Tag: Consumer Proposal

BIA: 2 PEOPLE’S CHALLENGE SUING A CANADIAN LICENSED INSOLVENCY TRUSTEE

Post author By Brandon Smith
Post date April 24, 2023

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Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA): Introduction

On April 13, 2023, the Supreme Court of Canada (SCC) dismissed the application by the legal counsel of a former bankrupt and his wife for leave to appeal the costs awarded against them in a decision of the Court of Appeal for Ontario. As is the usual case, the SCC did not give any reasons for the dismissal. The Court of Appeal for Ontario’s decision dealt with what is required under section 215 of the Bankruptcy and Insolvency Act (Canada) (BIA) to sue a licensed insolvency trustee.

In this Brandon’s Blog, I provide a comprehensive guide to the Court of Appeal for Ontario decision and everything you need to know about section 215 of the BIA. Using this real court decision as an example, we’ll explore the ins and outs of Section 215 of the BIA to give you a clear understanding of its purpose, how it applies, and the potential consequences of non-compliance.

Overview of BIA Section 215

Section 215 of the BIA requires that permission of the court be obtained to bring an action against the Office of the Superintendent of Bankruptcy Canada, an official receiver, an interim receiver or a licensed insolvency trustee with respect to any report made under, or any action taken, under the BIA.

The purpose of this section is to ensure that the court must first decide if a proposed action has on its surface a legitimate purpose relating to the administration of insolvency matters in Canada and to avoid frivolous actions that have no chance of success.

Regular readers of Brandon’s Blog know that I have been following and writing about the case of the former bankrupt, Mr. Wayne Flight and his wife, Amber Nicole Flight. In my November 2021 blog titled: TRUSTEE IN BANKRUPTCY: CERTAIN ACTIONS AGAINST TRUSTEE CAN BE UNLEASHED WITHOUT FIRST REQUIRING COURT PERMISSION, I detailed a decision of the Ontario court where the motion judge decided that notwithstanding section 215 of the BIA, the Flights did not need to first obtain authorization from the Court in order to initiate their legal proceeding.

Then in July 2022, I wrote that the licensed insolvency trustee (formerly called a bankruptcy trustee) had appealed this lower court decision and gave an overview of the appeal and other related issues in my blog titled: INSOLVENCY TRUSTEE: TURNS OUT CERTAIN ACTIONS AGAINST THE TRUSTEE CANNOT BE UNLEASHED WITHOUT COURT PERMISSION.

As stated above, this Brandon’s Blog will provide a comprehensive guide to the Court of Appeal for Ontario decision and everything you need to know about section 215 of the BIA.

BIA: The Motion Judge’s Decision

The motion judge decided that the Flights did not require the permission of the court, under s. 215 of the BIA, to bring an action against the Trustee, relating to the administration of four bankruptcies of Brian Wayne Flight! The same corporate trustee was the Trustee in each of his bankruptcy proceedings. The lower court judge rendered a decision that negates the applicability of the clause in dispute, deeming the action to be levied against the individual Trustee in a personal capacity, and further alleging omissions as a mitigating factor. She did not assess whether section 215 of the BIA did apply and if it did, should permission to proceed with the action be granted.

Upon due consideration of the arguments presented, the Court of Appeal for Ontario has granted the Trustee in Bankruptcy leave to appeal and has subsequently set aside the order of the motion judge. In rendering its decision, the appellate court has determined that pursuant to section 215 of the BIA, permission to bring the civil action must be obtained and has thus directed the matter back to the bankruptcy court to assess whether such permission should be granted.

It is noteworthy that, despite the Flights’ appeal of this ruling to the SCC, said appeal has been dismissed. Consequently, the matter will now be remanded to the bankruptcy court for further deliberations.

The BIA case background

Mr. Flight filed for bankruptcy on four separate occasions – specifically in the years 2004, 2006, 2011, and 2016. The same corporate trustee was the Trustee in respect of each of these bankruptcies. The same individual licensed insolvency trustee was the individual at the corporate trustee with carriage of Mr. Flight’s bankruptcies.

The total of the proven claims in the first three bankruptcies was $324,800. The total amount distributed to creditors of those bankruptcies was about $3,200. Proven claims in the fourth bankruptcy were $127,870.

In the year 2018, amidst his fourth bankruptcy, Mr. Flight uncovered the fact that substantial amounts had been unlawfully appropriated from his business operations between 2003 and 2018. The perpetrator of this offence was none other than Julie LeBlanc, his former spouse, his bookkeeper, and authorized agent. Ultimately, Mr. Flight determined that the amount of the misappropriations was approximately $206,000.

Mr. Flight successfully retrieved a sum of approximately $30,300 from Ms. LeBlanc, however, it was not submitted to the Trustee. Subsequently, in April 2018, Mr. Flight lodged a complaint with the Office of the Superintendent of Bankruptcy regarding the Trustee’s inability to identify Ms. LeBlanc’s actions. Following the formal complaint, the Trustee was made aware of Ms. LeBlanc’s illicit activities and the funds secured by Mr. Flight.

Disputes then arose between the Trustee and Mr.Flight concerning whether and on what terms he would be discharged from bankruptcy and how the payments from Ms. LeBlanc should be treated. In August 2019, Mr. Flight was granted a conditional discharge on terms that, if complied with, allowed him to receive an absolute discharge after twelve months. The Trustee and Mr. Flight did not agree as to whether those conditions were met.

In September 2019, Mr. Flight and his current spouse, Amber Nicole Flight, commenced an action against the individual licensed trustee, seeking relief (the “Action”). The Action does not name, or refer to, the corporate trustee, but it treats the individual trustee as though he were the Trustee. The central allegation in the Action is that the individual trustee, as the“Licensed Insolvency Trustee” for each of the bankruptcies, ought to have detected Ms. LeBlanc’s misappropriations and, once told about them, ought to have taken steps including suing Ms. LeBlanc.

As Mr. Flight states in his affidavit:

“At the heart of this action is the Trustee’s failure to detect, prevent, and once he became aware of it, to litigate, the theft and fraud committed by my former Accountant, Bookkeeper, and Power of Attorney, JulieLeBlanc”.

Did the undischarged bankrupt have the right to launch the Action under the BIA?

Both the individual trustee and the corporate trustee objected to the Action on the basis that at the time of its commencement, (i) Mr. Flight was an undischarged bankrupt person, and (ii) no permission was obtained under s. 215 of the BIA to bring the Action.

Mr. Flight brought a motion, in his bankruptcy proceeding, seeking directions with respect to whether he had the right to commence the Action as an undischarged bankrupt and, if required, seeking leave to do so under section 215 of the BIA.

In September 2020, and before the motion for directions was heard, Mr. Flight launched but did not proceed with, a motion for an absolute discharge. In October 2020, working with a different insolvency professional, he filed a consumer proposal under the BIA. It was accepted by Mr. Flight’s sole significant creditor in February 2021. The acceptance of the consumer proposal resulted in his bankruptcy being deemed annulled.

Following acceptance of the consumer proposal the motion judge heard the motion for directions with respect to the Action.

The Court of Appeal for Ontario’s analysis

The motion judge, sitting in the bankruptcy court, determined that permission was not required under section 215 of the BIA to commence the Action. She expressly did not determine whether, if permission were required, should it be granted. She did not address whether Mr. Flight’s status as an undischarged bankrupt at the time the Action was started prevented him from bringing it.

The motion judge described the Action as one seeking “a declaration that the defendant engaged in misfeasance, negligence, fraud and breach of fiduciary duty in his personal capacity and that the defendant was unjustly enriched.” She described the claims in the Action as alleging a theft (by Ms. LeBlanc) that caused Mr. Flight’s repeated bankruptcies, and as alleging that the individual trustee was liable since the“defendant trustee ought to have detected this fraud in the administration of the four bankruptcies”.

The motion judge described the Action as claiming damages flowing from the individual trustee’s alleged failure to: “take any meaningful action to address the alleged fraud and its impact on the fourth bankruptcy after its discovery”; “diligently commence an action against the former bookkeeper”; “investigate the fraud”; “adjust the plaintiff’s surplus income”; “recommend a consumer proposal in alternative to bankruptcy”; and “have the plaintiff promptly discharged from his fourth bankruptcy”.

The motion judge gave two reasons for finding that the Action did not require permission under section 215 of the BIA. According to her perspective, seeking recourse against trustees in their individual capacity does not necessitate prior authorization. Furthermore, it is noteworthy that the pursuit of legal recourse pertaining to omissions does not necessitate getting prior authorization.

The Court of Appeal for Ontario’s decision

The Court of Appeal for Ontario found that the motion judge erred in concluding that the capacity in which the Trustee was sued made section 215 of the BIA inapplicable. An action does not fall outside of section 215 of the BIA because it names an individual rather than the corporate trustee as the defendant, where the action alleges that the individual owed the duties of a Trustee and is liable as if he were the Trustee. Nor does an action fall outside of section 215 of the BIA because the claim asserts that it is brought against the Trustee in a personal capacity, where the gist of the claim is wrongdoing in the performance of the Trustee’s role.

The appellate court stated that the motion judge also erred in holding that an action that makes any allegation of an omission falls outside of section 215 of the BIA. Although section 215 does not apply to an action premised on the failure of a Trustee to do an act specifically and expressly mandated by the BIA, that is not the core allegation in the Flight’s claim. Section 215 applies to the Action, which alleges common law wrongdoing in the performance of the Trustee’s role, even if an aspect of that wrongdoing is described as an omission to act.

The Court of Appeal for Ontario granted the Trustee’s leave to appeal, allowed the appeal, and returned the matter to the bankruptcy court to determine whether the Flights should be granted permission to sue the individual trustee. The individual and corporate trustees were entitled to the costs of the appeal, fixed in the amount of $13,000, inclusive of disbursements and applicable taxes. Now that the SCC appeal is dismissed, the lower court will have to decide the real issues as determined by the Court of Appeal for Ontario

BIA: Conclusion

I hope you enjoyed this section 215 BIA Brandon’s Blog.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind. Coming out of the pandemic, we are also now worried about the economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy proceedings. We can get you debt relief now.

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

Tags bankrupt person, Bankruptcy and Insolvency Act, bankruptcy proceedings, BIA, bia section 215, civil action, Consumer Proposal, corporate trustee, current spouse, interim receiver, Ira Smith Trustee, legal counsel, licensed trustee, official receiver, trustee in bankruptcy, trustee in respect, trustee with respect, undischarged bankrupt

Brandon Blog Post

OUR MOST READ BLOGS IN 2022: THE INTRIGUING LIST

Post author By Brandon Smith
Post date January 9, 2023

our most read blogs in 2022

our most read blogs in 2022

Our most read blogs in 2022: Did people still consume blog content in 2022?

It is challenging to accurately ascertain the number of individuals who engaged in blog reading in 2022, as such information is not publicly accessible. However, if the performance of our blog, Brandon’s Blog, is any indication, blog reading should remain a widespread form of online content consumption in 2023 and beyond.

This is because blogs provide an easy way for individuals and businesses to share their opinions, stories, and advice with their audiences. Additionally, blogs can be customized to meet individual needs and preferences, making them accessible and enjoyable to a wide range of readers.

