A licensed insolvency trustee is the bankruptcy expert
Richard is unable to pay his bills, unsure what to do Richard knows he has to speak to someone but talking with a bankruptcy expert scares him. On the advice of a close friend, he contacts a Licensed Insolvency Trustee, a professional licensed by the Office of the Superintendent of Bankruptcy Canada.
A bankruptcy expert can do more than just bankruptcies
While Licensed Insolvency Trustees can and do handle bankruptcies, they can also offer information about other possible options. These might include reworking his budget, consolidating his debts, selling his assets, or offering a proposal to his creditors. Whatever option Richard chooses, the trustee will thoroughly explain the process.
I have a lot of questions for the bankruptcy expert
Of course, Richard has many questions, all of which the trustee takes the time to answer as part of the free first consultation. Richard gets all the information he needs from the trustee. The Trustee explains that his options include:
Richard now also understands what he needs to do for rebuilding credit. Knowing the options gives him the confidence he needs to take the steps necessary to get his financial house back in order.
Why use a licensed insolvency trustee instead of a debt consultant as your bankruptcy expert?
Do you have too much debt? Be like Richard and speak to a bankruptcy expert
Are YOU in financial trouble? Not sure where to turn? Regulated by the Office of the Superintendent of Bankruptcy Canada, Ira Smith Trustee & Receiver Inc. is there to help and we are the professionals who can file a consumer proposal or bankruptcy application in your name.
Are you insolvent and looking for solutions? The Ira Smith Team is here to offer alternatives to bankruptcy and bankruptcy. We offer help in Vaughan and throughout the GTA.
Are you a person or company who feels your situation is hopeless? Ira Smith Trustee & Receiver Inc. can prepare and put in place the plan MADE JUST FOR YOU. The plan will free you from the burden of your financial challenges. With our help, you will go on to live a productive, stress-free, financially sound life.
This is one of the most popular questions about bankruptcy we are always asked. The concept of surplus income in bankruptcy doesn’t seem to make much sense. After all, if you are bankrupt, how can you have surplus income? So let’s start at the beginning and clear up all the confusion. That way we can explain the answer to the question “What is surplus income in bankruptcy?”.
The answer
Heading into bankruptcy, your licensed insolvency trustee (LIT) must make an assessment. The more you earn, the more you must contribute. A definition is:
The amount of a debtor’s total income that exceeds what is necessary to maintain a reasonable standard of living. A reasonable standard of living is according to the standards set by the Office of the Superintendent of Bankruptcy. This is also sometimes called the OSB surplus.
The actual Superintendent’s standards are right at the poverty line so don’t get happy when you see words like “reasonable standard of living”. The bankrupt must make payments out of this surplus income to the LIT for distribution among the creditors.
The Office of the Superintendent of Bankruptcy sets limits for what a family can earn. The larger your family, the more you can keep. The thresholds increase each year. The government has established a list of earnings levels for households of different sizes.
If the household’s revenue exceeds the level set by the government then you have surplus income. Payments are made to your LIT. The government’s instructions about surplus income are in the Superintendent’s Directive 11R2.
What can I deduct for surplus income in bankruptcy?
There are some allowable deductions this calculation in bankruptcy:
child support payments
spousal support payments
child care expenses
expenses associated with a medical condition
Court-imposed fines or penalties that are in the process of being paid
expenses permitted by the Income Tax Act (or similar provincial legislation) that are a condition of employment
any other debt where a stay of proceedings has been lifted by the Court and a recourse authorized
interest paid on debts that are not dischargeable in bankruptcy under paragraph 178(1)(g) of the Act
If my salary changes, does my calculation change?
During your bankruptcy, you will have to report your monthly income and expenses to your LIT. The LIT must perform the surplus income calculation every time your income changes while you are in bankruptcy. You must make up any extra amount required if your income rises while you are in bankruptcy.
In a debt settlement restructuring, the amount you and your creditors have agreed upon is the same amount you pay. There is no monthly reporting of your income to your LIT and no recalibration to an increased amount if your income rises. Therefore, in a consumer proposal, surplus income in bankruptcy must be considered. This is to make sure that your consumer proposal is a better alternative than bankruptcy.
