Now that Valentine’s Day is over, we need to not lose that loving feeling. Many Canadians are not crazy with their love one’s finances. They may wish to book a financial date evening. Many are keeping debt secrets from their partner, or fear they are hiding financial information from them. Perhaps now is the time to come clean with secret debt in marriage.
Secret debt in marriage: A recent survey
A brand-new survey identified that Canadians in a relationship (whether living separately, common law or wed) wish they can change a minimum of one of their partner’s financial behaviours. But their loved one could be oblivious. Many reported seldom or never ever talking money or budgeting with them.
Secret debt in marriage: We have previously written about this tender subject
Spouses or partners holding secret debt in marriage is nothing new. We have previously written on the topic, and others involving couples, including the following blogs:
When it concerns taking care of debt as a couple, I recommend complete and honest disclosure. Work together to check your debts and make a household budget. Plan together how your household income will allow you both to pay ordinary monthly expenses, pay off debt and hopefully, save for emergencies and retirement.. Budgeting discussions are not easy, but if you can prepare a realistic one and stick to it, your relationship will find a new level of love.
Secret debt in marriage: What if you find out that talking and budgeting is not enough?
Although we are not social workers or marriage counselors, we are expert in helping people work through their financial challenges.
That is why the Ira SmithTeam always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:
The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.
I have written before on the more practical aspects of Ontario bankruptcy discharge certificate issues and process within Canadian bankruptcy and insolvency law. The most recent blogs are:
I recently reviewed the Ontario Court of Appeal decision in Cole v. RBC Dominion Securities Inc., 2017 ONCA 1009. This case is very interesting as it highlights an issue that we often don’t talk enough about when advising a person on what they might expect at their hearing under Canadian bankruptcy and insolvency law.
The facts
Henry Cole, age 52, had a Bankruptcy Order made against him in 2011 upon motion by Royal Bank of Canada (“RBC”), after he misappropriated $5 million from clients while working as their investment advisor. While in bankruptcy, he had a net monthly income of $14,600, resulting in surplus monthly income of $12,500. He nevertheless failed to make any surplus income payments.
The Ontario Court of Appeal (“ONCA”) upheld the two lower Court decisions
As is the case in bankruptcy matters, Mr. Cole’s bankruptcy discharge hearing came before the Master in Bankruptcy Court who also sits as the registrar in bankruptcy. Mr. Cole appealed the Master’s decision (discussed below) unsuccessfully to a Judge of the Bankruptcy Court. The Judge dismissed Mr. Cole’s appeal, thereby upholding the Master’s decision. As indicated above, the ONCA agreed with the Judge (and the Master) in dismissing Mr. Cole’s appeal.
Now for the interesting stuff!
Now for the interesting stuff. The Master determined that there was enough evidence to show that Mr. Cole, as a bankrupt, committed various bankruptcy offenses. The Master determined facts for which discharge may be refused, suspended or granted conditionally, under Section 173(1) of the Canadian bankruptcy and insolvency law called the Bankruptcy and Insolvency Act (Canada) (“BIA”).
The Master determined that Mr. Cole had failed to provide information to enable the Licensed Insolvency Trustee to calculate surplus income. Mr. Cole also conceded to the following facts:
his assets upon bankruptcy were not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities. Mr. Cole gave no evidence why he should not be held responsible;
he failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities; and
he brought on, or contributed to, his bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of his business affairs
With these findings, the Master, under Section 172(2) of the BIA, had to not grant an absolute discharge and to:
refuse the discharge of a bankrupt;
suspend the discharge for such period as the court thinks proper; or
make the bankrupt, as a condition of his discharge, to do such acts, pay such moneys, consent to such judgments or comply with such other terms as the court may direct.
I must point out that the options available to the Master are not mutually exclusive. So, just like in Mr. Cole’s case, you could have the Court come up with a mixture of a suspension and a condition to pay moneys.
What the Master decided
The Master made several decisions. First, the Master dealt with the surplus income issue. The Master ordered Mr. Cole to pay $284,346 to the Trustee as surplus income, payable at a rate of $5,000 per month.
The Master also considered Mr. Cole’s criminal behaviour and that he had real income while not working any longer as an investment advisor. Given the amount of Mr. Cole’s liabilities, and for the integrity of the Canadian bankruptcy system, the Master ordered as further conditions that:
Mr. Cole pay an extra $5,000 per month to the Trustee for a further six years for a total more payment of $360,000; and that
Mr. Cole argued before first the Judge, and then the ONCA, primarily that the Master’s treatment of surplus and other income was in error. He also argued that the Judge’s finding in dismissing his appeal was an error. The ONCA disagreed and dismissed his appeal.
So what is the lesson to be learned?
It is important for the Trustee, when sitting down with the person contemplating an insolvency proceeding, to understand all the facts. By properly understanding all the facts, we can provide proper professional advice and guidance.
Someone who had a facts situation like Mr. Cole, we would have strongly advised him or her to avoid bankruptcy and to contemplate performing a Division I Proposal to compromise his debts. The reasons we would have advised this are:
the debtor has real income to successfully do a Proposal;
Mr. Cole never would have qualified for an absolute discharge from bankruptcy given his facts situation and any discharge conditions would be onerous;
avoiding the ongoing calculation of surplus income up to the time of his bankruptcy discharge hearing; and
with the support of his major creditors, it is possible that the Proposal amount could have been somewhat less than $644,000 (subject to knowing the value of his assets at the date of bankruptcy).
he person needs our advice in plain English before making any decisions
We also would have advised the debtor the type of the rough ride they were in for if they chose to go ahead with the bankruptcy option. We would have explained in detail how we believed the Canadian bankruptcy and insolvency law system would treat him, so at least there would be no surprises during the bankruptcy administration.