Furthermore, blogs are easy to share, allowing readers to share their favourite content with friends and family. As such, the prevalence of blog reading will likely continue for the foreseeable future. In this Brandon’s Blog, I explain what I think makes for an effective blog post and then discuss our most read blogs in 2022.

The demand for personal blogs and business blogs can vary widely depending on the topic and audience. Some popular blog topics for personal blogs are the ones that impact people’s daily lives including personal finance, parenting, health and wellness, travel, food and cooking, technology, and fashion blogs. Some people may also be interested in specific hobbies or activities, such as gardening, crafting, sports, or fitness blogs.

In general, blogs that are well-written, informative, and engaging tend to be in demand, regardless of the topic. Blogs that can offer valuable insights, useful tips, or new perspectives on a subject can be particularly appealing to readers. Additionally, blogs that are updated regularly with fresh content following a specific content strategy, can be more attractive to readers, as they provide a reason to return to the site on a regular basis.

It is important to bear in mind that there can be fluctuating levels of demand for blogs due to the dynamic nature of individuals’ interests and priorities. A blog that covers a topical issue or a current event may experience a surge of readers, while a blog that looks at a less prominent topic may not be a popular blog.

Consequently, bloggers can benefit from being mindful of the int ests of their readership and having the capacity to adjust their blogging practices accordingly. That is what we try to do with Brandon’s Blog. I would love you to email me at info@irasmithinc.com to let me know how you think I am doing and if there are any topics, in particular, you wish me to cover.

our most read blogs in 2022

There are many strategies I believe that bloggers can use to make their blogs more effective in 2023 and beyond. What I try to do for making sure that this remains a successful blog is:

Create high-quality content with a specific content strategy:

One of the most important strategies for successful blogging is to create content that is informative, engaging, and well-written. This can help to attract and retain a loyal readership.

Use SEO techniques:

Search engine optimization (SEO) can help improve your blog’s visibility in search engine results pages. This can be achieved by using relevant keywords in your blog titles and content and creating meta descriptions and alt tags for images.

Promote the blog:

To ensure your blog reaches its intended audience, it is essential to use marketing tools to promote it through available channels such as social media and email.

Interact with your readers:

Developing a dedicated group of followers is a major part of blogging success. Connect with your audience and motivate them to spread the word about your content.

Frequency:

Keep your readers engaged and coming back for more by providing new content and getting the word out!

Don’t be afraid to mix things up in your blogs:

Trying out different formats and styles like video, audio, or interactive content can be a great way to keep your readers engaged.

Stay up to date with the latest trends:

To remain a leader in the industry, I’m constantly researching the newest trends, court decisions, and top strategies in the world of insolvency. This way I can ensure Brandon’s Blog topics are always up-to-date and appealing to new audiences. All this hard work gives me the confidence that my efforts won’t go to waste!

our most read blogs in 2022

From #10 to #1, here are our top 10 most read blogs in 2022:

10. CREDIT CARD DEBT AFTER DEATH IN CANADA: WHO IS RESPONSIBLE?

This August 2019 blog answers the 8 most asked questions about credit card debt after death in Canada.

9. CANADIAN DEBT RELIEF PROGRAM SCAM REVIEW: MASSIVE HARM CAUSED TO DEBTOR

In this January 2022 Brandon’s Blog, I wrote about the unfortunate privilege we had of consulting on a compelling case of a Toronto man who had opted to utilize a debt relief program offered by a Canadian debt relief firm to tackle his debt problems. Unfortunately, despite taking advantage of this program, the individual in question remains debt-ridden and lost his home, all a result of perfectly following the advice of the debt consultant.

8. 4 PILLARS CLASS ACTION LAWSUIT SETTLEMENT: OUR DEFINITIVE GUIDE TO THE PEARCE V 4 PILLARS LAWSUIT SETTLEMENT

On October 29, 2019, an agreement was reached in the Pearce v 4 Pillars Consulting Group Inc. class action lawsuit, certified by the court in British Columbia. This blog, published in March 2022, provided an overview of the settlement between the two parties. This debt consultant company in question obviously preferred this settlement to resolve the issue rather than going to trial. This is especially in light of the findings of the BC Court up to the point of the settlement as to the infractions by the debt consultant company.

7. HOW LONG DOES PROBATE TAKE IN ONTARIO? 7 QUESTIONS NEWBIE ONTARIO ESTATE TRUSTEES ARE EMBARRASSED TO ASK

In our role as Estate Trustees in our companion business, Smith Estate Trustee Ontario, our team of professionals often encounters queries regarding the duration of probate in Ontario, as well as 6 other commonly asked questions. This May 2021 Brandon’s Blog provides answers to these FAQs.

6. 4 PILLARS LAWSUIT GETS GIGANTIC APPROVAL TO PROCEED FROM COURT OF APPEAL FOR BRITISH COLUMBIA

In this May 2021 blog, I discuss the 4 Pillars lawsuit, explaining why the Court of Appeal for British Columbia has approved it as a class action proceeding, despite the objections of the debt consulting firm.

5. CEBA LOAN BUSINESS CLOSED: THE #1 DRASTIC ULTIMATE CEBA LOAN FORGIVENESS PLAN

Early this year, the Canadian Federation of Independent Business revealed that due to the indefinite prolongment of the pandemic, many Canadian businesses have become apprehensive about their financial stability. Even with emergency government assistance, the future of these businesses remained uncertain.

Despite the CEBA loan program for Canadian businesses in this April 2022 installment of Brandon’s Blog, I examined the implications for entrepreneurs who are unable to repay a CEBA loan and their business was forced to close.

4. CEBA LOAN UPDATE: 3 INTRIGUING CREATIVE WAYS FOR ENTREPRENEURS TO CONQUER CEBA LOAN DEFAULT

This October 2021, Brandon’s Blog provided a comprehensive update on the CEBA loan program and addressed the often-asked question of what constitutes a loan default. Additionally, the blog outlined three innovative strategies for entrepreneurs to deal with any potential loan default.

3. EXECUTOR DUTIES ONTARIO: OUR COMPLETE GUIDE TO MAKE A 1ST TIME EXECUTOR LOOK LIKE A PRO

My Firm through our other business, Smith Estate Trustee Ontario, frequently undertakes the role of Court-appointed Executor/Estate Trustee. Unfortunately, many individuals are inadequately equipped to handle the delicate process of settling the estate of a deceased family member or friend, leading to stress and distress.

This October 2021 Brandon’s Blog provides support to you in your duties as an Estate Trustee in Ontario through a helpful Ontario Executor duties checklist to help you navigate the estate settlement process with confidence and expertise.

2. HOW TO BEAT 407 PLATE DENIAL RULES EACH AND EVERY MONTH FOREVER

The 407 ETR reports that only a small proportion of toll evaders choose to pay up voluntarily. However, they have one surefire way to make sure they recoup what they’re owed; Ontario can deny license plates to those who don’t settle their 407 toll debt. People ought to be aware that this is a serious consequence and should be sure to pay their tolls.

If you’re having difficulty with a 407 plate denial, this March 2021 Brandon’s Blog provides a comprehensive overview of the Canadian insolvency process and how it can help you handle this issue if the 407 is one of your creditors.

1. WHAT HAPPENS TO MORTGAGE WHEN YOU DIE CANADA: AMAZING DEBT PHILOSOPHY EXPLAINED

This Brandon’s Blog published in October 2019 dives into the implications of what happens to a Canadian’s mortgage when they pass away.

our most read blogs in 2022

Several signs may indicate financial health:

You have a budget and stick to it: Having a budget can help you keep track of your income and expenses and make sure you are saving and spending wisely.
Your emergency fund exists: It’s critical to maintain an emergency fund for any unanticipated costs or situations. A reliable guideline is to have enough cash stored away to cover your living expenses for at least three to six months.
You have manageable debt: Having some debt is normal, but it’s important to make sure your debt is manageable and that you are making progress in paying it off.
You save and invest: Building wealth involves saving and investing for the long term. If you can set aside money for the future and invest it wisely, it can be a sign of financial health.
You can meet your financial obligations: Being able to pay your bills on time and meet your financial obligations, such as rent or mortgage payments, is a sign of financial stability.
You have a financial plan: Having a plan for your financial future can help you achieve your financial goals and can be a sign of financial health. This might include setting savings goals, investing for retirement, or planning for a major purchase.

I hope you enjoyed our most read blogs in 2022 Brandon’s Blog.

There are many financial blogs. Ours focuses mainly on issues of importance to those experiencing debt problems. Income and cash flow shortages are critical issues facing Canadians, be they employees, entrepreneurs or companies and businesses. Are you now worried about just how you or your business are going to survive? Those concerns are obviously on your mind. Coming out of the pandemic, we are now worried about its economic effects of inflation and a potential recession.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Tags Bankruptcy, blog posts, blog topic, Consumer Proposal, content strategy, daily lives, Fashion blogs, fitness blog, Ira Smith Trustee, marketing tools, our most read blogs, our most read blogs in 2022, Personal blogs, popular blog, social media, successful blog, wide range

Brandon Blog Post

GAMBLING HELP ONTARIO: BEATING THE ODDS AND CONQUERING GAMBLING ADDICTION AND DEBT

Post author By Brandon Smith
Post date January 2, 2023

gambling help ontario

gambling help ontario

Gambling help Ontario: What is gambling?

Gambling is the act of betting or wagering on the outcome of an event or a game with the intention of winning money or other material goods. It can take many forms, including playing games of chance like slot machines or cards, betting on sports events or horse races, or participating in games of skill like poker or blackjack.

Gambling can be done in person, such as in a casino or at a horse racing racetrack, or online. It is important to note that gambling can be addictive and can have negative consequences if it is not done responsibly. With the proliferation of online gambling opportunities in Canada, in this Brandon’s Blog, I discuss the issue of gambling, gambling addiction, gambling debt, and gambling help Ontario. I am talking about impulsive behaviour leading to addiction, not about the social gambler.

Gambling help Ontario: What is gambling addiction?

Gambling disorder is a type of impulse control disorder, commonly referred to as pathological or compulsive gambling behaviour, which is characterized by a persistent and recurrent inability to resist the urge to gamble, despite the potential for serious negative consequences. Individuals suffering from gambling addiction may continue to gamble despite the consequences.

Gambling can be a real problem, resulting in financial issues, relationship stress, and lower work performance. It can also lead to mental health concerns like anxiety and depression. If you think you, or someone you know, might be dealing with a gambling addiction, it’s important to get gambling help Ontario.

gambling help ontario

Gambling help Ontario: What are some of the usual factors behind a gambling problem?

Pathological gambling, commonly referred to as gambling addiction, is a form of impulse control disorder. Those affected by this disorder experience gambling habits which are an intense compulsion to gamble, even when they are aware of the potential adverse effects it can have on their lives.

Potential contributors to the emergence of a gambling dependency may include, but are not limited to:

Biological factors: Some research suggests that gambling addiction may have a genetic component and that certain brain chemicals may be involved in the development of the disorder.
Psychological factors: People with certain personality traits, such as impulsivity and a need for novelty and excitement, may be more prone to developing a gambling addiction.
Environmental factors: People who are exposed to gambling at an early age or who have access to gambling opportunities may be more likely to develop a gambling addiction.
Social factors: Gambling addiction may be more common in people who have a social network that supports or encourages gambling, or in people who are isolated and may use gambling as a way to cope with stress or negative emotions.
Cultural factors: Gambling is more accepted in some cultures than in others, and people who live in cultures where gambling is more prevalent may be more likely to develop a gambling addiction.