What now if I have too much debt?
If you’re considering bankruptcy you need the services of a LIT. ContactIra Smith Trustee & Receiver Inc. We provide the depth of expertise found in a large company, delivered in an informal setting. We ensure you will receive a high quality and cost-effective service.
With a joint 50+ years of experience dealing with diverse issues and complex files, the Ira Smith team delivers the highest quality of professional service. Take the first step to Starting Over, Starting Now.
THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track
There is a large amount of bankruptcy information online. Just go to the website of any Licensed Insolvency Trustee or bankruptcy lawyer. There is information about:
Once you have gotten the online information, to take action, you need to take it offline. It is not possible in Canada to file online yourself.
To file either a consumer proposal to make debt settlement or bankruptcy, you need to select a Licensed Insolvency Trustee. A Licensed Insolvency Trustee administers the insolvency process in Canada.
The 10 Step Program of the Canadian Insolvency System
Meet with a trustee to talk about your personal situation and your options.
Work with the trustee to complete the required forms.
The trustee filing your consumer proposal or bankruptcy and notifying your creditors.
You attend a meeting of creditors if required.
You attend two counselling sessions.
Subject to your provincial exemptions, the trustee sells your assets; you may also have to make surplus income payments to the trustee.
In certain circumstances, you may have to attend an examination by an officer at the OSB.
The trustee prepares a report to the OSB describing your actions during the bankruptcy.
You attend the discharge hearing if required.
Your discharge and then the trustee completes the administration.
This is why to take action in the Canadian insolvency system you have to take it offline
How To Take Action To Achieve Debt Settlement
If you’re in deep financial difficulties and are looking for a way out, there is help for you. You need help from experts in debt – professional trustees.
We are:
regulated by the Canadian government, as are our fees;
licensed and have undergone a background check by the RCMP;
subject to a stringent code of ethics; and
required to maintain our competence by completing ongoing mandatory professional development each year.
Are you an individual or company who feels your situation is hopeless? Ira Smith Trustee & Receiver Inc. can prepare and put in place the plan MADE JUST FOR YOU. The plan will free you from the burden of your financial challenges. With our help, you will go on to live a productive, stress-free, financially sound life.
There are alternatives to bankruptcy. Say the word bankruptcy and people immediately recoil. I don’t know if there is more stigma attached to another word in the English language. In reality bankruptcy is not something to be ashamed of. It should not be avoided at all costs and it’s not a deep dark hole; it can be the light at the end of the tunnel. As with other alternatives to bankruptcy, it is an option. Let’s explore why avoiding bankruptcy can do more harm than good.
Many реорlе аѕѕumе thеrе’ѕ only оnе tуре of bankruptcy. The one that еlіmіnаtеѕ all уоur debts. Thаt’ѕ a BIG rеаѕоn реорlе ѕау things like, “I wоuld never dесlаrе bаnkruрtсу! It just dоеѕn’t seem to be the responsible thing to do. Right?”
What mоѕt реорlе don’t know іѕ that there are TWO tуреѕ of BIA proceedings for іndіvіduаlѕ. One is bankruptcy and the other is an alternative to bankruptcy. The alternative is a (consumer) proposal. The reason you would pick the alternative is to AVOID bankruptcy.
Two tуреѕ of BIA proceedings
Thеѕе two types of BIA proceedings are іntеndеd to асhіеvе very dіffеrеnt goals. Bеfоrе taking асtіоn it is іmроrtаnt to undеrѕtаnd what уоu want to achieve. What you are trying to achieve will determine whісh tуре of BIA proceeding іѕ right fоr you.
Here is a quick ѕummаrу of еасh type of BIA proceeding. We also show how еасh one саn help уоu асhіеvе specific gоаlѕ in your fіnаnсіаl life.
What is bankruptcy?
Bankruptcy is most of the time misunderstood. According to the Office of the Superintendent of Bankruptcy Canada:
“Bankruptcy is a legal process designed to relieve honest but unfortunate debtors of their debts. At the end of the process, the bankrupt is released from the obligation to repay the debts they had when the bankruptcy was filed (with some exceptions)”.
