under his administration. There have been times already where he’s been plainly irritated the economy is refraining from doing what he wants of it. Mind you, to date, he has not let the truth get in the way of a good boast!

So climbing rates of interest will certainly have a result on the North American economic situation and the marketplaces. Whether interest rate hikes will be scarier than Halloween, only time will tell.

Canadian interest rate hike: Are you uneasy about your household debt?

Do you feel rising debt costs will put you and your family in peril? Do you need budgeting help? Are you already experiencing financial difficulties? If you answered yes to just one of these questions, you need a professional trustee. If yes, call the Ira Smith Team. 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 front door.

We always offer a free consultation. We listen to your issues and provide you with a full range of realistic options to help you get out of debt. There have been numerous times where thinking about all the Canadian debt solutions available, we have advised debtors that they do not need an insolvency process. Rather, maybe they can avoid it by implementing an informal process. If that is your case that if fine with us; finding the best solution for YOU is just the right thing to do to help you achieve total debt freedom.

The earlier you contact us, the more options we will have to implement. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.

You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, ending the pain and stress you are feeling forever. Call Ira Smith Trustee & Receiver Inc. today for your free consultation.ira smith trustee

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CANADIAN DEBT SOLUTIONS: AVOIDING THE BANKRUPTCY PROCESS

Canadian debt solutions: Introduction

This blog discusses a very interesting recent decision in the British Columbia bankruptcy case of Hervias (Re), 2018 BCSC 1579 (CanLII). A licensed insolvency trustee (LIT or Trustee) (formerly known as a bankruptcy trustee) is trained to develop Canadian debt solutions. Sometimes the best debt solution does not involve a formal insolvency process; either a consumer proposal or personal bankruptcy. The purpose of this blog is to describe the case of Mr. Hervias and why sometimes the best advice is that you don’t need to go bankrupt. This is a story of Canadian debt help – the good, bad & ugly.

Canadian debt solutions: The position of the stakeholders

Mr. Hervias made a Court application to annul his bankruptcy. He says that the bankruptcy assignment ought not to have been submitted because his only creditor of any significance was the Canada Revenue Agency (CRA). The evidence showed that CRA would have accepted a voluntary proposal to settle his tax liability in regular monthly payments affordable to him. He claims that the Trustee never asked such questions of CRA prior to recommending that he file for bankruptcy.

CRA does not challenge an annulment. It is encouraging his proposal to repay the debt. They likewise intend to file a memorial on the title to his home in which he has equity higher than the debt owed to CRA!

The Trustee is the only party to oppose the annulment application. The LIT insists that when Mr. Hervias sought his help, Mr. Hervias was insolvent because CRA was garnishing his pension and had frozen his bank account. Mr. Hervias had a previous bankruptcy and a couple of other minor creditors. Mr. Hervias had significant equity in buildings he owned with his son and his wife.

Canadian debt solutions: How could this even happen?

Mr. Hervias owed CRA, his major creditor, unpaid income tax of $23,820.50, including penalty and interest. In April 2017, CRA froze his only bank account. He sought help from a debt consultant, Canada Debt Helpline. He required CRA debt forgiveness. On the second meeting with an agent of Canada Debt Helpline, they introduced him to a LIT.

The Trustee met Mr. Hervias at the offices of Canada Debt Helpline. The LIT argues that Mr. Hervias sought bankruptcy guidance when he initially met with him. The Court determined that Mr. Hervias was presented to the Trustee by the debt counselor. The evidence showed that Mr. Hervias looked for the help of a debt consultant; not for a bankruptcy trustee!

The Court found that at the date of bankruptcy, Mr. Hervias had net equity in real estate of $95,000 – far more than the total of his debts! I question whether Mr. Hervias was even insolvent at the date of bankruptcy.

His bankruptcy happened because a debt consultant, who had a cozy relationship with a LIT, recommended a bankruptcy trustee with whom no doubt a financial relationship existed.