Many times people we speak with do not like to hear the truth, and begin “Trustee shopping” until they find a Trustee that does not tell them all the bad news up front. People like this believe that if they aren’t told it, it can’t happen. This is a mistake. We believe everyone deserves to know the truth about their situation, to help them make the best decision possible.
In Mr. Cole’s case, not only did he find out the hard truth from the Court, he then spent money on his lawyers appealing the Master’s and Judge’s decisions. That obviously was extra money spent with no benefit received.
FULL DISCLOSURE: Our firm has never met with Mr. Cole and was not considered to be his Trustee.
What to do if you have too much debt
Declaring personal bаnkruрtсу in Canada is a big deal. So is getting your Ontario bankruptcy discharge certificate. While it can be a way out for the honest but unfortunate debtor who is deep in debt and looking for a new start, there are rules, rеѕtrісtіоnѕ and fіnаnсіаl rаmіfісаtіоnѕ.
That is why the Ira SmithTeam always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:
The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.
Since there are various provincial run casinos, horse racing and lotteries, we are often asked if you can have a gambling debt bankruptcy. More importantly, what clients really want to know is, can gambling debt be discharged in bankruptcy?
Gambling debt bankruptcy: What is gambling debt in bankruptcy?
We first must go back to basics. There are two types of gambling debts:
Debts for loans taken out, either direct loans or through credit cards; and
Loans directly from a casino with “markers”.
In the first case, the loans or credit card debts could be direct – using the cash advance to gamble with, or indirect – used to make purchases for the necessities of life because the person gambles away their employment or other income. The use of markers at a casino is obviously a direct gambling debt.
In the context of this discussion, it does not matter if the gambling debts are direct or indirect. As discussed in this blog, the gambling debts are legally enforceable. As such, gambling debts in bankruptcy (or a proposal) are claims provable under the BIA.
Gambling debt bankruptcy: Gambling debt and bankruptcy
You can declare bankruptcy on a gambling debt. So is it really as simple as declaring bankruptcy? The answer is no. There are various issues that you must first consider with the licensed insolvency trustee during your first free consultation. The major issues are:
The nature and amount of your other debts because you lost cash in gambling
Have you not been paying your taxes because of gambling losses and Canada Revenue Agency is also a major creditor
Getting gambling addiction advice
Getting a discharge from bankruptcy
Is there another option available to you in order for you to avoid bankruptcy
Gambling debt bankruptcy: There are many issues in addition to just getting gambling addiction debt help
If you are insolvent and you choose the bankruptcy route, you will face the following issues:
If you have non-exempt assets or equity in non-exempt assets, your interest in those assets will be taken over by your trustee. For example, your interest in the matrimonial home would come to the trustee and now your spouse, or other friend or relative, would have to purchase your interest back to the cash could go to your creditors. Go explain that to your spouse!
Earning more than essentially a poverty line amount will cause you to have to pay surplus income to the trustee for the benefit of your creditors. If you are a first time bankrupt, with surplus income, you will have to pay the surplus income for 21 months. You can’t seek a discharge from bankruptcy until then.
If you have been bankrupt before, the 21 months becomes 36 months.
Once you show that your debts are due to gambling losses, you can expect your lenders and credit card companies to oppose your discharge from bankruptcy.
gambling debt bankruptcy
Gambling debt bankruptcy: Including your discharge from bankruptcy and your gambling addiction
If you owe a large amount of unpaid income tax to Canada Revenue Agency, you can expect them to vigorously oppose your discharge from bankruptcy.
Your trustee must oppose your discharge from bankruptcy when your bankruptcy is a result of gambling debt. The reason is under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(“BIA”), there are various facts, if proven, it is impossible to get an absolute discharge from bankruptcy.
Section 172 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(“BIA”) allows the Court to make an order of discharge which is either absolute, conditional or suspended. Where a fact under s. 173 of the BIA is proven, an absolute discharge is precluded.
Gambling which brings on or contributes to bankruptcy is a recognized s. 173 fact. (BIA, s. 173(e)). That is why your trustee would have to oppose your discharge from bankruptcy.
In reaching any decision on your discharge, the Court and the trustee need to maintain the integrity of the Canadian insolvency system. You can assume that your discharge will at least be conditional upon you paying a certain sum of money to your trustee for the benefit of your creditors. A bankruptcy discharge suspension for a certain time after you fulfill the payment condition is also possible. If your behaviour was especially egregious, your discharge from bankruptcy may be outright refused.
The bankruptcy discharge hearing is a full Court hearing. You will be well advised to retain experienced insolvency legal counsel to come with you to Court. This is an expense you may not even be able to afford.
If you want to have a chance in obtaining a discharge from bankruptcy, you will also have to show that you are taking concrete steps to deal with your gambling addiction by getting gambling addiction advice. That will include proving in Court that you enrolled, attended and completed at least one recognized rehabilitation program for gambling addicts.
Gambling debt bankruptcy: Going bankrupt doesn’t seem to be an easy fix
You are right about that. As if the above 11 issues weren’t enough, depending on your specific circumstances, there could be more. Therefore, I always recommend to debtors that if there is hope for the person to be able to successfully restructure through either a consumer proposal or Division I BIA Proposal, that must be seriously looked at and considered preferable to going bankrupt.
Gambling debt bankruptcy: What must you do if you have gambling debts and are considering personal bankruptcy?
Do you have unmanageable debts from gambling, other addictions or for any other reason? Be proactive; it’s time to rehabilitate yourself and deal with your debt while you still have alternatives.