It’s important to note that gambling addiction can affect anyone, regardless of age, gender, or background. If you or someone you know is struggling with gambling addiction, it’s important to seek help as soon as possible.

Gambling help Ontario: What is the prevalence of gambling addiction among individuals?

Accurately estimating the prevalence of gambling addiction in Canada is challenging due to underreporting of the disorder. Nevertheless, studies suggest that gambling addiction is a major public health issue in this country.

The Canadian Centre on Substance Use and Addiction (CCSA) estimates that approximately 2% of Canadian adults are affected by problem gambling, characterized by adverse financial, relational, and mental health outcomes.

With respect to alcohol addiction, the CCSA estimates that approximately 5% of the adult population in Canada meets the criteria for alcohol addiction. This includes approximately 10% of men and 3% of women.

The CCSA also estimates that approximately 5% of the adult population in Canada meets the criteria for drug addiction. This includes approximately 10% of men and 3% of women.

It’s important to note that all addictions, including gambling addiction, can have serious consequences for individuals and their families. If you or someone you know is struggling with addiction, it’s important to seek help as soon as possible. There are many resources available in Canada to help people who are struggling with addiction, including support groups, credit counselling, and rehabilitation programs.

gambling help ontario

Gambling help Ontario: How do I stop gambling?

Gambling addiction can be a difficult disorder to overcome, but it is possible for gambling addicts to overcome their gambling concerns and addictive behaviour, stop gambling and regain control of their life. Here are some steps you can take to stop gambling:

Seek help: One of the most important things you can do to stop gambling is to seek help from a healthcare professional or a support group, particularly a gambling help services group. A therapist or counselor who specializes in treating gambling addiction can help you identify the underlying causes of your gambling and develop strategies to overcome it.
Set goals: Identify specific goals that you want to achieve, such as paying off debt or rebuilding relationships with loved ones. Setting goals can help you stay focused and motivated as you work to overcome your gambling addiction.
Avoid triggers: Identify the situations and circumstances that trigger your desire to gamble, and try to avoid these triggers as much as possible. This may include avoiding places where gambling is available, such as casinos, or avoiding activities that you associate with gambling, such as watching sports or playing card games.
Find healthy coping mechanisms: Gambling may have been a way for you to cope with stress or negative emotions, so it’s important to find healthier ways to manage these feelings. This may include exercising, spending time with friends and family, or practicing relaxation techniques such as deep breathing or meditation.
Get support: Surround yourself with a support network of friends, family, and loved ones who can offer encouragement and support as you work to overcome your gambling addiction. Joining a support group, such as Gamblers Anonymous, can also be a helpful way to connect with others who are facing similar challenges.

Remember, overcoming gambling addiction takes time and effort, and it’s important to be patient with yourself. It may take several attempts before you are able to successfully stop gambling. Don’t get discouraged, and keep seeking help if you need it.

Gambling help Ontario: Strategies for managing debt from gambling

People with gambling problems ultimately will have significant debt, which can be overwhelming and stressful. If you are struggling with gambling addiction and debt, it’s important to take steps to address both issues as soon as possible. Here are some steps you can take to deal with gambling addiction debt:

Acknowledge the problem: The first step in recovering from gambling debt is to admit that you have a problem and take responsibility for it. This can be difficult, but it is an essential step in the recovery process.
Create a budget: To manage your debt payments, you need to have a clear understanding of your financial situation. Create a budget that takes into account your income, expenses, and debts.
Make a plan to pay off your debts: Once you have started to address your gambling addiction, it’s important to make a plan to pay off your debts. This may include negotiating with creditors, consolidating your debts, or seeking assistance from a debt management organization.
Cut expenses: Look for ways to cut your expenses so that you can free up more money to put towards your gambling debt. This might involve cutting back on non-essential expenses, such as dining out or entertainment.
Look for additional income: If you are unable to cover your debts with your current income, consider looking for additional sources of income, such as taking on a part-time job or selling assets.
Negotiate with creditors: If you are unable to make your minimum payments, consider negotiating with your creditors to see if they will accept a lower payment or extend the repayment period.Retain a lawyer: If negotiations with creditors fail or if you are facing legal action, it may be beneficial to consult a legal professional for assistance.
Speak to a licensed insolvency trustee (formerly called a licensed bankruptcy trustee): If you feel that you are in over your head in debt and there is no way out of it, get a no-cost consultation with a licensed insolvency trustee who can review your situation and make recommendations.
Avoid temptation: To avoid falling into gambling debt again, it is important to avoid situations that may trigger your gambling addiction. This might mean avoiding casinos or online gambling sites or finding alternative ways to cope with stress or boredom.
Seek support: Recovery from gambling debt is a long and difficult process. It is important to seek support from friends, family, and professional resources to help you stay on track and achieve your financial goals.
Using a financial professional such as a non-profit credit counselor or a debt coach: They can determine if they can make a plan for you that will see you pay off your debts in a reasonable period of time. If not, they will recommend you seek advice from a licensed insolvency trustee.
Deny access to financial resources and credit: In order to impede any additional gambling activities and debt accumulation, it may be wise to restrict your access to money and credit. This could involve canceling credit cards and lines of credit, closing bank accounts, or entrusting a reliable relative or friend to manage your funds.
gambling help ontario

Gambling help Ontario: Is it possible to have gambling debts eliminated in bankruptcy proceedings?

In Canada, it is possible to have gambling debts eliminated in bankruptcy proceedings under certain circumstances.

Under the Bankruptcy and Insolvency Act (Canada), gambling debts may be discharged (eliminated) in bankruptcy if they meet certain criteria. For example, you must not have obtained the money to gamble with through fraud, embezzlement, or larceny.

It is advisable to seek the counsel of a licensed insolvency trustee if you are thinking of filing for bankruptcy with regard to financial obligations resulting from gambling. Doing so will allow you to gain an understanding of the available options and specific regulations applicable to your circumstance so that you can make an informed decision on whether bankruptcy is the best course to take.

Bankruptcy should not be the first option for dealing with a gambling addiction; it should be the last resort. Therefore, it is necessary to explore other options first. However, if any insolvency process is pursued, one must also be committed to tackling the addiction head-on in order to achieve a full recovery. Ignoring the root of the problem and simply filing for bankruptcy will not benefit anyone in the long run.

Gambling help Ontario: If bankruptcy is the last resort, what is first?

The answer is a consumer proposal. A licensed insolvency trustee can offer both a consumer proposal and bankruptcy as two options that are available to individuals who are struggling with debt and are unable to pay their bills. Both options can help you manage your debts and get a fresh start financially, but they work in different ways and have different consequences.

A consumer proposal is a formally proposed payment plan to creditors. Administered by an insolvency trustee, the proposal is intended to have the person make an affordable monthly payment for no more than 60 months to settle all of the debt. It must be approved by creditors.

There are some key differences between a consumer proposal and bankruptcy in Canada. To be eligible for a consumer proposal or bankruptcy, an individual must be insolvent. To qualify for a consumer proposal, you cannot owe more than $250,000 (excluding mortgage debt) and need to have a reliable regular income source.

Feel free to reach out to me to find out more about a consumer proposal for debt relief.

gambling help ontario

I hope that you found this gambling help Ontario Brandon Blog helpful. Other types of addiction can also result in debts.

If you or your business are facing serious debt issues, and you are unsure if bankruptcy is the best solution, call me for advice on ways to tackle your debt, whether it stems from gambling or other sources.

It is not your fault that you remain in this way. It has been demonstrated that traditional methods of addressing financial difficulties are inadequate. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties with debt relief options as alternatives to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will thoroughly evaluate your circumstances and devise a tailor-made solution to address both your financial and emotional concerns. Let us lighten your load and dispel any lingering concerns. We will design a debt settlement strategy for you. We know that we can help you now.

We recognize that individuals and companies facing monetary difficulties require an optimistic opportunity for hope. The Ira Smith Team offers a wide array of solutions to fit any situation – never settle for a one-size-fits-all approach!. Not everyone has to file for bankruptcy in Canada. Most of our clients never give up and explore the alternatives to bankruptcy, thus taking control of their financial future! Our mission is to empower people and businesses to steer clear of bankruptcy and achieve financial success.

You can create a unique payment plan to conquer debt and achieve financial success! It will be as unique and extraordinary as the challenges and struggles you are facing. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost bankruptcy consultation.

Brandon Blog Post

HOW TO FILE BANKRUPTCY ONLINE: OUR KNOCKOUT STEP-BY-STEP GUIDE

Post author By Brandon Smith
Post date August 29, 2022

file bankruptcy online

File bankruptcy online: You can file bankruptcy online in Canada!

Can I file bankruptcy online in Canada? This is a question we’ve been getting a lot lately. And the answer is yes, you can file bankruptcy online in Canada; just not by yourself.

The only ones the federal government authorizes in Canada to do bankruptcy filings are licensed insolvency trustees. Since March 2020, the process for meeting with a bankruptcy trustee to discuss bankruptcy has changed and can be done online. This may be helpful if you’re considering bankruptcy for your individual situation.

In this Brandon’s Blog, I explain how, with the help of a licensed insolvency trustee, you can meet all the legal requirements and file bankruptcy online for the Canadian bankruptcy process.

Why you can file bankruptcy online in Canada

There’s virtually nothing you can’t do online these days. The lockdowns increased our reliance on online shopping for things like groceries, clothes, office supplies, and even toilet paper.

The internet also includes a wealth of knowledge on any subject you can think of, including financial topics. I find that anyone contacting me who is struggling with their, or their company’s financial problems, has already looked into the various options available to them in dealing with debts like income taxes and credit cards.

Although people may not be familiar from their online research with all the ins and outs of insolvency and bankruptcy, this is to be expected. However, callers are generally well-informed about different options for dealing with secured creditors and unsecured creditors.

Nowadays, people expect to be able to do everything online – including filing for bankruptcy in Canada. Those who think bankruptcy might be a solution for them, are curious to understand if they can declare bankruptcy online. Thanks to the COVID-19 pandemic, online everything is a way of life.

file bankruptcy online

Why you should file bankruptcy online

The Canadian government oversees the administration of the insolvency process in Canada through the Office of the Superintendent of Bankruptcy Canada (OSB). The OSB is part of Innovation, Science and Economic Development Canada (Industry Canada). They ensure that consumer proposals, corporate financial restructuring and bankruptcies are handled in accordance with federal law. This process protects the rights of both debtors and creditors and helps to ensure a fair and orderly resolution to financial difficulties.

The OSB is responsible for administering Canadian bankruptcy law under the Bankruptcy and Insolvency Act (BIA), as well as certain duties under the Companies’ Creditors Arrangement Act (CCAA). They license and regulate the insolvency profession, ensure an efficient and effective regulatory framework, and supervise stakeholders. The OSB is independent of the Government of Canada in carrying out its regulatory, administrative, and supervisory duties.

As a result of the outbreak of COVID-19, the OSB issued guidance to Trustees on how certain aspects of the Canadian bankruptcy and insolvency process have changed. This document, entitled Temporary Guidance for LITS During the COVID-19 Pandemic, provides direction on how to navigate these changes.