Bankruptcy used to be the mоѕt common type of BIA proceeding fоr consumers. Its lіquіdаtіоn and discharge fеаturеs are dеѕіgnеd to end debts and give уоu a frеѕh ѕtаrt. In the United States it is referred to as “Chapter 7 proceedings”.
(Consumer) Proposal: One of the best alternatives to bankruptcy
The proposal provisions used by companies is “restructuring” or “reorganization”. Individuals with large debts can also use the restructuring provisions. Yet, there was no similar provisions available to small individual debtors in the BIA.
Parliament wished to find a way to provide for people with smaller debts to be able to restructure. A Parliamentary committee consulted with the stakeholders in the Canadian insolvency world. As a result, the consumer proposal legislation came into force in the 1990’s. Now, the consumer proposal provisions are used more than the consumer bankruptcy provisions. Canadians are now able to AVOID bankruptcy while still obtaining the help and counseling of a LIT.
The main use of the (consumer) proposal provisions of the BIA is to:
allow you as a debtor to keep your assets, if you can afford to in your budget;
AVOID bankruptcy, and provide a better alternative to your creditors than a bankruptcy would. You can relieve yourself of your debts, for an amount less than the total face value of all your debts;
If the рауmеnt plan іѕ ѕtruсturеd well, make affordable monthly payments; and
allow for the affordable monthly payments to cut ALL debts.
To meet all your debts in full but уоu can’t afford to ассоmрlіѕh that gоаl, this mау be just the ѕесrеt уоu need to know! In the United States it is called “Chapter 13 proceedings”.
Why avoiding bankruptcy can do more harm than good
There are alternatives to bankruptcy which merit review. But bankruptcy can often be a good thing. A recent report by the Federal Reserve Bank of New York states:
People who filed bankruptcy had access to more new lines of credit. Those who limped along in a poor financial state did not;
this puts to rest the misconception that filing bankruptcy closes the door to new credit;
those who didn’t file bankruptcy are just insolvent;
individuals who go bankrupt get a sharp boost in their credit score after bankruptcy;
the recovery in credit score is much lower for individuals who do not go bankrupt; and
insolvent individuals who do not go bankrupt exhibit more financial stress.
Are you insolvent and looking for solutions? The Ira Smith Team is here to offer alternatives to bankruptcy and bankruptcy. We offer the help in Vaughan and throughout the GTA.
Some are calling it grey divorce. Baby boomers divorcing after many years of marriage. People think they will be married forever but many times, it isn’t meant to be. People have their families, and increasingly, they then find after decades of marriage that they just can’t relate to each other anymore. Ultimately, they have to accept things are as they are not as they wish them to be.
Since 1990 the divorce rate has doubled for couples over age 50 and researchers found after age 40 its often the wife who wants the divorce. People are no longer willing to compromise to live in unhappy circumstances. Longevity is a key factor. We are all living longer, and spending four or more decades with the same person is becoming more difficult.
Nowadays, people in their forties and fifties and sixties feel very youthful and if you’re in a marriage that your needs aren’t being met, we have choices. Financial independence is more prevalent among seniors and baby boomers put an emphasis on individual happiness. Should you live unhappily or as roommates under the same roof?
Itcan be financially complicated
Financial advisors caution that splitting up later can be complicated. Timing is critically important because people that are in their late fifties or early sixties may have planned for retirement to be right around the corner, and the financial ramifications of your marriage ending in your senior years may substantially alter those plans for both spouses.
According to the Investors Group:
80% of those people who divorced at the age of 50 or older say they will delay retirement because they need to work longer than planned
62% say their post-breakup savings and investments will no longer be adequate to fund their retirement
54% of those who divorced at or past the age of 50 found it difficult to make financial decisions surrounding their splitting up
53% had to adjust their retirement plans
47% will have to scale back on their anticipated retirement lifestyle
26% no longer have enough retirement savings
What should you do if your life is financially complicated?
If you are experiencing financial problems, instead of going deeper into debt and just putting your head in the sand like an ostrich, contact us today. Seek the help from a professional trustee, even if you’re not considering bankruptcy at this stage.
This vlog was inspired by our new eBook: PERSONAL BANKRUPTCY CANADA – Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track, which is sold on Amazon.com. The eBook explains the Canadian personal insolvency and bankruptcy system, specifically directed to the person stressed out with too much debt.