The Ira Smith Team has years of experience assisting Canadians like you, getting you back on track to debt free living. CallIra Smith Trustee & Receiver Inc. today so that we can help you regain control of your life and be stress-free, Starting Over, Starting Now.
Hannah Bell beats PEI NDP leader was certainly a great headline. However, the one we want to focus on is “Hannah Bell Beats Her Debt Problems”. The purpose of this Brandon’s blog is to tell the story of the financial woes of Hannah Bell. She is a Prince Edward Island woman who recently won a by-election in Prince Edward Island. Hannah Bell, PEI Charlottetown-Parkdale, is the 2nd Green Party MLA sworn into the legislature. Ms. Bell is a very accomplished woman. Here is a link to the Hannah Bell PEI bio.
Hannah Bell beats PEI NDP Leader: Hannah’s story is like so many others
Hannah’s story is like so many others who have filed for either bankruptcy or a consumer proposal, the best bankruptcy alternative. It is also like many who have consulted and filed with our firm; life got in the way. The only difference is that none of our clients hold public office like Hannah Bell PEI green party member Charlottetown-Parkdale.
Hannah Bell beats PEI NDP Leader: Hannah’s tax problem
A Federal memorial submitted versus her, the Green Party candidate that won the District 11 Charlottetown-Parkdale by-election in a surprise victory over the Liberals and Progressive Conservatives. The judgment, submitted in September 2016, reveals she owes $26,252 to the federal government in tax obligations.
She was reassessed a $26,000 tax obligation after the Canada Revenue Agency (CRA) carried out a review of her tax returns going back many years. She states she had gotten some bad tax recommendations when relocating her government pension plan into a private plan after leaving a federal government position. The outcome was this costly tax obligation.
Be proactive and proud like Hannah Bell
She says she is not embarrassed by this tale of her financial woes. She states that she has worked very hard through some difficult times to provide for herself and her child as a single mother. Her debt was such when– after a previous costly custody fight and living life as a single mom– that she determined the most effective means to manage this issue was to file a consumer proposal through a Licensed Insolvency Trustee.
Ms. Bell states it’s unfortunate her economic problems had to come to light as part of the other candidates’ political agenda. “Most of us don’t have emergency funds that go into the tens of thousands of dollars,” Bell said.
Ms. Bell is somewhat philosophical about her journey:
“It puts me a bit closer to everybody’s regular story, which is – I can tell you what it feels like to run out of money and wonder what you’re going to do and that you have to make really good decisions. So for that, there is no shame in this.”
She is not alone
Ms. Bell is by far not alone. In previous blogs, we have shown that even the rich and famous have run into financial problems and declared bankruptcy.
Family and Human Services Minister Tina Mundy’s individual economic debts ended up being front-page fodder in 2015. Premier Wade MacLauchlan had actually picked her for cabinet then, and one day after being sworn in, approved her resignation after it concerned him that Ms. Mundy had submitted a consumer proposal.
The financial woes of Hannah Bell could happen to anyone. From our experience, we agree with Ms. Bell’s assessment that her journey puts her a bit closer to many people’s regular story.
What to do if you have too much debt
This story shows that anything is possible. Against all odds, Hannah Bell won the election and her debt problems. With our help, you can beat your debt problems too.
Have you been reassessed by CRA and don’t have the money to pay them in a reasonable period? Do you have unmanageable debts from any other reason? Be proactive, just like Hannah Bell and Tina Mundy. It’s time to repair the cycle of debt while you still have alternatives.
The Ira Smith Team has years of experience assisting Canadians like you, getting you back on track to debt free living. CallIra Smith Trustee & Receiver Inc. today so that we can help you regain control of your life and be stress-free, Starting Over, Starting Now.
Unfortunately for many Canadians, their fears are about to be realized. On Wednesday, January 17th the Bank of Canada interest rate hike began. The Bank of Canada raised its key lending rate by a quarter percentage point to 1.25%. This is the third time it’s moved its benchmark rate from once-record lows last summer.
Bank of Canada interest rate hike: How will changes in the prime lending rate affect Canadians?
Changes in the prime lending rate affect variable-rate mortgages, lines of credit and other lending linked to the benchmark rate, and this means that borrowers will be paying more. And the Bank of Canada interest rate hike has a ripple effect.
The Royal Bank of Canada raised its prime lending rate by a quarter of a percentage point, to 3.45%, effective Thursday, January 18th. Canadians expect that Canada’s other big banks will do the same. Already all of Canada’s Big Six banks raised their listed five-year mortgage rates by 15 basis points to 5.14%.
It’s now going to be more difficult for home buyers to qualify for mortgages, particularly with the new stricter guidelines. As you can see, a rise in interest rates can have far-reaching effects.
Bank of Canada interest rate hike: Reasons Canadians are concerned
With so many Canadians walking a financial tightrope, the last thing they wanted to see was an increase in interest rates. A recent survey by Ipsos showed that:
48% of Canadians are within $200 of not being able to meet their financial obligations
40% of Canadians worry that they’ll be in financial trouble if interest rates keep rising
33% of Canadians can’t keep up with their monthly bills and make their debt repayments
30% of Canadians are concerned that rising interest rates could push them close to bankruptcy
Bank of Canada interest rate hike: Are you worried about the interest rate hike?
If you’re like many Canadians who worry that the rise in interest rates will push you over a cliff financially, now is the time to seek professional help. A licensed trustee can give you answers, options and a realistic plan for recovery.
Can you file personal and corporate bankruptcy: Introduction
Can you file personal and corporate bankruptcy is a question all small business owners ask us when they come to our office for a free consultation. We discuss local business bankruptcy with entrepreneurs in our office. Their personal and business lives are intertwined. There’s very little distinction between the individual their small business.