As concerns about COVID-19 grew in Canada, licensed insolvency trustees took action to reduce in-person meetings. The OSB supported the Trustee community in these initiatives while maintaining the stability of Canada’s insolvency system.

Many of the same temporary measures remain in place today. Most clients find it more convenient and less stressful to continue filing for bankruptcy online. So how do we file bankruptcy online in Canada?

Assessing your financial situation and considering bankruptcy alternatives

No matter what form of insolvency process we are discussing to deal with a specific debt situation calling for either financial restructuring with a debt settlement payment plan through a consumer proposal or Division I Proposal, or personal bankruptcy, the process always starts in the same way. It’s not important what type of bankruptcy or insolvency process we’re talking about if we are dealing with a limited liability company or with someone considering bankruptcy for individuals.

When it comes to corporate insolvency, it’s important to have a clear understanding of the company’s current financial position and what its chances are for a successful financial restructuring. In consumer insolvency cases, the first step is to assess the debtor’s individual situation.

When a person contacts me to discuss their personal financial situation, we would have our initial chat. If the person wished to explore their available options in more detail, I would need to collect additional information from them to enable a proper assessment. Before we discuss which actual filing may be appropriate, it is important for me to know things like their assets and liabilities, their monthly income, and their household size.

If they would like me to continue our no-cost consultation and provide them with a proper assessment, I email them our standard intake form called the Debt Relief Worksheet. I ask them to please make sure to fully complete it and include any backup documents that are requested.

The backup documents we typically request are quite standard – a copy of their most recent bank statement, their last filed tax return, and the notice of assessment. Once I have a chance to review everything and ask any follow-up questions, I’ll be able to provide tailored advice based on their unique situation.

The counseling before filing bankruptcy that we give is perhaps even more important than any counselling sessions after filing. So far, we’ve been able to do everything over the telephone and online.

file bankruptcy online

Is filing bankruptcy online an option for getting rid of debt?

Now that I have all the necessary information, I can perform the rest of the initial assessment. There could be several options available for those struggling with debt, and filing for bankruptcy may be an option for some. However, it’s important to understand the process and what it entails before making a decision.

Continuing with the online model, I meet with the person and do the rest of the assessment by phone or video meeting. I explain what I see as the realistic debt relief options for the person, explain why and discuss what is involved with each option and answer any questions they may have.

At the end of the meeting, I provide the person with a list of resources that can help them make their decision. I’m always available to answer any questions they may have throughout the process. Filing for online bankruptcy may very well be an option for getting rid of debt, but it should be the last option.

Something else to remember is that an insolvency proceeding will lower your credit score as it appears on your credit report. Declaring bankruptcy will have a worse effect than a debt management plan through a BIA-approved financial debt restructuring program repayment plan.

What documents do you need in order to file bankruptcy online?

To discuss what documents you need for a bankruptcy application in order to file bankruptcy online in Canada, we will assume that the person chose the bankruptcy option. By now, I have enough financial information to prepare all the necessary bankruptcy documents.

Examples of statutory bankruptcy forms which are part of the bankruptcy paperwork include the:

statement of affairs, indicating both the person’s eligible assets and those exempt from seizure under provincial law with related bankruptcy schedules;
list of creditors that is used for the creditor mailing list to send out the notice to creditors;
person’s statement of monthly income and expenses;
bankruptcy assignment
notice to bankrupt of their bankruptcy duties; and
estate information summary.

We schedule a video meeting with the debtor once all the statutory and financial documents are ready for signing. We can either email the documents or upload them to our secure signing portal and provide the debtor with a private, secure link. We’re happy to use online technology to have our meeting and explain all the documents, witness their signing, and get the signed documents from them.

We take the signed documents and file them in the Industry Canada OSB electronic online filing system. The OSB issues the bankruptcy certificate once the electronic filing is accepted. The day and time of the certificate is the exact moment the person is officially bankrupt.

file bankruptcy online

Duties during bankruptcy include credit counselling sessions

The duties of a bankrupt person are set out in section 158 of the BIA. They include:

to identify all of their property and allow the Trustee or anyone authorized by the Trustee to take possession of all the debtor’s property;
to give the Trustee all books, records, documents and papers related to their property or affairs, including, but not limited to, title papers, insurance policies, and tax records and returns;
providing full disclosure of all assets and liabilities;
helping the trustee when required with assistance from time to time;
if one or more creditor meetings are required, you must attend; and
attending the two mandatory bankruptcy credit counseling sessions run by the Trustee.

We can meet with the bankrupt person over video meetings to provide counselling sessions and help them to fulfil their online bankruptcy duties.

Is it always going to be possible to file bankruptcy online in Canada?

The OSB has extended the option to conduct online service delivery of the Canadian insolvency options available under the BIA. Licensed insolvency trustees can continue to use online methods. It has provided some peace of mind for many people.

The OSB has been consulting with the insolvency community on potential amendments to relevant directives, with the goal of implementing an online alternative to meeting in person. While allowing flexibility, the changes they are contemplating would emphasize that while trying to be flexible, the changes being contemplated would emphasize that debtors will have the choice to either meet in person or online.

It looks like the OSB is warming up to the idea that remote filing through online resources, whether we are talking about BIA-approved debt repayment plans or bankruptcy may very well be here to stay. The OSB is trying to balance the benefit to debtors as well as the bankruptcy process continuing to be for the benefit of creditors. Can it all continue to be accomplished by online resources and technology? So far the average person, be they Canadian debtors or Canadian creditors, seem to want to continue with the choice of having insolvency administration online.

file bankruptcy online

Are you deep in debt? We can help!

I hope you enjoyed this Brandon’s Blog on how to file bankruptcy online. Are you or your company in need of financial restructuring? Are you or your company unable to survive the COVID pandemic and its aftermath? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. We know that we can help you the way we take the load off of your shoulders and devise a debt settlement plan.

We realize that people and businesses in financial difficulty need practical advice and a workable solution in an easy-to-understand financial plan. The Ira Smith Team knows that not everyone has to file for bankruptcy in Canada. Most of our clients never do, as we are familiar with alternatives to bankruptcy. We assist many people in finding the relief they need.

Call or email us. We can tailor a new debt restructuring procedure specifically for you, based on your unique economic situation and needs. If any of this sounds familiar to you and you’re serious about finding a solution, let us know.

Call us now for a no-cost initial consultation.

Brandon Blog Post

UNDISCHARGED BANKRUPTS: WHAT ALARMING RESTRICTIONS ARE PLACED ON CANADIAN UNDISCHARGED BANKRUPTS?

Post author By Brandon Smith
Post date August 1, 2022

undischarged bankrupts

Undischarged bankrupts: Declaring bankruptcy may not make all of your debts disappear

What? I thought the point of filing bankruptcy was to make all of a person’s debts go away.

For many years, people have used debt repayment strategies such as the debt snowball, debt avalanche and debt stacking to pay off their credit card debts and other unsecured liabilities. Each strategy has its own set of pros and cons in attempting to straighten out your financial affairs.

If you’re struggling with too much debt and you feel your financial affairs are in a mess, you can always try financial restructuring. This involves working with a licensed insolvency trustee to reorganize your finances. It is a sensible next step people take when they’re trying to get their debt under control.

Deciding to file for bankruptcy is never very easy, however, it may be the most effective choice for getting a fresh start to straighten out your financial affairs. If a do-it-yourself or restructuring method is not an option for someone after that bankruptcy will certainly be the required action.

Nobody likes to think of the possibility of personal bankruptcy, yet it is essential to understand the procedure. In this Brandon’s Blog post, I’ll discuss the insolvency process, what limitations are placed on individuals that have actually filed for bankruptcy and are still undischarged bankrupts, and also when in bankruptcy is the time financial obligations are gotten rid of.

Undischarged bankrupts: How bankruptcies work in Canada

The Canadian bankruptcy legislation is designed to help insolvent and not viable companies, or insolvent, honest but unfortunate people, obtain relief. Subject to trust claimants’ rights and the rights of secured creditors, the company or person is assigning all of their unencumbered assets to the licensed insolvency trustee.

After going through bankruptcy and being discharged, most of your debts will be gone. There are a few exceptions, but for the most part, you will be relieved of a great financial burden.

undischarged bankrupts

Undischarged bankrupts: Are there any debts not forgiven when I get my discharge from bankruptcy?

It’s crucial to remember that once undischarged bankrupts are released from bankruptcy, they are no longer responsible for the financial obligations they had at the time of bankruptcy. The discharge is a key part of this process, and it helps to give individual bankrupts a fresh start.

A bankruptcy discharge provides relief from most debts, except for:

support payments for a former spouse or your children;
penalties and fines assessed by the court;
any financial debts resulting from fraud or fraudulent breach of trust; and
student loans within the last seven years before your date of bankruptcy while you were a part-time or full-time student.

Additionally, the debts owing to secured creditors holding valid security fall outside of the bankruptcy process. Those secured loans must stay current or else the secured creditor can look to the default provisions of its loan in order to preserve their rights to collect.

Problems for undischarged bankrupts – What are the consequences of a bankrupt not being discharged?

The implications of not being discharged from bankruptcy are significant for undischarged bankrupts.

Being unable to obtain credit

If you are bankrupt (i.e., not discharged from bankruptcy), you may only borrow $1,000 or less without informing the lender (e.g., credit card company) that you are an undischarged bankrupt. If you fail to do this, it is an offence under the Bankruptcy and Insolvency Act Canada (BIA) and you could be fined and/or imprisoned.

Being unable to work in certain jobs or professions

Undischarged bankrupts in Canada, will not be able to work in certain jobs or professions. Examples are:

If possible employment requires you to pass a security clearance, you may not be able to pass it. If you cannot pass, then you will not be hired.
As someone who is not yet discharged from bankruptcy, you are not able to serve as a Director of a company.
You cannot operate a trust account so that is a problem for certain professions such as real estate brokerage or lawyer.
If you’re bankrupt and haven’t been discharged, you won’t be able to get bonded. So any jobs that require that are out of the question.

How long the information lasts on your credit report

The six to seven years AFTER your bankruptcy discharge that your bankruptcy information stays on your credit file is like a stain that just won’t come out. For undischarged bankrupts, the clock hasn’t even started ticking yet. Your credit score is negatively affected for anyone who goes bankrupt, especially for undischarged bankrupts.

Being subject to certain restrictions in relation to their property and finances

While you are an undischarged bankrupt, your property and finances are in play.

While you are an undischarged bankrupt, your property and finances are up for grabs! You cannot have any assets other than those allowed for by the exemptions allowed in the province where you live. So if you acquire any before your discharge from bankruptcy, they belong to your licensed insolvency trustee!

The most often cited examples are things that are out of your control, such as a windfall, like winning the lottery or getting an inheritance.

An undischarged bankrupt may be subject to having to make surplus income payments to their licensed insolvency trustee. The Office of the Superintendent of Bankruptcy Canada sets a minimum threshold in bankruptcy proceedings based on the person’s family income and the number of people in the household. That minimum threshold is essentially the Canadian poverty line. Any monthly income earned by an undischarged bankrupt above that minimum threshold set is subject to surplus income payments.

Essentially, one-half of the person’s monthly income, net of income tax, above the minimum, must be paid over. A licensed insolvency trustee administering the personal bankruptcy must recalculate the person’s obligation to pay, up or down, as the person’s income changes. The longer you remain an undischarged bankrupt, the longer your ability to keep all that you earn is restricted.

undischarged bankrupts

What is the meaning of undischarged bankrupts?