The most asked question is about surplus income limits
The question we are always asked is: What are the surplus income limits for 2015 and 2016 if I am in bankruptcy? I don’t have any cash left over from each paycheque, so, how can you say that I have surplus income?
What are the surplus income limits for 2015, 2016 and beyond?
Surplus income is the amount of a debtor’s total income that exceeds what is necessary to maintain a reasonable standard of living according to the standards set by the Office of the Superintendent of Bankruptcy (remember, the actual standard is right at the poverty line so don’t get happy when you see words like “reasonable standard of living”). The bankrupt must make payments out of this surplus income to the Licensed Insolvency Trustee for distribution among the creditors.
It is part of the goals of the Canadian insolvency system that tries to balance the elimination of debt with the rights of creditors to be paid. The surplus income limits for 2015, 2016 and beyond, are set to allow Canadians to maintain what the Superintendent of Bankruptcy calls a reasonable standard of living during the bankruptcy process; the government has set thresholds or limits on net earnings (gross earnings after taxes and deductions) during the bankruptcy process. The Office of the Superintendent of Bankruptcy sets the threshold limits each year and these limits are indexed to inflation.
The threshold is set the same across Canada, regardless of what province or city you live in. So, someone living in the Greater Toronto Area, whose costs for shelter and probably transportation are higher than other parts of the country, will find that the threshold for them is essentially at the poverty line.
An example of how to apply the surplus income limits for 2015 and 2016
Here is an example of how the surplus income amount is calculated. Let’s assume we have a family of 4: a husband, wife and two young children in school. The husband earns (net of income tax) the annual amount of $46,000 and the wife earns (net of income tax) the annual amount of $18,000. To keep it simple, let’s assume that their monthly take-home pay can is their annual amount divided by 12 or a monthly income of $3,833.33 for the husband and $1,500 for the wife. Let’s assume that only the husband has to go bankrupt and not the wife.
The surplus income calculation for 2015 was:
(($3,833.33 + $1,500.00) – $3,831.00) X ($3,833.33/($3,833.33+$1,500)) = $539.90
This means the bankrupt husband will have to pay $539.90 to the Licensed Insolvency Trustee for a period of 21 months if he has never been bankrupt before, or for 36 months, if he has been bankrupt before, according to the Bankruptcy and Insolvency Act (Canada).
The surplus income calculation for 2016 is:
(($3,833.33 + $1,500.00) – $3,882.00) X ($3,833.33/($3,833.33+$1,500)) = $521.57
This means the bankrupt husband will have to pay $521.57 to the Licensed Insolvency Trustee for a period of 21 months if he has never been bankrupt before, or for 36 months, if he has been bankrupt before, according to the Bankruptcy and Insolvency Act (Canada) (BIA).
You cannot deduct your normal monthly living expenses against the monthly income in order to calculate the surplus income limits for 2015 or any other year. However, if the bankrupt has any of the following types of expenses, they can be deducted from income in calculating the surplus income amount.
Child Support
Spousal Support
Child Care Expense
Expenses associated with medical condition
Court imposed fines or penalties that are in process of being paid
Expenses permitted by Income Tax Act that are a condition of employment
Any other debt where the stay of proceeding has been lifted
The surplus income limits for 2015 and 2016, or put another way, the amount the Superintendent of Bankruptcy believes a family, where there is one bankrupt person in a family of four, should have a take-home monthly income of $3,882 or annual family take home pay of $46,584, before the bankrupt person has to start contributing 50% of his or her income for the benefit of the bankrupt’s creditors. That is why we say the Federal government’s idea of a “reasonable standard of living” is really at the poverty line.
If we get to see you early enough, at the first sign of trouble, you can utilize and implement one of the bankruptcy alternatives, to free you from the burden of your company’s financial challenges to go on to be a productive, profitable employer allowing management to focus on business growth and not be plagued by debt problems. Come in for a no obligation, no fee consultation and let us help you get back on track to living a debt free life Starting Over, Starting Now. Give us a call today.