This is especially true if their business in unincorporated and is being operated as a proprietorship. Our role is to first understand them as a person and as a business separately. This way we can give the best possible advice. If the business is a proprietorship, then we are only talking personal bankruptcy, or alternatives to avoid bankruptcy, such as a consumer proposal or restructuring proposal.
Can you file personal and corporate bankruptcy: Better to be separate legal entities
If their business legal form is that of a corporation, then we look at both the corporate and personal issues separately. The reason for this is because in the eyes of the law, the corporation and the individual are separate people. Many times it is not necessary for both the corporation and the individual to each file an insolvency process. Maybe only one has to.
Separating your business and personal assets and liabilities is a great reason for incorporating your business. When discussing bankrupting an incorporated company, we also need to consider if there are any Director liabilities. We must also consider the owner’s personal situation. This is so we can make sure they do not do themselves more personal harm than good. We also first look to see if there is a way to restructure and save the corporation.
Can you file personal and corporate bankruptcy: What is bankruptcy
Bankruptcy is a lawful method for the honest but unfortunate company or person to get a remedy from the burden of the financial debts that cannot be repaid. When an assignment in bankruptcy is submitted a “stay of proceedings” is invoked.
What the stay of proceedings means
The stay of proceedings results in stopping creditors from beginning or continuing with litigation against the company or person. The stay of proceedings also stops an unsecured creditor who has obtained a judgement. It stops them from garnishing funds from a bank account or part of the person’s wages. For unsecured creditors, the stay of proceedings also calls a timeout to make sure that one unsecured creditor does not get a benefit over others in regards to the settlement of financial obligations. Keep in mind that the bankruptcy process could also be started by one or more unsecured creditors. They must be owed at least $1,000 in total.
Can creditors push you into bankruptcy?
The unsecured creditor(s) could file a motion with the Court requesting that a Bankruptcy Order be issued against the company or person. The method of bankrupting a corporation in Canada is the same as that of a person. In addition to being able to prove that the company or person owes this unsecured creditor or group at least $1,000, they also need to prove that at least one act of bankruptcy has been committed in the 6 months prior to the filing of the motion.
The Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) identifies the various acts of bankruptcy. The most common one is “ceases to meet his liabilities generally as they become due”.
Secured creditors are generally not impacted by bankruptcy. They can realize upon the assets of the company or person covered by the security. In return for the original loan, the lender required that the borrower put up the security as a condition of the loan. The reason for this was so that if insolvency happens, the lender could sell the assets to try to repay the loan, interest and costs.
The secured creditor only really takes part in the bankruptcy process if after they have sold all the assets covered by their security, they are still owed money. The balance they are still owed is an unsecured debt.
Personal bankruptcy
If an individual’s business is a single proprietorship or a partnership, but not a corporation, legally, the person or people are also the business. So when they deal with the possibility of bankruptcy, all their assets are included, subject to provincial exemptions. Simply put, the assets of the business are not held different from their individual assets, so a small business bankruptcy of this kind is personal bankruptcy. Where does Canada Revenue Agency fit in?
There are generally 3 types of claims that Canada Revenue Agency (CRA) has against a business. It does not matter if the business is incorporated or is a sole proprietorship.
The 3 kinds of CRA claims generally are:
Unremitted source deductions from employee payroll
Net HST owing
Unpaid income tax from profitable years
Both the HST liability and income tax, in a bankruptcy, is an unsecured claim. However, the HST liability is also a personal claim against the Director(s) of a corporation. Unremitted source deductions are both a deemed trust claim against the bankrupt’s assets and in the case of a corporation, a personal claim against the Director(s) of the company.
When we do our first consultation with a business owner, when the business is run in a corporation, whenever unremitted source deductions or HST is involved, this always leads to a talk about the person’s situation in the event CRA would make a claim against the Director. Some bankruptcy statistics
According to the Office of the Superintendent of Bankruptcy Canada, for the 12 months ending September 30, 2017, there were 125,912 insolvencies in Canada. This is a decrease of 3% over the same time period a year earlier. Consumer insolvency filings were 122,296 or 97.1% of total filings. The consumer filings were split into 59,192 bankruptcies and 63,104 consumer proposals – roughly half and half.
Business insolvency filings for the same time period in all of Canada totalled 3,616, a decrease of 8.1% from the 12 month period one year earlier. Business insolvency filings were split into 2,719 bankruptcies and 897 proposals. These statistics do not include filings by very large corporations under the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36).
As you can see, for a country the size of Canada, there were not a lot of business insolvencies during the first 9 months of 2017. The consumer filings were split roughly even between bankruptcy and a consumer proposal, the best consumer bankruptcy alternative.
Alternatives to Declaring Bankruptcy
A consumer proposal entails paying back a part of your financial debts in return for your unsecured creditors forgiving the remaining balance owing. A consumer proposal provides a significant benefit for a proprietor or partner in an unincorporated business. Unlike in a bankruptcy, your assets are not available for seizure by the licensed insolvency trustee (LIT).
You can take up to 60 months to pay off your consumer proposal. How much you will have to offer your creditors depends on what the unsecured creditors could expect in your bankruptcy. Working with a LIT, you work out that amount through discussion and analysis. A LIT can explain the entire process to you. From a financial viewpoint, a consumer proposal is better than your bankruptcy because it permits the unsecured creditors to recoup a larger part of the debt than they would receive in your bankruptcy.
What is best for you and your business?
If you find you or your business is in a financial danger zone, contactIra Smith Trustee & Receiver Inc. We’re full-service insolvency and financial restructuring practice serving companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now.