As soon as you declare personal bankruptcy, the individual bankrupt’s status is that of an undischarged bankrupt. People that have actually not yet gotten their discharge from personal bankruptcy are called undischarged bankrupts.

How does an individual bankrupt person get their discharge? By completing all of the required duties, including making full disclosure of all assets and liabilities to the licensed insolvency trustee and delivering non-exempt assets to the Trustee. You are expected to attend the two mandatory counselling sessions and any other meetings that may be called.

You are entitled to an automatic discharge after 9 months if you are a first-time bankrupt and do not need to pay surplus income. This assumes that you have met all of your obligations as an undischarged bankrupt, fully cooperated with the licensed insolvency trustee and that no creditor is opposing your discharge.

If you are a first-time bankrupt and subject to surplus income, you must pay it for 21 months before you are entitled to a discharge. Longer timelines apply if you are a second or more time bankrupt.

Suppose the Trustee has evidence that the bankrupt has not been forthcoming and cooperative, or has committed one or more bankruptcy offences. In that case, the Trustee needs to oppose the bankrupt’s application for discharge. Such undischarged bankrupts are not entitled to an automatic discharge. Unsecured creditors who have filed a proof of claim in the person’s bankruptcy on account of their unsecured liabilities may also object.

If your income tax debt is equal to or more than $200,000 and 75% or more of your total debt, you are not entitled to an automatic discharge either. If you have been bankrupt before, the Office of the Superintendent of Bankruptcy Canada may object. This would happen if they believe the person is abusing the Canadian bankruptcy system.

If you’re a secured creditor, you’re usually not affected by bankruptcy. That’s because bankruptcy is designed to help unsecured creditors with unsecured liabilities, not creditors who have a security interest in some or all of the bankrupt debtor’s assets. Secured creditors have the right to enforce their security, take possession of the asset(s) covered under the security, sell the asset(s) and get paid back all or a portion of their secured debt. Secured creditors who are not repaid in full after the sale of the secured asset(s), can file a claim in the person’s bankruptcy as an unsecured creditor for the unpaid unsecured liabilities.

Undischarged Bankrupts in Canada – Your Options

The Trustee is only responsible for filing an undischarged bankrupt’s application for discharge once in the bankruptcy proceedings. The system requires that the Trustee make the first application on their behalf. It is ultimately the responsibility of the bankrupt person to ensure that their application is filed.

If either the Trustee or one or more unsecured creditors oppose your application for discharge, the matter will need to go to a hearing in bankruptcy court. This will essentially put a hold on the bankruptcy proceedings until the court hearing.

Undischarged bankrupts are never sure what to do next. This is understandable, so, here are a few options to consider:

1. Contact your Trustee – They’ll be able to help you understand your options and what’s best for your situation. You’ll need to speak to your licensed insolvency trustee to find out why they’re opposing your discharge. It might be something as simple as not having had your second counselling session yet, or forgetting to give the Trustee some information or a document.

If the Trustee or creditor opposes your discharge for any reason, it may be more difficult to remedy the situation, but the best place to start is by talking to the Trustee and getting a copy of any notice of opposition filed.

This way, undischarged bankrupts can understand the issues preventing them from getting an automatic discharge from bankruptcy.

2. Get in touch with a bankruptcy lawyer – They can give you more specific advice about your options and what might be the best course of action for you. Undischarged bankruptcy may need to retain a bankruptcy lawyer for advice and representation in court.

3. File a consumer proposal – this is another option that might be available to you, depending on your circumstances. A consumer proposal filed by a bankrupt person that makes a sufficient offer to the unsecured creditors that is accepted and fully performed acts to annul the person’s bankruptcy. By doing this, the need for a bankruptcy discharge hearing is eliminated.

undischarged bankrupts

You owe money—The 5 types of bankruptcy discharges available to undischarged bankrupts

Automatic discharge from bankruptcy –

After you file for bankruptcy, you will be automatically discharged nine months later from your bankruptcy proceedings if:

this is the first time you were ever bankrupt;
unless your trustee, creditors, or the Office of the Superintendent of Bankruptcy oppose it;
you have gone to your 2 mandatory counselling sessions;
your income tax debt is less than $200,000 and less than 75% of your total debt; and
you have not been told to pay surplus income to the bankruptcy estate.

If you do have to make payments, and you qualify for an automatic discharge, you will get it after 21 months of payments.

If this is your 2nd bankruptcy, after 24 months of bankruptcy, you may be eligible for an automatic discharge if you don’t have to make payments of surplus income.

If you need to pay surplus income and are bankrupt for the second time, you must pay this money to your Trustee for 36 months. After that, you qualify to be automatically discharged.

If you do not get an automatic discharge, then you are required to attend a bankruptcy court hearing to consider all the evidence to decide what type of discharge you are entitled to. The court has various options available.

Absolute order of discharge –

As part of the bankruptcy proceedings, there are many factors the bankruptcy court will consider when you apply for discharge. Some of these may include:

What was your conduct before and during bankruptcy, as set out in the Trustee’s Section 170 Report?
Did you attend the financial counselling sessions and pay any required surplus income to the Trustee for your creditors as agreed?
How much do you earn annually?
Do you have any assets that are exempt from seizure (such as RRSPs)?
Do you have just one creditor, such as the Canada Revenue Agency or a litigation creditor?

The court will issue an absolute order of discharge if it is satisfied that there are no factors that would disqualify you from receiving your bankruptcy discharge immediately.

Conditional order of discharge –

If the court feels that your discharge should be conditional on you meeting certain conditions to obtain an absolute discharge, the court will order a conditional discharge.

This usually involves paying a certain amount of money over a set period of time. The court may also impose other conditions. Once you’ve met all the conditions, you’ll be given an absolute discharge.

Suspended order of discharge –

A suspended discharge is one that delays the absolute discharge to a later date. It can also be combined with a conditional order of discharge.

Refused discharge –

If the evidence demonstrates that the bankrupt individual is taking advantage of the bankruptcy process, has not worked cooperatively with the licensed insolvency trustee, or their conduct is deemed unacceptable, the court can refuse to grant a discharge.

In this instance, undischarged bankrupts must take measures to improve the situation before being able to apply again to court to hear the bankrupt’s application for discharge.

Undischarged bankrupts summary

I hope you enjoyed this Brandon’s Blog on undischarged bankrupts. Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

Call us now for a no-cost initial consultation.

Tags absolute discharge, application for discharge, automatic discharge, bankrupt person, bankruptcy proceedings, breach of trust, Consumer Proposal, discharge from bankruptcy, financial affairs, income tax, individual bankrupt, Ira Smith Trustee, secured creditors, surplus income, surplus income payments, undischarged bankrupt, undischarged bankrupts, unsecured creditors, unsecured liabilities

Brandon Blog Post

INSOLVENCY TRUSTEE: TURNS OUT CERTAIN ACTIONS AGAINST THE TRUSTEE CANNOT BE UNLEASHED WITHOUT COURT PERMISSION

Post author By Brandon Smith
Post date July 18, 2022

What does an insolvency trustee do?

In simple terms, the only professional who can help you with a government-regulated insolvency proceeding that may allow you to be discharged from your debt is an insolvency trustee. This may be the best solution for individuals with significant financial difficulties.

An insolvency trustee is responsible for carrying out the administration of an insolvency file in accordance with the requirements of the Bankruptcy and Insolvency Act (Canada) (BIA). The insolvency trustee is responsible for ensuring that both creditors and the public interest are protected during the debt relief options of bankruptcy, consumer proposal, or Division I proposal process. This includes ensuring that assets are properly managed, sold and the cash distributed and that the bankruptcy or insolvency process is carried out in a fair and orderly manner.

A licensed insolvency trustee is federally regulated

The Office of the Superintendent of Bankruptcy (OSB) licenses and provides ongoing oversight for insolvency trustees, who must adhere to federal standards of practice, including the Code of Ethics for Trustees.

If you have a problem with a licensed insolvency trustee (formerly called a bankruptcy trustee) that you can’t solve, you can file a complaint with the OSB. Your complaint will be reviewed and assessed. You may even want to consider taking legal action against the insolvency trustee if your situation is extreme.

Section 215 of the BIA states:

“Except by leave of the court, no action lies against the Superintendent, an official receiver, an interim receiver or a trustee with respect to any report made under, or any action taken pursuant to, this Act.”

The BIA recognizes that a party may have a legitimate grievance against an insolvency trustee for something that was done or not done during a bankruptcy administration. The BIA tries to balance the need to protect legitimate claims against the Trustee with the need to prevent parties from using the threat of litigation to gain leverage.

insolvency trustee

Who is a person of insolvency?

The above is an introduction to today’s insolvency trustee Brandon’s Blog. In June of last year, I wrote about this bankrupt person in the blog TRUSTEE IN BANKRUPTCY: CERTAIN ACTIONS AGAINST TRUSTEE CAN BE UNLEASHED WITHOUT FIRST REQUIRING COURT PERMISSION. That Brandon Blog dealt with a decision of the Ontario Superior Court of Justice.

The person of this insolvency was a serial bankrupt, filing bankruptcy four times in 12 years: 2004, 2006, 2011, and 2016. Each time he used the same insolvency trustee. He operated a sole proprietorship painting business. So technically, each time he went bankrupt, a new sole proprietorship began.

The plaintiff alleges that the licensed insolvency trustee (LIT) was negligent, committed fraud, breached their fiduciary duty, and was unjustly enriched, starting with the confidential consultation and throughout each personal bankruptcy administration. The bankrupt discovered during his 4th bankruptcy that his former spouse had misappropriated substantial sums from his business between 2003 and 2018. Ultimately, he determined that the amount of the misappropriations was approximately $206,000.

The bankrupt’s fourth bankruptcy was annulled by filing a consumer proposal with a different insolvency trustee that was accepted by his creditors. He and his current spouse then commenced an action not against the corporate licensed insolvency trustee of record who handled all four bankruptcies, but rather against the person, who is a licensed insolvency trustee, who carried out the individual bankruptcy processes.

The bankrupt person and his new spouse are seeking relief against the individual as though he were the Trustee of record. The central allegation is that he, as the “Licensed Insolvency Trustee” providing bankruptcy services for each of the bankruptcies, ought to have detected the misappropriations and, once told about them, he should have sued the former spouse. So they are blaming the Trustee for the bankrupt businesses with debt problems!

The plaintiff went to court to determine whether they needed the court’s permission to proceed with their case under section 215 of the BIA against the bankrupt person’s insolvency trustee. The plaintiff believed they did not need permission, but if they did, they should be granted it. The defendant Trustee argued that permission was needed and should not be granted. The judge ruled that the plaintiff does not need to get permission from the court to start this legal process.

Insolvency trustee appeals lower court decision

On July 13, 2022, the Court of Appeal for Ontario released its decision of the three appellate judge panel on the insolvency trustee‘s appeal of the lower court decision. The OSB obtained intervener status and was represented by legal counsel on the appeal. The OSB supported the insolvency trustee‘s position.

The motion judge, sitting in the bankruptcy court, determined that permission was not required under s. 215 to commence the legal action. However, she expressly did not determine whether, if permission were required, it should be granted. Therefore, she did not address whether the person’s status as an undischarged bankrupt would impact the decision.