Canadian debt solutions: Debt consultants cause harm

I have written before on the evils of the debt consulting/debt settlement industry:

  1. DEBT SETTLEMENT COMPANIES FINALLY TAKEN TO TASK IN ONTARIO – December 17, 2013
  2. HOW ADVANTAGES OF CONSUMER PROPOSALS SAVES YOU FROM DEBT SETTLEMENT COMPANIES – June 30, 2015
  3. CONSUMER PROPOSAL VS DEBT SETTLEMENT – October 1, 2015
  4. DEBT SETTLEMENT OR CONSUMER PROPOSAL CANADA: NEW CANADIAN GOVERNMENT REPORT EXPOSES DEBT SETTLEMENT COMPANIES HARMING CONSUMERS – May 3, 2017
  5. DIFFERENCE BETWEEN DEBT SETTLEMENT AND CONSUMER PROPOSAL: DEBT SETTLEMENT COMPANIES ARE PROS WHEN IT COMES TO CONS ON INSOLVENT CONSUMERS – May 10, 2017

Canadian debt solutions: Technically or temporarily insolvent?

At the time of the bankruptcy, Mr. Hervias declared some other little financial obligations including:

  • a possible debt of roughly $900 to a Recreational Vehicle park chain;
  • $213 owed to Telus Mobility from an old phone agreement; and
  • a $186 debt to Best Buy for a laptop computer that he had not repaid in full.

Mr. Hervias had assets that well surpassed his obligations. Notwithstanding, he met the technical interpretation of a bankrupt person under s. 2 of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA). Since the CRA had frozen his only bank account, he had no access to his income to fulfill his commitments as they came to be due.

Because he had a poor credit score, he was not able to arrange to finance on the real property he owned jointly. His wife was also not ready to consent to the financing because she was back in her homeland of the Philippines looking after her elderly mother. She asked her husband to wait until she returned to Canada.

Canadian debt solutions: Was there a realistic option for an insolvency process?

Definitely. The evidence showed that CRA would have agreed to an informal proposal, allowing Mr. Hervias time to repay his debt to CRA. As stated above, his other debts were minor. His bankruptcy was unnecessary.

This is a prime example of the dangers of debt consultants and the Trustees who are in bed with them. For the record, my Firm does not have a relationship with any debt consulting or debt settlement firm.

Canadian debt solutions: The Court’s concerns

The main concerns for the Court were:

  • did the Court have jurisdiction to annul a bankruptcy in circumstances where the bankrupt was insolvent when the bankruptcy occurred and there is no finding that the bankrupt abused the Court’s process or committed fraud on his creditors in filing an assignment in bankruptcy;
  • if the court has jurisdiction, whether it should exercise its discretion to annul the bankruptcy in this case; and
  • in granting the application to annul, whether it should be subject to payment of the trustee’s fees.

The Court determined that it was absurd that someone with considerable assets which created income would assign himself into bankruptcy. This is especially so when the main creditor is prepared to accept payment over a longer time span in amounts that the debtor can afford. The Court concluded that these circumstances were both special as well as uncommon.

Canadian debt solutions: The Court’s decision

However, just because bankruptcy ought not to have taken place, an annulment does not instantly follow. The law is clear that the bankrupt must additionally satisfy the Court that in all the conditions of the case, thinking about all the different stakeholder interests, the discretion needs to be worked out in favour of annulment. Furthermore, the jurisprudence guides the Court to think about the legal rights of the insolvent, the creditors and the public policy issues.

The Court was critical of the LIT. The Court found that prior to the assignment in bankruptcy, the Trustee should have consulted with CRA. Certainly, had he done so, he would have found out that an informal proposal was possible and there would have been no need for any insolvency process, especially a bankruptcy.

In the Court’s view, Mr. Hervias and his creditors are not harmed by an annulment, while the public interest in the integrity of the bankruptcy process is not undermined by annulling this bankruptcy under these unique conditions. Mr. Hervias’ bankruptcy was annulled according to s. 181 of the BIA. Mr. Hervias was ordered to pay the Trustee’s fee and disbursements immediately, subject to taxation.

Canadian debt solutions: Our approach

If you or your company are experiencing financial difficulties, you need a professional trustee. If yes, call the Ira Smith Team. 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 front door.

First of all, we always offer a free consultation. We listen to your issues and offer you a full range of realistic options to help you get out of debt. There have been many times where thinking about all the solutions available, we have advised debtors that they do not need an insolvency process. Rather, maybe they can avoid it by implementing an informal process. As a result, we do not earn any fees from such advice; it is just the right thing to advise and do in those circumstances to help you make total debt freedom.

The earlier you contact us, the more options we will have to carry out. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.

You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, ending the pain and stress you are feeling forever. Call Ira Smith Trustee & Receiver Inc. today for your free consultation.

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