Your financial problems can be solved with immediate action and the right plan. Give us a call today.
Declaring personal bankruptcy in Ontario Canada: Introduction
Facing serious financial difficulties is devastating, especially if you believe that declaring personal bankruptcy in Ontario Canada is your only option. In fact, many people mistakenly believe that dire financial problems automatically mean personal bankruptcy.
If you are having problems meeting your financial obligations or have stopped meeting those financial obligations as they come due you are actually insolvent, not bankrupt. Insolvency is a financial condition; bankruptcy is a legal state.
Declaring personal bankruptcy in Ontario Canada: Bаnkruрtсу is a legal рrосеѕѕ
Bаnkruрtсу is a legal рrосеѕѕ under the Bankruptcy and Insolvency Act (Canada) (“BIA”) that help you to resolve уоur debts if they have become unmanageable. If you have relatively few assets and low іnсоmе and dесіdе to file for bаnkruрtсу, you will probably fіlе under the streamlined Summary Administration part of the BIA.
If you have realizable assets that will produce a value greater than $10,000, then your bankruptcy would be administered under the general administrative provisions. Don’t worry about these distinctions right now. For now, just know that the summary administration rules are shortened. The cost of this type of bankruptcy administration is fixed by a tariff set by the Superintendent of Bankruptcy.
Declaring personal bankruptcy in Ontario Canada: A summary of the bankruptcy steps
In either case, you will turn over to your Licensed Insolvency Trustee (“LIT”) all of уоur рrореrtу that is not exempt (protected) by law. The LIT will sell your property and use the proceeds to рау for the bankruptcy administration and then distribute to уоur сrеdіtоrѕ.
If you have very little property, all of it may be рrоtесtеd. In that case, you will not lose it. How much уоur сrеdіtоrѕ will get in this process dереndѕ on how much уоur unрrоtесtеd property can be sold fоr and whether you will be required to pay “surplus income” to your LIT (more on this later).
The final step of your bankruptcy process will be to get your discharge from your debts. This means that you will not have to рау them (with certain exceptions).
Declaring personal bankruptcy in Ontario Canada: Know the basic rules BEFORE filing for bankruptcy
Gеnеrаllу, going through bankruptcy helps реорlе with debts get a fresh start. Hоwеvеr, many реорlе have false ideas about how it can help them. Bеfоrе deciding you need to fіlе for bаnkruрtсу, you should know some of the bаѕіс rules. That way you will know what bankruptcy can and cannot do for you.
Declaring personal bankruptcy in Ontario Canada: What bаnkruрtсу may do for you, dереndіng on your sіtuаtіоn
Dіѕсhаrgе уоur unѕесurеd debts; depending on your assets and income, you may not рау or lose anything. If you do, you will рrоbаblу рау less than you owe.
Give you a short-term “аutоmаtіс stay” аgаіnѕt уоur сrеdіtоrѕ.
As opposed to bankruptcy, one of the bankruptcy alternatives under the BIA will help you work out a repayment plan that lets you take longer to рау your debt and/or рау less than you owe. If your budget allows for this approach, the (consumer) proposal, allows you to keep property that ѕесurеѕ a debt. Examples of such assets would be your home or car. It can also allow you to keep nоn-еxеmрt аѕѕеtѕ that you would рrоbаblу lоѕе in a bankruptcy filing. This is one bankruptcy alternative.
Declaring personal bankruptcy in Ontario Canada: What bankruptcy does not do for you
Getting a dіѕсhаrgе of уоur debts through the bankruptcy process will not discharge:
Any award of damages by a court in civil proceedings in respect of:
i) bodily harm intentionally inflicted, or sexual assault, or ii) wrongful death resulting therefrom
A debt or liability for alimony or alimentary pension.
Any debt or liability arising under a judicial decision establishing affiliation or in connection with support or maintenance, or under an agreement for maintenance and support of a spouse, former spouse, former common-law partner or child living apart from the bankrupt.
Debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in the Province of Quebec, as a trustee or administrator of the property of others.
Any debt or liability resulting from obtaining property or services by false pretenses or fraudulent misrepresentation, other than a debt or liability that arises from an equity claim.
Liability for the dividend that a creditor would have been entitled to receive on any provable claim not disclosed to the trustee unless the creditor had notice or knowledge of the bankruptcy and failed to take reasonable action to prove his claim.
Any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred:i) before the date on which the bankrupt ceased to be a full or part-time student, as the case may be, under the applicable Act or enactment, or ii) within seven years after the date on which the bankrupt ceased to be a full or part-time student; iii) any debt or obligation in respect of a loan made under the Apprentice Loans Act where the date of bankruptcy of the bankrupt occurred: a. before the date on which the bankrupt ceased, under that Act, to be an eligible apprentice within the meaning of that Act, or b. within seven years after the date on which the bankrupt ceased to be an eligible apprentice; or
Any debt for interest owed with an amount referred to in the above list.
Declaring personal bankruptcy in Ontario Canada: More things bankruptcy does not do for you
The bаnkruрtсу court can refuse to dіѕсhаrgе your debts if it finds that you are abusing the рrосеѕѕ. Thеrеfоrе, you cannot run up debt just before filing for bаnkruрtсу and automatically have it forgiven. The Court will look at what you ѕреnt the money on and can deny you a discharge if it finds that you have abused the ѕуѕtеm. You must be truthful and not try to hide аѕѕеtѕ.
Will not help you with any debts you take on during and after you begin the bаnkruрtсу рrосеѕѕ.