The motion judge found that the litigation did not require permission under section 215 for two reasons:

she believed that actions against trustees in their personal capacity do not require permission; and
she found that actions that allege omissions do not require such permission.

Is the appeal as of right, and if not, should leave to appeal be granted?

The Court of Appeal for Ontario first had to decide if the licensed insolvency trustee has an automatic right to appeal the lower court decision and if not, should leave to appeal be granted?

The appellate court stated that it would be willing to grant leave to appeal because the proposed appeal, falls within the proper scope of section 215 of the BIA for 3 reasons:

This case raises an important issue – the circumstances in which an insolvency trustee can be sued without leave of the court – that is of general importance to the practice in bankruptcy/insolvency matters.
The case is prima facie meritorious.
The appeal would not unduly hinder the progress of the person’s bankruptcy proceedings.

The Court of Appeal for Ontario, therefore, gave the Trustee the opportunity to appeal the lower court’s decision.

Insolvency trustees and bankrupts are obliged to work with the court

The lower court found that the action did not require leave under section 215 of the BIA. This is because the judge decided it was against the Trustee in a personal capacity. The Trustee was now appealing this decision. The Trustee argued that section 215 of the BIA applies when a director, officer, or employee of the corporate trustee is sued for the Trustee’s conduct, just as it would if the corporate trustee were sued. The appellate court agreed, relying on a decision from the Supreme Court of British Columbia.

The purpose of BIA section 215 is to ensure that the bankruptcy process is not obstructed by the Trustee being hindered by actual or threatened vexatious lawsuits in connection with the administration of the bankruptcy.

In Canada, most licensed insolvency trustees are corporations. The BIA imposes numerous duties on them. A corporate entity can only discharge its duties through its directors, officers and employees. If the scope of section 215 were limited to protecting only the corporate trustee, then Trustees would be unable to properly carry out their duties.

The Court of Appeal for Ontario in this cased determined that this type of distinction between the corporate trustee and its staff would contravene the clearly expressed will of Parliament as evidenced by the statutory language. To allow such would be to subvert the fundamental purpose of section 215.

The key question in determining whether s. 215 applies is whether the connection contemplated by the section is present. This question is answered by examining the relationship between the alleged wrongdoing complained of in the Action and the role of a trustee. The appellate court looked at the proposed action by the bankrupt person and his current spouse and saw that there was the required connection. Therefore the Court of Appeal for Ontario agreed with the position of the Trustee and the intervener in finding that section 215 does apply in this case.

The other reason the motion judge came to her conclusion was that the action also alleged omissions. The lower court judge determined that a claim for omissions is not covered by section 215. The appellants and the intervener argued that action may fall outside of section 215 only when the crux of the action is the failure to do something expressly and specifically required by the BIA.

The common law claims here arise from alleged failures to act, rather than from failures to do something specifically and expressly required by the BIA. The Court of Appeal believes that section 215 applies to this action, and the motion judge was incorrect in concluding otherwise.

The Court of Appeal for Ontario sent this case back down to the bankruptcy court to decide whether the former bankrupt and his current wife should be allowed to sue the Trustee. insolvency trustee

What you need to know about LITs

Neither myself nor my firm has any kind of involvement in this issue. I have not read any of the pleadings in this action. I wish to be clear with you and let you know, based only on the information available to the public from the court decisions, what I would certainly have done in carrying out the personal bankruptcies if I was the Trustee.

If you’re experiencing financial difficulties and are considering insolvency, the first step is to consult with an insolvency trustee. During this consultation, the Trustee will collect information about your financial affairs and make recommendations about the best course of action for you.

The individual conducting the assessment must inquire about the debtor’s property and financial affairs. They shall prepare a statement of the debtor’s financial affairs, including their assets and liabilities, based on the information obtained from the debtor.

It is also necessary to get a clear and up-to-date monthly income and expenditure statement, which details all income (gross and net), all expenditures (including special needs, alimony, support or maintenance payments, and medical and prescription expenses). The debtor must also be prompted to provide information on all transfers under value they may have made concerning their assets.

There are a few options available to debtors who are struggling financially and looking to improve their financial situation. These debt relief programs include:

non-legislative debt solutions such as debt consolidation or financial counselling sessions performed by credit counselling agencies (insolvency trustees must provide two mandatory credit counselling sessions with the debtor as part of either a proposal or bankruptcy);
consumer proposals under Division II of the BIA;
a proposal under Division I of the BIA for those that do not qualify for a consumer proposal; and
as a last resort, bankruptcy.

What are the duties of an insolvency trustee?

Each debt management plan option has different rights and responsibilities for both the debtor and the creditors. It’s important for the debtor to understand all of the available debt management solutions. I would discuss each one with the debtor and help them choose the one that would be the best for their individual situation. In this particular case, I would want to drill down with the debtor to have him identify the causes of their insolvency. This inevitably would lead to a discussion with this debtor as to why his business seems to be losing so much money every year.

In order to fulfill my duties, I would want to drill down with the debtor to have him identify the causes of their insolvency. This inevitably would lead to a discussion with this debtor as to why his business seems to be losing so much money every year. If the debtor had been able to afford the monthly payments for a consumer proposal to annul his fourth bankruptcy using a different Trustee, could he have avoided filing for bankruptcy a fourth time altogether? I don’t have enough information to know the answer to that question.

I am required to review the bankrupt’s banking transactions for the 12 months prior to the date of bankruptcy as a Trustee. I am looking for any large or unusual transactions, especially large amounts of cash being paid to relatives or friends. This is important in bankruptcy proceedings because the Trustee has a duty to keep creditors updated on any legal proceedings, reviewable transactions, and preference payments. The Trustee needs to consider taking action against anyone to recover funds or, at the very least, opposing the bankrupt’s absolute discharge.

This review is only possible if the bankrupt has accurate records. In this case, if the bankrupt had the records and I reviewed them, I would have either found or not found any unusual transactions. If I did the review, it may have uncovered the alleged fraud.

The former bankrupt claims that the insolvency trustee should have sued the former wife for taking cash out of his business fraudulently. As a Trustee, I must first determine whether there are sufficient funds available to do so. If there are funds available, I must then carefully consider whether pursuing legal action is in the best interests of the estate.

This also assumes that the Trustee’s lawyer has given the opinion that this is a strong case to pursue. The Trustee must be very cautious because if the case is lost, the Trustee will be responsible for the other party’s legal costs awarded by the court. If the bankruptcy estate has insufficient funds, the Trustee will be held personally responsible. This is not a desirable outcome.

If I had found evidence of the alleged fraud and I either did not have sufficient funds to launch a legal action or I did not think it was a wise use of estate funds, there is one more thing I could do and would have done.

I would write to all known creditors and the bankrupt to advise that there is a potential asset in the form of litigation against the bankrupt’s former wife. However, the Trustee does not have sufficient assets to begin the litigation and as a result, I must refuse to pursue this asset. I would also explain section 38 of the BIA. This section allows creditors to obtain court approval to pursue legal action in their own name. If successful, they are able to keep their costs and the full amount of their claim from the recovery. This could be a great option for creditors who wish to fund the legal action.

If the facts that come out align with my explanation of the steps I would have taken, then my prediction is that the former bankrupt and his current wife will not be successful in persuading the court to allow them to continue their action against the Trustee. I will keep watch. insolvency trustee

The insolvency trustee is here to help you with your problem debt

I understand that you’re struggling with debt and I’m here to help. I am an insolvency trustee and I want to help you find a way to shed your debt, eliminate your challenging debt issues, improve your financial future and get all that stress and worry out of your life, Starting Over Starting Now.

I hope you found this insolvency trustee Brandon’s Blog interesting. Among the many problems that can arise from having too much debt, you may also find yourself in a situation where bankruptcy seems like a realistic option.

If you are dealing with substantial debt challenges and are concerned that bankruptcy may be your only option, call me. I can provide you with debt help.

You are not to blame for your current situation. You have only been taught the old ways of dealing with financial issues, which are no longer effective.

We’re passionate about permanently solving your financial problems with you and getting you or your company out of debt. We offer innovative services and alternatives, and we’ll work with you to develop a personalized preparation for becoming debt-free which does not include bankruptcy. We are committed to helping everyone obtain the relief and financial wellbeing they need and are worthy of.

You are under a lot of pressure. We understand how uncomfortable you are. We will assess your entire situation and develop a new, custom approach that is tailored to you and your specific financial and emotional problems. We will take the burden off of your shoulders and clear away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

Call us now for a no-cost initial consultation.

Tags bankruptcy canada, bankruptcy proceedings, bankruptcy trustee, Consumer Proposal, credit counselling, debt consolidation, debt management, debt settlement, initial consultation, insolvency trustee, insolvency trustee canada, Ira Smith Trustee, licensed insolvency trustee, monthly payments, Office of the Superintendent of Bankruptcy, personal bankruptcy

Brandon Blog Post

LICENSED INSOLVENCY TRUSTEE FEES: WHAT UNDENIABLE EVIDENCE IS NEEDED FOR COURT APPROVAL OF INSOLVENCY TRUSTEE FEES?

Post author By Brandon Smith
Post date July 4, 2022

Licensed insolvency trustee fees: How is a licensed insolvency trustee paid?

Are your debts or your company’s debts and financial situation causing you so much stress that you are considering speaking to a licensed insolvency trustee (formerly called a bankruptcy trustee or trustees in bankruptcy), but you are worried about the licensed insolvency trustee fees? Are you concerned about the professional fees to be paid because you think that businesses with debt problems already cannot afford to hire professionals? Your concerns are valid and relevant but you should not let that stop you from your initial inquiry. An insolvency trustee will always provide you with a no-cost initial consultation, discuss realistic options and explain the cost of each option to you.

Licensed insolvency trustee fees are set by bankruptcy laws and rules contained in the Bankruptcy and Insolvency Act (Canada) (BIA). They are reviewed by the Office of the Superintendent of Bankruptcy and must be approved by the bankruptcy court. Fees are either drawn from the funds accumulated in the insolvency file from the sale of assets in the receivership or bankruptcy administration or the monthly payment funding of the restructuring proposal. If there are insufficient assets in the insolvency file, then the insolvency trustee gets its fee from a third-party retainer.

In this Brandon’s Blog, I describe how licensed insolvency trustee fees are calculated. Then, I review a recent Ontario court decision to show what kind of evidence the Trustee needs to provide the court in order for its fees to be approved.

Licensed insolvency trustee fees: Disbursements included in a streamlined personal insolvency process

Licensed insolvency trustees offer a range of services for both individuals and businesses. For individuals, there are two streamlined insolvency processes:

summary administration personal bankruptcy; and
consumer proposals.
licensed insolvency trustee fees

Licensed insolvency trustee fees in a summary administration personal bankruptcy

The summary administration personal bankruptcy process applies when the assets of the bankrupt person to be sold are expected to sell for $15,000 or less. Licensed insolvency trustee fees for a summary administration personal bankruptcy are set by a formula called a tariff.

In a summary administration bankruptcy, the fees that insolvency trustees are entitled to are calculated as follows:

100 percent on the first $975 or less of receipts;
35 percent on the portion of the receipts exceeding $975 but not exceeding $2,000;
50% of receipts exceeding $2,000;
for counselling fees of $75 per session, totalling $150; and
an allowance for administrative disbursements of $100.