I will give you a money back guarantee that I can teach you the difference between consumer proposal and bankruptcy
We’re so pleased to offer you Ira Smith’s new eBook,” PERSONAL BANKRUPTCY CANADA: Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track”. The world of finance can be very confusing and in particular the insolvency system. The information out there about the Canadian insolvency system, including the topic of the difference between consumer proposal and bankruptcy, seems to be written for industry insiders in industry jargon. Where is the average person experiencing serious financial difficulty going to find the information they need in a language they understand?
What is the bottom line difference between a consumer proposal and bankruptcy and which one is better?
So how soon can your eBook teach me?
Right now, if you want. If you’ve been looking for answers to these questions and others like it, click here for your free copy of the eBook. We encourage you to read the eBook before you sit down with a professional trustee and discuss your issues. That way, you will go to your initial consultation already understanding the insolvency system and the difference between consumer proposal and bankruptcy. That way, you can spend the time with the licensed insolvency trustee talking about solutions to your specific situation and not wasting the time with an introduction to the Canadian insolvency system. That is what our eBook is all about.
There are two ways to get your copy of the new eBook, but only one has a money back guarantee.
No money back guarantee – Purchase the eBook on Amazon.com, but it is against Amazon’s rules to provide you with the money back guarantee. If you wish to purchase it that way, click here:
FULL MONEY BACK GUARANTEE
As a special gift and a reward for reading this blog to the very end, if you click on the picture of the book cover below, you will have the opportunity to obtain the eBook TOTALLY FREE! The book will teach you the difference between consumer proposal and bankruptcy. If you don’t learn anything from our eBook, PERSONAL BANKRUPTCY CANADA: Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track, we will give you back 100% of what you spent!
I don’t mean to be cheeky – but I know this eBook will teach you about the Canadian insolvency and bankruptcy system. Thank you for reading our blog and please obtain your free copy below.
A debt settlement company is not debt counseling Toronto
Many реорlе thіnk trying a debt settlement company is all about debt counseling. Many people certainly will choose this bеfоrе they іnvеѕtіgаtе bаnkruрtсу. I’m hеrе to tell you that many of thеѕе companies are not асtіng in уоur best interest.
Many are paid—and in ѕоmе cases mаnаgеd—bу сrеdіt саrd companies.
According to a аrtісlе by fіnаnсіаl guru Dаvе Ramsey:
“Some of the thеѕе ‘counseling’ соmраnіеѕ wіthhоld credit саrd рауmеntѕ untіl the account іѕ thrее to ѕіx mоnthѕ past duе. Then, thеу соntасt the lender and nеgоtіаtе to ѕеttlе the bad debt….That’s hоw thеу get nеgоtіаtеd dіѕсоuntѕ on сrеdіt саrd debt. Card companies don’t ѕеttlе on your debts when уоur рауmеntѕ are on time. These ѕеrvісеѕ are аlwауѕ a bad іdеа, and ѕоmеtіmеѕ thеу’rе a complete ѕсаm.”
Dаvе Rаmѕеу isn’t the only one lееrу of these settlement companies. Gail Vaz-Oxlade writes:
“One of the big drawbacks of ….. debt management company is that they don’t come with any serious advice, so people often fulfill their commitment and then go right back out and rack up their debt again.”
The provincial governments have their own opinion. Most provinces have enacted legislation to try to thwart many of their shady practices. Stay away from debt settlement companies. Don’t be afraid to go to a LIT for a free consultation at the first sign of financial trouble.
Why credit counseling?
If done properly, credit advisory services take a holistic approach. It looks at your specific situation, your family, your personal financial objectives and you a person, not just another money spending machine. It takes all of your needs (as opposed to your desires) into account. It also looks into the future as to where you and your family want to be, in order to provide a clear road map to assist you to achieve your goals.
Does a Licensed Insolvency Trustee perform such services?
If you are experiencing financial problems, do not be afraid to consult with a Licensed Insolvency Trustee. By statute, the Licensed Insolvency Trustee is required to do an assessment of your entire asset and liability situation. If the assessment results in a finding that your best option is to work with a qualified counsellor with ongoing follow up, then you will be referred to an appropriate service and you will stay away from any bankruptcy proceeding.