Will not give you a clean slate on уоur credit report (except to show what debts have been dіѕсhаrgеd). Bankruptcy reduces your credit rating to R9. This rating remains on your record for 6 years after your discharge for the first time bankrupt. These ratings are set by the relevant credit bureaus whose rules may vary.
Will not protect some kinds of іnсоmе and рrореrtу you get during the соurѕе of the bankruptcy until you are discharged (such аѕ іnhеrіtаnсе, tax refund, gifts, lottery winnings).
May not dіѕсhаrgе all of уоur debts without some ѕасrіfісеѕ. If you have very few аѕѕеtѕ and little іnсоmе, you may not lоѕе anything. Debtors with more assets and income above the poverty line can lose some of their assets and have to pay surplus income.
Will not allow for your discharge after 9 months if you are required to pay surplus income. A first time bankrupt must pay surplus income for 21 months and a second or more time bankrupt will have to pay surplus income for 36 months. Whether or not a first time bankrupt will be entitled to an automatic and absolute discharge after paying the required surplus income depends on the specifics of your circumstances.
A second or more time bankrupt is not entitled to an automatic absolute discharge and there must first be a Court hearing to decide what form of discharge is most appropriate given your circumstances.
Filing fоr bаnkruрtсу is a big deal
Declaring personal bаnkruрtсу in Ontario Canada is a big deal. It can be a trеmеndоuѕ rеѕоurсе for the honest but unfortunate debtor who needs a new start. However, there are rules, rеѕtrісtіоnѕ and fіnаnсіаl rаmіfісаtіоnѕ to соnѕіdеr before jumping in hеаdfіrѕt.
That is why the Ira Smith Team always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:
The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.
The holiday gift buying season is over. Next month the credit card bills will be arriving. Maybe you overspent on holiday gifts this year. Maybe you had too much debt to start with, and you know this new spending will put you over the top. Perhaps you already have questions about Canadian bankruptcy and insolvency law.
Perhaps you spent wisely but modestly because you were acutely aware of your financial problems. Maybe you never were an uncontrollable spender. Perhaps a specific damaging event outside of your control caused you to wind up deep in the red. So far you have worked hard to overcome the financial challenges, but for the first time you are thinking that you should read up on Canadian bankruptcy and insolvency law.
Either one unfortunate life issue or one foolish monetary choice is all it could take. Despite how you arrived, there is no simple escape, except perhaps winning the lottery or an unexpected inheritance. Bankruptcy is one alternative
If you’ve fallen under just what seems like impossible financial debt and you have no chance to get out of it, bankruptcy is one alternative. It’s not constantly an excellent one– and never ever one to be taken gently. Below is exactly what you should understand prior to making any kind of choices about filing personal bankruptcy. Long-term results Almost 63,372 people declared bankruptcy in 2016, an action that will certainly have an effect on them for a long time to come. They have certainly started learning about the Canada bankruptcy and insolvency law regime.
While declaring bankruptcy relieves debt pressures caused by decisions and/or issues of the past, it could adversely influence your future. The record of your filing for bankruptcy will certainly stay on your record for up to 10 years. Numerous companies run a credit check on job applicants. The record of your bankruptcy will come up. Potential employers have either their own bias or unique interpretation about this. Perhaps the job you are applying for requires you to be bonded. Faced with many qualified applicants, a potential employer may very well choose the person who does not have a bankruptcy on their record. As I have previously written, it can likewise have an influence on insurance coverage costs.
The Canadian bankruptcy and insolvency law system is designed to financially rehabilitate the honest but unfortunate debtor. As a licensed insolvency trustee, I certainly believe in our system. However, it is also my role to point out to anyone considering personal bankruptcy, there are many issues to consider before taking this choice. Evaluating your alternatives For some people bankruptcy many not be the only option. Just how do you recognize its the right one for you? What are the options under Canadian bankruptcy and insolvency law? Prior to making any type of choice about filing for bankruptcy, you should first contact a licensed insolvency trustee (LIT) in your area for a free consultation. The LIT will review with you your current financial situation and ask you various questions. The purpose is for the LIT to gain an understanding of your current financial position and how you got there. Based on this information, the LIT will be able to give you a preliminary opinion about what your realistic options are.
The proposal option used for half of all personal insolvency filings in 2016
I am using brackets around the word “consumer” when talking about the proposal option. A consumer proposal is available to anyone who owes the amount of $250,000 or less, not including the amount you owe on loans registered against your home. If you owe more than this $250,000 threshold, a proposal may still be the most viable option for you. That proposal process just falls under a different section of the Bankruptcy and Insolvency Act (Canada) (BIA). It is not called a consumer proposal, but rather a Division I proposal. The BIA governs Canadian bankruptcy and insolvency law.
As I mentioned above, in 2016, 63,372 Canadians filed personal bankruptcy. However the total number of people who filed an insolvency proceeding in 2016 in Canada was 126,843. So what did the other 63,471 people do? They filed a proposal. So roughly half of the people who filed an insolvency proceeding in Canada in 2016 to solve their debt problems, were able to avoid bankruptcy.
In 2016, 63,471 individuals filed a (consumer) proposal. This bankruptcy alternative is an organized settlement of your financial debts for an amount less than the total you owe. You can take up to 60 months of regular monthly payments to complete your (consumer) proposal. The proposal provisions of Canadian bankruptcy and insolvency law allow those people “in the red” to keep their assets they can afford to continue paying for, including their home. At the same time, they made a monthly payment to the LIT to be distributed to their creditors for their past debts that they could not afford to repay.
Canadian bankruptcy and insolvency law: Beginning the insolvency filing process If you believe that bankruptcy may be for you, your first action is to speak with a LIT. Remember, you are not only looking to them for solutions. The LIT is not only interviewing you. You are also interviewing the LIT to decide if this is someone you feel you can work with.