The reason the formula refers to receipts (of cash) rather than net proceeds from asset sales is that, in any personal bankruptcy, there are two types of cash receipts: 1. from the sale of assets; and 2. surplus income payments made by the bankrupt person, if any.

Licensed insolvency trustee fees: How much will it cost me to file a consumer proposal?

The calculation of the amount you need to offer your creditors in your consumer proposal has no relation to what the licensed insolvency trustee fees will be. Licensed insolvency trustee fees for a licensed trustee acting as the Administrator in the consumer proposal process is also governed by a tariff. It is calculated as follows:

$750 on the filing of the proposal with the official receiver;
$750 on the approval or deemed approval by the court;
20% of moneys distributed payable on distribution; and

counselling fee of $75 for each counselling session for a total of $150.

In a consumer proposal, administrative disbursements are paid out of the above fee calculation.

In both summary administrations and consumer proposals where the licensed insolvency trustee fees are only the tariff, there is no need for court approval.

licensed insolvency trustee fees

What factors influence licensed insolvency trustee fees in other administrations?

There are no streamlined provisions for any corporate insolvency administration. In addition to administering summary administration bankruptcies and consumer proposals, licensed insolvency trustees also can provide the following services:

business review of a company to identify its solvency and future prospects so that financial advice can be given
ordinary administration personal bankruptcy
commercial bankruptcy
personal Division I restructuring proposal to creditors (for consumers who cannot qualify for a consumer proposal)
corporate Division I restructuring proposal
private corporate receivership
court-appointed corporate receivership
winding-up corporate liquidation, either voluntary or court-supervised
corporate restructuring under the Companies’ Creditors Arrangement Act

In all of the above government-regulated insolvency proceedings/insolvency procedures, there are only two factors that influence the licensed insolvency trustee fees. They are:

Hours spent by the level of staff working.
The professional hourly rate of the staff.

Licensed insolvency trustee fees: How does an insolvency practitioner receive compensation?

In all of the non-streamlined insolvency processes, I just described, how the licensed trustee gets the fees it is charging requires approval. In private appointments, the licensed trustee needs the approval of the client. In a court appointment or administration for bankruptcy services or any other mandate under the BIA, the licensed trustee needs court approval.

What evidence do licensed insolvency trustees need to provide to prove the time that was spent doing the work? The documentation expected of a licensed trustee is the same that is expected from an insolvency lawyer or any other kind of lawyer. What is expected are detailed time dockets, so that everyone can see who spent what time, on what day on what activity.

But what if proper dockets are not kept? Well, that is exactly what the court case I want to describe to you is all about.

licensed insolvency trustee fees

Licensed insolvency trustee fees: How do practitioners of insolvency get compensated – it takes a Final Statement of Receipts and Disbursements

I am writing this Brandon’s Blog to be informative, not to embarrass anyone. So I will not be providing the case reference of the case I am now going to describe. This is actually the second such case in Ontario that I am aware of in the last 12 months.

The case deals with a bankruptcy trustee who submitted its final statement of receipts and disbursements (SRD) to the court for approval. Contained in this final statement is amongst other things, the line item for the fee and disbursements the Trustee is seeking court approval for. The court expects to see a sworn affidavit from someone on the insolvency trustee’s staff who has knowledge of the time spent and the fee charged outlining what was done and why it was necessary. The court also expects to see detailed time dockets.

In this case, and the very similar one that came before it, the insolvency trustee’s material did not include detailed time dockets. Both Trustees applied for taxation of their SRD in an individual debtor’s Division I Proposal. In both cases, the Office of the Superintendent of Bankruptcy issued clean letters of comment. The primary issue raised on this taxation is whether the insolvency trustee’s fees are to be approved. In the ordinary course, the debtor and the creditors have not been given notice of the taxation but it would appear that there is unlikely to be any objection.

The taxation raises the question of how the Trustee is supposed to establish its entitlement to fees when there is no time dockets kept or otherwise available to support the trustee’s claim. In this case (and the one before it), the Trustee is relying solely on the terms of the proposal. The proposal contains the methodology for calculating the fees to be taken by the Trustee in administering the proposal. The Trustee is relying on the fact that a Proposal is a contract between the debtor and its creditors, the court has already approved the Proposal and the Proposal includes the Trustee’s remuneration.

Licensed insolvency trustee fees: Bankruptcy trustees – why not keep accurate time records?

The Trustee requested fees (plus HST) based on the formula set out in the debtor’s proposal. While the Trustee provided an affidavit in support of its taxation, the Trustee did not provide any evidence of actual time spent at each staff level. The taxation came before the Associate Justice on September 1, 2021. She adjourned the taxation and requested time dockets.

The Trustee filed a report in response to the September 1, 2021 endorsement and request for time dockets, supporting the taxation and approval of the fees claimed, but no time dockets were included. In its report, the Trustee noted that it did not keep formal, detailed time records, as the terms of the Trustee’s fees and expenses are set forth in the Proposal as a “fixed fee” formula. This fee formula was accepted by creditors and approved by the Court. Therefore, the Trustee is relying upon that in not keeping time dockets.

The Trustee advised that its rationale for the development of a fixed fee formula to be charged by the Trustee, and for its decision to eliminate time docketing in such Division I proposals containing a formula for fixing a fee, were as follows:

The fixed fee formula was designed by the Trustee to provide more certainty about the costs of administration for the Division I proposal. This formula also takes into account contingencies such as the time needed to negotiate the terms of the proposal and to verify the debtor’s financial information.
The fixed fee formula was designed to make billing and accounting more efficient by eliminating the need to track chargeable time.
The fixed fee formula was based on the consumer proposal tariff, to a certain extent.
The fixed fee formula’s structure helped the Trustee keep initial costs low, so creditors could start getting dividends from the debtor’s monthly payments sooner.
The fixed fee formula was designed to minimize unexpected increases in costs of administration and a resulting decrease in dividends.
Not once has a creditor balked at the Trustee’s fixed fee.
The court approved the proposal with the fixed fee formula, so the Trustee did not keep time dockets.
There are many proposals whose administration is underway or completed that the Trustee has relied upon the fixed fee formula, and therefore has not maintained time dockets.
The trustee’s fees, as claimed under the fixed fee formula, have not been objected to by the Office of the Superintendent of Bankruptcy Canada.
licensed insolvency trustee fees

Licensed insolvency trustee fees: The court’s analysis and decision

The BIA provides for the determination of a Trustee’s remuneration in section 39. The Associate Justice said that s. 39(5) of the BIA provides the jurisdiction to increase or reduce the remuneration claimed by a Trustee. Further, the court was not a “rubber stamp” obliged to approve the fees claimed by the Trustee merely because they were in the Proposal. The court noted that it is common for Trustees to request remuneration based on the time spent and hourly rates charged. The burden is on the Trustee to convince the court that the amount claimed for remuneration is warranted.

The Associate Justice listed the following principles that must be considered when it comes to taxation:

Trustees should be given proper compensation for their services.
Prevent unjustifiable payments for Trustee fees that harm the insolvent estate and its unsecured creditors.
The efficient and conscientious administration of an estate for the benefit of creditors and, to the extent that the public is concerned, in the interests of the proper carrying-out of the objectives of the BIA, should be encouraged.

This Associate Justice also dealt with the previous case I mentioned above, which involved the taxation of a statement of receipts and disbursements in a Division I proposal where no time dockets were kept. In that case, she held that the lack of time dockets was not fatal to the approval of fees. She said the court is in a difficult position when there is no corroborative evidence as to the time and effort spent in the administration of the proposal.

So due to the lack of evidence justifying the time spent by the various staff members of the Trustee firm at their normal hourly rates, the Associate Justice was forced to look at the entirety of the Trustee’s administration. She found issues with it and therefore concluded that the Trustee was not entitled to the full fee being requested, based on the formula contained in the Division I Proposal. The Associate Justice determined, with the benefit of hindsight as to how the Division I Proposal turned out, that the debtor could have filed a consumer proposal and the creditors would have then been better off with a higher dividend distribution.

The Associate Justice ruled that, in this case, fees and disbursements will be set on a consumer proposal tariff basis. The proposal fund totalled $31,500. Using the formula for a consumer proposal, the Trustee was therefore entitled to fee and disbursements of $7,620 (plus HST) and not the $9,973.46 fee and $14,252.01 of disbursements (plus HST) formula amount.

The Associate Justice was also very critical of the Trustee’s administration and she had strong words overall for Trustees coming to court without proper evidence of the time spent when requesting approval for fees and disbursements at taxation. Her warning was that she did not accept the Trustee’s submissions that:

The court’s jurisdiction over approving the SRD and the fees to be claimed by the Trustee is replaced by the approval of the creditors and the OSB. Creditor and OSB approval are not determinative when it comes to taxation, but their approval is still relevant.
The appropriateness of the Trustee’s fees is not considered in an application for court approval of a Division I proposal. The court is not prevented from taxing the Trustee’s fee and disbursements upon the taxation of the SRD.
Any benefits to having a set fee remove the court’s jurisdiction to approve the Trustee’s fees. If the Trustee decides to save time by not documenting their hours worked, they do so at their own risk. The responsibility is always on the Trustee to justify their fees.
Creditors who want to know how much the Trustee’s fee will be cannot override the Trustee’s responsibility to explain to the court why the fee is fair and reasonable.

The court directed the Trustee to redo its SRD on the basis decided by the court, resubmit it to the Office of the Superintendent of Bankruptcy for its comment letter and then resubmit the entire package to the court for the taxation order.

A tough day in court to be sure.

Licensed insolvency trustee fees: Call us for debt-free solutions

I hope you found this licensed insolvency trustee fees Brandon’s Blog interesting. Among the many problems that can arise from having too much debt, you may also find yourself in a situation where bankruptcy seems like a realistic option.

If you or your business are dealing with substantial debt challenges and are concerned that bankruptcy may be your only option, call me. I can provide you with debt relief advice in setting up one of various possible debt management plans using debt relief options for you or your company.

You are not to blame for your current situation. You have only been taught the old ways of dealing with financial issues, which are no longer effective. We are debt professionals who know how to use the new innovative tools to solving debt problems while avoiding a bankruptcy filing.

We realize that people and businesses in financial difficulty need a workable solution. The Ira Smith Team knows that not everyone has to file for bankruptcy in Canada. Most of our clients never do, as we are familiar with alternatives to bankruptcy. We assist many people in finding the relief they need.

Call us now for a no-cost consultation to find out what your debt relief options are.

Brandon Blog Post

ONLINE SPORTS BETTING: DISCUSSION IN ONTARIO IS ABOUT WHETHER IT COULD LEAD TO ALARMING ADDICTION

Post author By Brandon Smith
Post date June 20, 2022

Is online sports betting legal in Ontario?

Private gaming websites that have gone through the province of Ontario licensing process are allowed to start taking wagers as of April 4, 2022. This new online platform marketplace is being run by iGaming Ontario, a subsidiary of the Alcohol and Gaming Commission of Ontario. Right now, online sports betting sites are the heaviest in advertising spending.

The Canadian government made single-game betting legal in Canada last summer, but Ontario didn’t fully open until 12:01 a.m. April 4, 2022. The province of Ontario is expected to generate about $800 million in total revenue this year from the online gambling market. Ontario with a population of approximately 15 million, is equal in size to the state of Pennsylvania, the fifth-largest state in the United States by population.