On the other hand, if the Licensed Insolvency Trustee feels that you won’t be able to settle your debts on your own, but it is still early enough for settling with your creditors as an alternative to bankruptcy, then the Licensed Insolvency Trustee will recommend that you settle your debts (if less than $250,000) through a consumer proposal, or (if your debts are $250,000 or greater) through the other proposal provisions of the Bankruptcy and Insolvency Act (Canada). The earlier you recognize that you have debt problems, the more options there will be available to you to avoid bankruptcy.
The next step
As seen in the video, even people with a good profession and high income can experience a bump in the road. If you’re trapped in high household debt, you need a professional trustee to help you manage the situation before it reaches a critical stage where bankruptcy is your only option.
We have provided debt counseling services to many people. This has led us to help them carry out a successful debt settlement program. It all began with debt counseling. The first step is a realistic household budget. Successful completion of such a program will free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.
We’ve prepared this online video to answer the consumer proposal vs. bankruptcy FAQs that we are normally questioned. This information will hopefully help you understand better exactly what a Consumer Proposal is and how it will also help you clear the money you owe and AVOID individual bankruptcy.
The most asked consumer proposal vs bankruptcy FAQs
Consider some of the advantages of the consumer proposal vs bankruptcy, such as:
You keep all of your assets
Actions against you by creditors, such as wage garnishments are going to be stopped
Unlike informal unsecured debt settlement, the consumer proposal is a forum where all of your creditors must handle your restructuring
You don’t need to declare bankruptcy
Additional reasons are:
The opposed bankruptcy discharge process is not quick. Courts are backed up so your bankruptcy discharge hearing may not happen for many months. So think of 4 months or more being added on to the 21 or 36 months you have already spent in bankruptcy.
The discharge hearing is a Court process. Sometimes, for valid reasons, the Court has to adjourn a hearing. What if it takes another 6 months for your discharge hearing to come back up again? You have now been in bankruptcy perhaps for over 4 years at this stage.
If you could restructure by filing and completing a (consumer) proposal, you are not going to get an absolute discharge from the Court. The Court will most likely give you a conditional discharge. This is a discharge where you have to fulfill a condition being the payment of money to your LIT. The repayment will be in the form of monthly payments over a certain period; perhaps 12 months. You are now in bankruptcy, in this example, for close to 5 years.
In a (consumer) proposal, the maximum time period for making the monthly payments that either the statute or your creditors, be prepared to wait is 60 months. However, there is nothing stopping you from paying it off early if you can. Consider the (consumer) proposal as someone giving you an interest-free loan for up to 60 months, and this loan is just a fraction of the total of your debts, and once you pay off this fraction, all of your debts (other than certain ones such as student loans, child support, and alimony) are all eliminated.
In a (consumer) proposal, the self-reporting you need to do with your LIT is significantly less than in a bankruptcy. In a restructuring, all your LIT really cares about is that you don’t miss a payment.
During your bankruptcy, you will have to report your monthly income and expenses to your Licensed Insolvency Trustee (“LIT“). The LIT is required to perform the surplus income calculation again and if your new income means that your surplus income obligation has increased, then you have to make up the difference by paying more surplus income to your LIT to get your discharge from bankruptcy. In a restructuring, the amount you initially agreed to pay that your creditors accepted, is the same amount you pay. There is no monthly reporting of your income to your LIT and no recalibration to an increased amount if your income rises.
If you win a lottery or receive an inheritance while being an undischarged bankrupt, you have to pay that over to your LIT for the benefit of your creditors. If the amount is more than needed to pay your creditors off in full, with interest, then you receive the difference back. In a (consumer) proposal restructuring, if you receive such an amount, good for you. You get to keep it and if you like, you can use part of it to pay off your (consumer) proposal early.
Excessive debt? Get the help you need now!
We hope you enjoy this video about consumer proposal vs bankruptcy. Click on this link to find out more about Consumer Proposals. You can also have many of the questions about bankruptcy answered by exploring our Bankruptcy FAQs link.
Instead of going deeper into debt and just putting your head inside sand like an ostrich, heed the advice of a licensed insolvency trustee and contact us today. Seek the help from a professional trustee, even if you’re definitely not considering bankruptcy at this stage.