If you don’t feel comfortable after speaking to that first LIT, there is nothing wrong with you getting a second opinion from a different LIT. Not only is that not anything wrong with that, I urge it. You are going to be working with your LIT for quite some time. Make sure that you believe it will be a comfortable relationship for you. The bottom line is if you got in over your head with money, you do have alternatives. Get an expert viewpoint on just what your options might be under Canadian bankruptcy and insolvency law. If you can’t make your monthly payments, you need professional help; and you need it now. Contact a professional Toronto bankruptcytrustee.
The Ira Smith Team has a cumulative 50+ years of experience helping people who are facing a financial crisis and we deliver the highest quality of professional service. Make an appointment for a free, no obligation appointment today and Starting Over, Starting Now you’ll take your first steps towards financial freedom.
We wish all of our readers and subscribers a healthy, happy and prosperous New Year 2018.
Other than for some last-minute small items, your holiday spending is complete. The credit card bills will arrive next month. You will soon find out if you made any holiday spending mistakes in Canada.
Maybe you overspent and will now have too much debt you won’t be able to repay. Perhaps you spent wisely, but it will put you over the top given your current debt level. Regardless, you now need to know how to help yourself financially from holiday spending mistakes in Canada.
Holiday spending mistakes in Canada: You are not alone being in debt
Are you fighting financial threats daily? Do you wish you could unlock how to help yourself financially? If so, you are not alone. Lots of Canadians have fought the good fight to barely survive. There have been many articles in the media of the dangers of living with way too much debt. Many Canadians are living paycheque to paycheque.
The Bank of Canada has warned Canadians for years now. With the rate of interest having been so reduced, Canadians have taken on much debt. Now interest rates are beginning to rise. You have to know how to help yourself financially, so that you will not only be able to make your minimum payments, but you will also be able to start reducing your debt. Your holiday spending mistakes has now increased the pressure on you. I do not want to see anyone living this way.
Holiday spending mistakes in Canada: Who this information will help
You know you have debt troubles and this information will help if you:
often pay expenses after the date they are due;
on a regular basis write cheques that don’t clear your bank;
use room from one charge card to get a cash advance to pay the minimum due on a different card;
cannot live to a balanced budget based on your current family income;
need to take a second job just to meet normal daily living expenses;
Holiday spending mistakes in Canada: Statistics Canada reporting
Statistics Canada reported that on average, at the end of 2016, Canadian families have a debt-to-income ratio of $1.67 for each dollar of after-tax revenue. At the end of the second quarter of 2017, they report that the ratio has risen to $1.68. Although Canadians’ net worth is also rising, primarily due to rising housing prices. So now housing prices have dropped, yet the debt remains.
Holiday spending mistakes in Canada: Our 12 secrets on how to help yourself financially
If you are living in a debt threatening zone, it is currently the time to act to turn things around. Consider the following 12 secrets to stop your debt from spiralling out of control.
Safeguard Your Health – Make sure that you are taking good care of yourself and your health, both physical and mental. You won’t be any good to yourself or your family if you are ill.
Don’t Talk Yourself Out of What You’re Worth – Don’t put up with the things as they are of your job without seeking out new opportunities. Don’t sell yourself short. Make sure you understand if there are opportunities awaiting you that will pay you more than you are currently earning. Stay current on your marketable skills.
Keep It Simple – Don’t over-complicate things. Don’t get involved with difficult payment plans. Put yourself in a position where if you need an essential item, you can pay for it. Don’t get sucked in by sexy advertisements for things that have long-term payment plans.
Give to Your Future Before Giving to Others – There are many worthwhile causes that clamour for our money. Make sure your own house is in financial order before you give to others. Volunteer your time and not your money. You will find it very rewarding and you will be helping both yourself and others at the same time. Just say no to relatives and friends who ask you for money, until you have no debt yourself.
Make Savings Automatic – Otherwise known as pay yourself first. Set up a special bank account and have the same percentage hived off of your paycheque every payday. Do not touch the funds in that special bank account, until you have enough money to invest in a safe investment. Have this money work for you over and over.
Control Your Impulse Spending – Make sure that you have a monthly budget and follow it. Your budget should account for all your necessary living expenses for you and your family AND allow the percentage you are hiving off each pay period for your investment savings account. If there is anything left over, this balance should be used for debt reduction. Don’t buy on impulse as you will regret it.
Evaluate Your Expenses, and live frugally – We can all get by on less than we think. This ties back into your budget. Make sure that your necessities of life and your regular payday savings are all accounted for. By cutting out expensive daily coffee drinks and other non-essential items, you will be surprised how much you will have leftover for debt reduction.
Invest In Your Future – Upgrade your skillset. Take a course that will make you more marketable. Make room in your budget for this type of expense, as it will generate more income for you for the long-term future.
Keep Your Family Secure – Involve your entire family in the family budget process. Everyone needs to be on the same page and working towards the same goals. Meet regularly to go over your real performance as compared to budget. When everyone knows the plan is working, they will all feel secure and try even harder.
Eliminate And Avoid Debt – Make sure that you are not taking on any new debt. Use budgeting to make sure that you allow a certain amount out of your monthly budget for paying down debt. Even small amounts add up over time. You will see and feel the difference it makes in your life.
Use The Envelope System – Set up a separate envelope for each of your weekly necessities, based on your budget. Only take out enough cash for those amounts and place the right amount of cash in each envelope. Do not use credit cards to pay for the necessities; just use the cash in each envelope. Make the cash in your envelopes last the entire week, then rinse and repeat.