We will evaluate your situation and provide help to arrive at the ideal solution for the problems, whether that solution is a bankruptcy alternative similar to credit counselling, consolidating debts or a customer proposal or individual bankruptcy. With immediate action as well as the right plan the Ira Smith Team can solve the financial problems Starting Over, Starting Now. We’re just a phone call away.
Gambling and Consumer Proposals Ontario: Introduction
Gambling and Consumer Proposals Ontario are treated very differently than in a Bankruptcy in Ontario. One of the most common questions that people in difficult financial situations ask is: what’s the difference between a consumer proposal and bankruptcy?
Personal bankruptcies and consumer proposals are two of the most common solutions available for personal financial issues. While both are designed to help people resolve debt issues and give users the necessary protection from creditors, learning what’s the difference between a consumer proposal and bankruptcy can help people make more informed decisions in the future.
Gambling and Consumer Proposals Ontario: Consumer Proposal debt limitation
With a consumer proposal, it is only possible for you to claim it if your total debt does not exceed $250,000, excluding the debt owing on the mortgage(s) on your home. Additionally, you must be able to repay a part of those debts to apply.
Gambling and Consumer Proposals Ontario: Creditor acceptance
However, your creditors must accept your proposal, as you do not automatically earn it upon signing up for the option. With bankruptcy, however, any person who owes their creditors more than $1,000 in debt is eligible to file without the need for creditor approval.
The ideal candidates for this situation are those who need some type of immediate financial relief and whose income and budget do not allow them to pay off the reduced amount agreed to in a consumer proposal, on a monthly basis, up to a maximum of 60 months.
Gambling and Consumer Proposals Ontario: Fixed consumer proposal monthly payment vs. potential variable surplus income bankruptcy payment
In order to resolve the financial issues, you and your creditors need to agree to a proposed amount with a consumer proposal, hence the name of the program. This is a monthly amount that you need to pay consistently, but it stays the same for as long as the proposal is in effect. With bankruptcy, however, monthly payments may vary based on the amount of money that you make. The more that you regularly earn, the more you need to pay per month.
Gambling and Consumer Proposals Ontario: Surrendering of your assets in a bankruptcy
With a consumer proposal, you do not need to surrender your assets. With bankruptcy, however, with only certain minor exceptions, you will have to surrender your assets to your licensed insolvency trustee. The Trustee sells them and will use the money to pay for the cost of administration. The Trustee might also pay a dividend to your unsecured creditors.
Gambling and Consumer Proposals Ontario: Credit rating
With a consumer proposal, your credit rating will receive an R7. This indicates you have undergone such an agreement. It will remain for up to 3 years after paying off your loans. With bankruptcy, you earn an R9 rating. That is the worst that you can have. It can stay on your report for a period of 7 years.
Gambling and Consumer Proposals Ontario: Debts from an addiction
The Bankruptcy and Insolvency Act and the Superintendent of Bankruptcy, are very concerned about debts that have arisen as a result of addiction. The Licensed Insolvency Trustee must ask questions to decide if any debts have arisen as a result of addiction.
Once so determined, in a bankruptcy, the licensed insolvency trustee must oppose the bankrupt’s discharge. In order to hope to get an absolute discharge from the Court, the bankrupt will have to go into a rehabilitation program. They will need to prove they have completed a recognized program and continue to seek help. The person will also need to show they are no longer spending money on such addiction.
These are all good things for the total rehabilitation of the individual. It differs from the treatment under a consumer proposal. The licensed insolvency trustee will still want to make sure that the individual is seeking help for their addiction. If you complete your consumer proposal payments there will never be a bankruptcy. Your consumer proposal is successfully completed. You also avoid the onerous issues of discharge from bankruptcy. The treatment of gambling and consumer proposals Ontario as compared to bankruptcy is huge for the individual.
Gambling and Consumer Proposals Ontario
Gambling and Consumer Proposals Ontario: Are you suffering from too much debt?
If you are an individual or company who needs to free themselves from the stress and strain of too much debt, and especially if you have been told your situation is hopeless because of an addiction, Ira Smith Trustee & Receiver Inc. can prepare and carry out the plan made just for you, to free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.