Pay Bills Immediately And Automatically – If you don’t like the envelope system, here is another idea. Pay as much as you can online from your bank account. Set up regular automatic monthly payments so that the bills are paid. You can also use this method for your regular payday savings account. Make sure you budget properly so that you realize what money is coming out of your account in a month automatically so that you don’t overdraw your bank account.
Holiday spending mistakes in Canada: Will you need immediate help from your holiday spending mistakes?
These 12 steps will ensure that you get back on the road to financial health as soon as possible. You can recover from your holiday spending mistakes.
If you find that you have too much holiday or other debt, debt collectors are harassing you and you can’t keep them all happy, then you need to take more action. I say more action because it will be in ADDITION to the above 12 steps. What you will need to do is to immediately speak to a professional trustee.
The Ira Smith Team has a cumulative 50+ years of experience helping people who are facing a financial crisis and we deliver the highest quality of professional service. Make an appointment for a free, no-obligation appointment today and Starting Over, Starting Now you’ll take your first steps towards financial freedom. We can devise a plan so you can come back from your holiday spending mistakes in Canada.
As you can imagine, I have a schedule for creating Brandon’s Blog. I created the above-mentioned blog and related video on the Office of the Superintendent of Bankruptcy (OSB) insolvency records search renewal (IRS) program and posted it for publishing on November 15. After doing so, the OSB published an update on its IRS program. The purpose of this blog is to give you the updated information.
The OSB November 2017 update offers more information about the IRS post it published in August 2017.
Online bankruptcy search: Updating the technology
The OSB has stated that its updated IRS system will consist of modern-day safeguards. The new IRS will secure the private information of people or companies who have either filed or become bankrupt or who have filed a consumer proposal or Division I proposal.
Online bankruptcy search: The legislative need
Under the Bankruptcy and Insolvency Act (BIA), the Superintendent of Bankruptcy is required to keep and make available a public document of all personal and corporate bankruptcies and proposals. The public document, includes the names of the insolvent debtors given statutory stay of proceedings from the commitment to pay their financial debts.
This record consists of vital information needed to administer the bankruptcy system. It is also important for the running of an efficient and well-functioning Canadian marketplace.
Online bankruptcy search: The purpose of the current system
The current Bankruptcy and Insolvency Records Search data source offers Canadians with access to search the public database for specific people or companies that have submitted a (consumer) proposal or bankruptcy, as the case may be. It is also for creditors to see if any party applying for credit are in an insolvency proceeding.
Online bankruptcy search: Uses of the current system
The OSB’s database allows for searches for:
creditors to take necessary activity with respect to specific insolvency filings;
insolvent debtors, either an individual or Directors of a company, to acquire information about their bankruptcy or proposal;
people and companies making informed credit choices on people or organizations applying for loans or trade credit.
Online bankruptcy search: How many times a year is the current system searched?
Each year the current database, (which has a cost of $8 each search for public users), is searched about 800,000 times by individual Canadians, including LITs (for whom there is no charge). Any member of the public who pays the charge could browse the government insolvency records. The present system does not limit access in any other way.
Online bankruptcy search: The proposed new IRS
The OSB will be changing the current system. It is outdated by today’s privacy standards. The OSB will create a new IRS. While still attending to the legislative needs to give access to a public document of bankruptcies, it will substantially make individual information of debtors more secure.
As compared to the old system, the IRS will consist of many steps developed to particularly restrict the disclosure and use of the individual’s details of the debtors who file for an insolvency proceeding.
online bankruptcy search
Online bankruptcy search: New IRS protections
Examples of the brand-new protections which are not available in the current system, to shield disclosure of individual information, are:
Individual information entered will just be confirmed, not offered in a search result.
Searchers will need to recognize the first, last name, as well as date of birth of a debtor. This is required to get verification of an individual in bankruptcy or who has filed a (consumer) proposal.
The new system will no longer supply access to bankrupts’ documents that do not match the search requirements. The new IRS will be search specific, and not providing a complete list of names matching search criteria.
For every right search, a decreased measure of individual information will certainly be returned in the public search results page. Home addresses and complete postal codes will no longer be included in search results.
The public document search retention will be lower. The duration for the storage of details will be 10 years post-discharge.
The new system will consist of innovations designed to decrease the possibility for unexpected uses of the information. For example, machine-based searches.
Online bankruptcy search: Meeting the needs of LITs
The OSB has talked to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) as part of developing the IRS. The OSB has dealt with comments received thus far. The IRS layout will certainly make best use of technology to protect personal information. The new system will fulfill the specific needs of LITs, in meeting their insolvency estate management and legal requirements. It must be kept in mind that the OSB has no plan to remove the $8 charge from the current system before its being retired. The first introduction of the fee was designed exclusively to sustain the OSB’s operating expenses in developing and keeping the existing system. The new IRS will consist of many measures to appropriately reduce disclosure and increase the defense of personal information of debtors. The OSB says that it has no proof that a service charge with the brand-new IRS would better safeguard debtor information against improper use.
Online bankruptcy search: This IRS won’t chase you for money!
As a result, the OSB says it will look at and suggest getting rid of the historic governing arrangement which permitted the charging of a cost to get access to the public record. The OSB states that this will align with Treasury Board Policy. That is why this IRS, is not planning to ever chase you for money!
Online bankruptcy search: What to do if you think you might need an insolvency process
Are you or your company insolvent and in need of restructuring? Are you scared to become another entry in an online bankruptcy search? If so, the worst thing you can do is procrastinate and not take positive steps to remedy your situation. Contact the Ira Smith Trustee & Receiver Team. If we meet with you early on, we can create a restructuring and turnaround strategy designed specifically for you.