Who is responsible for monitoring online casinos in Ontario?

The Alcohol and Gaming Commission of Ontario is responsible for monitoring the new online casino market run by online casino operators. They were already monitoring the land-based casinos such as Casino Windsor run by Caesars Windsor, Fallsview Casino Resort in Niagara Falls and Casino Rama. Now they are in the online casino game too. They have a mandate to ensure that Ontario’s alcohol, gaming, horse racing and cannabis retail sectors operate with honesty and integrity, in the public interest. The federal government allowed for single-game betting and now the Ontario provincial government has implemented its licensing system for online sports betting.

The question now is whether online sports betting and other wagering sites will lead to an increase in gambling addiction. In this Brandon’s Blog, I explore the issue and describe why people who become insolvent because of addiction must be treated differently than others who have run-up debt.

online sports betting

Welcome to the exciting world of iGaming in Ontario!

Welcome to the exciting world of Internet gambling in Ontario! Here you’ll find all the hottest games and biggest jackpots, the most popular casino games, all just a click away! So come on in and start winning today!

The government of Ontario has officially launched its new online gaming market, which includes online casinos and esports betting sites. This marks the first time a Canadian province has run a private market for online betting, and predictions are that it could be worth billions of dollars.

The new regime in the province has raised many eyebrows and people are anxious to see how it will play out. The province has stated that it would like to bring some of the illegal, grey-market players into the fold by promising lower taxes (for the operators) and enforcing responsible gambling standards and anti-money laundering practices. This would, of course, generate new revenue from taxes.

What is the Ontario gambling age?

Both online sports betting and online casino gaming are available online in Ontario to anyone of legal betting age which is19 years or older. It didn’t take long for someone to bet on Ontario’s online sports betting industry.

PointsBet announced 50 seconds after the start that its “first big bet” in the province was Monday night’s NCAA men’s basketball finals in which North Carolina beat Kansas and the Toronto Maple Leafs beat the Tampa Bay Lightning.

Initially, 16 gaming operators, including sports betting operators, for each to become a provincially licensed operator to open operations in the province. More companies have registered with the Alcohol and Gaming Commission of Ontario, but have yet to reach an agreement with iGaming Ontario.

One is online game operator FanDuel, which signed a multi-year deal with TV station TSN. FanDuel will integrate with TSN across platforms, including in-game broadcasting, digital marketing, mobile apps and co-branding opportunities.

The service means that people in Ontario can now place bets on a wide variety of casino games, and sporting events, including single-event sports, betting, betting, and other gambling through online websites, smartphone apps and online casino apps that operate in the province’s regulated markets. The many gamblers in the province who have been active in the so-called “grey market” for years will find this appealing.

online sports betting

Is the Woodbine Casino available online?

But not everyone is excited about its launch. Jim Lawson, chief executive of Woodbine Entertainment, worries that the growing online sports betting market could have a detrimental effect on the horse racing industry and Woodbine Casino.

Woodbine, Canada’s largest bookmaker, has been unable to integrate its homogeneous horse racing business into legal online sports betting. “We don’t seek exclusivity, we don’t seek protection,” Lawson said. “We just want to be a part of it…all we’re asking for is having the operator host our product.”

“We knew almost from the beginning that they (sports betting platforms) were all very interested in horse racing, and if they wanted it, they had to buy it from Woodbine. That’s the premise that we’ve been pushing. And putting our content on their platform is a good thing for racing because that’s going to give it a huge exposure.”

Lawson hopes horse racing will soon be included in this newly competitive market of gambling sites with its wide range of betting options to allow the horse racing gambler to bet online, but he admits that being forced to do so after the game’s release isn’t ideal.

“I think it hurts us because we’re not on the starting line with everyone else,” he said.

Do online sports betting lead to gambling addiction?

The Ontario government of course hopes that everyone will only be involved in responsible gaming, but we all know that not everyone will. The early stages of the COVID-19 pandemic saw a shift from offline gambling to online gambling, including online sports betting, for many people. Offline gamblers became online gamblers. While most people see gambling as nothing more than a form of entertainment and will not be a seriously impacted gambler, the epidemic has led to an increase in gambling addiction.

Gambling addiction is a problem that is on the rise for women in the United Kingdom since the onset of the coronavirus pandemic. This addiction can lead to mental health problems, cognitive problems, relationship problems, and in some cases, bankruptcy and crime.

Unlike alcohol and drug addiction, gambling addiction does not have obvious physical symptoms or physiological manifestations. However, gambling problems have a huge impact. According to the latest estimates from the World Health Organization, players worldwide lost a total of $400 billion per year since 2016.

The current diagnosis of gambling disorder is based on the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association. Treatment and management guidelines for gambling disorders are being developed by the National Institute for Health and Care Excellence. Cognitive behavioural therapy and self-help groups are currently the most effective treatments for gambling disorders. These methods can help change thinking patterns and behaviours associated with gambling.

The key to addressing gambling disorders is early detection and treatment. This is essential in order to keep everyday activities enjoyable and prevent the brain’s reward system from being distorted.

If an addiction has taken over someone’s life, causing them to borrow money they can never repay, or divert money from family needs to feed their online sports gambling addiction, bankruptcy may be an option for them to get out of debt. However, a licensed insolvency trustee must deal with the bankrupt person whose causes of insolvency include addiction in a specific manner different than bankruptcies not caused by addiction.

online sports betting

Can you file bankruptcy for online sports betting debts?

People in debt because of addiction are usually dealing with personal loans, lines of credit, credit card debt, and maybe even income tax debt. They don’t have the money to repay and don’t have to repay your debts in full.

Filing an assignment in bankruptcy for gambling debts is possible, but it is not going to be easy. Different concerns must first be taken into consideration by people with gambling dependencies and financial obligations resulting from gambling.

The key issues are:

Your assets.
What is your annual income?
Have you ever been bankrupt before?
Full disclosure of all your debts, not just money owed as a result of gambling.
Have you been avoiding paying taxes because of gambling money?
Do you qualify for financial restructuring to avoid bankruptcy by filing a consumer proposal or a Division I proposal?
If you’re struggling with a gambling addiction, there are many resources and programs available to help you get the treatment you need. Gamblers Anonymous is one of the most well-known programs, but there are also many therapists and counsellors who specialize in gambling addiction who can help you in the long term.
To get a bankruptcy discharge, it is crucial for the person to show both financial rehabilitation as well as showing that their treatment is successfully stopping them from continuing to gamble. This involves the bankrupt revealing they have regularly attended therapy sessions and have ceased their addictive behaviour. They must also prove they are now capable of managing their finances responsibly.

Online sports betting: There are many other issues that need to be addressed besides just getting gambling addiction debt help

If you are insolvent and decide to file for bankruptcy, you will face several challenges.

Your non-exempt assets or equity in non-exempt possessions will be transferred to your Trustee. For example, if you own your marital residence with your partner, your share of the asset will be given to the Trustee and your partner will have to buy your interest back.

In a bankruptcy, if your regular income exceeds the poverty line, you will have surplus income to pay to the Trustee. If you have never been bankrupt before and have surplus income, you will have to make a regular monthly payment for 21 months before you can seek bankruptcy discharge. If you have been previously bankrupt, the 21 months becomes 36 months.

When the Trustee reports that your financial problems are due to a gambling addiction, they may try to block your discharge in bankruptcy. You will need to show not only that you have fixed your finances, but also that you have gotten help for your addiction. The Trustee has an obligation to make sure you have it as part of your overall rehabilitation.

online sports betting

Online sports betting, gambling addiction and getting a bankruptcy discharge

If you have a large unpaid income tax balance with the Canada Revenue Agency, they will likely oppose your discharge from bankruptcy. Your Trustee needs to oppose your discharge from bankruptcy if your bankruptcy is due to gambling. The facts that make it impossible to get an absolute discharge from bankruptcy are under the Bankruptcy and Insolvency Act (Canada) (BIA).

Section 172 of the BIA permits the Court to make an order of discharge which is either absolute, conditional, suspended, or even refused. The purpose of section 172.1 of the BIA is to prevent bankrupts who owe (1) $200,000 or more in personal income tax debt, and (2) at least 75 percent of all unsecured proven claims in the form of personal income tax debt, from receiving an automatic discharge from bankruptcy.

If a fact under s. 173 of the BIA is proven, the absolute discharge is not possible. The acknowledged fact that gambling addiction can bring on or contribute to bankruptcy is an s. 173 fact (BIA, s. 173(e)) that precludes an absolute discharge. This is why your Trustee would oppose your discharge from bankruptcy. The Court and Trustee require that any decision on your discharge maintain the integrity of the Canadian insolvency system. Your discharge will be contingent upon you paying a certain amount of money to your Trustee. A bankruptcy discharge suspension for a period of time after you pay the condition is also possible. If your behaviour was especially egregious, your discharge could be refused.

At the discharge hearing, you will need to demonstrate that you are taking active measures to end your addiction and are receiving counselling and therapy for gambling addiction. You will also need to show that your financial situation is improving.

Fantasy sports is one thing but an online sports betting addiction is real

I hope that you found this online sports betting Brandon’s Blog interesting. Among the countless problems that can arise if you have too much debt, you may also find yourself in a situation where you are seriously considering bankruptcy as a realistic option.

If you are concerned because you or your business are dealing with substantial debt challenges, whether you need online sports betting debt help or just plain old debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

online sports betting

Brandon Blog Post

CERB CANADA: THE ENORMOUS DEBT PROBLEM NOW FACING CANADIANS

Post author By Brandon Smith
Post date June 13, 2022

The Canada Emergency Response Benefit (CERB Canada) has been closed but is not over

The government is ramping up its efforts to verify CERB Canada eligibility for payments made under the Canada pandemic support program. Many Canadians have been told to return some or all of the funds received in the past. The Canada Revenue Agency (CRA) and Employment and Social Development Canada are working together to ensure that those who received COVID-19 pandemic individual benefits were eligible for them. CRA also announced that they are sending out Notices of Redetermination to Canadians who were ineligible for some or all of the CERB Canada benefits they received.

The CERB Canada benefit was rolled out quickly and there was a lot of confusion about who was eligible for it. It was created to help those in Canada who the COVID-19 pandemic directly impacted. The program provided financial assistance to employees and self-employed workers. The benefit was worth a maximum of $2,000 every 4-week period for up to four months.

The issue that troubles me is that the benefit was mostly paid to people who otherwise would not have been able to afford rent or food. The CERB Canada benefit money was spent immediately and a long time ago. So if CRA and Service Canada have now determined that some people should not have gotten that benefit, what are those people supposed to do if CRA demands the money back?

In this Brandon’s Blog, I discuss what the options may be for people who receive a demand for repayment of the CERB Canada benefit.

Who was eligible for CERB Canada?

To qualify for the CERB payment from the government support program, you must have met certain conditions during the period you applied. The Government of Canada stipulated the following eligibility criteria:

You did not look for or receive, CERB Canada or Employment Insurance benefits from Service Canada for the same qualification period.
You did not stop your work willingly on your own. You were forced to stop your work by someone else.
You are a Canadian resident who is at least 15 years old.
You must have earned at least $5,000 (before taxes) in the preceding 12 months, or in 2019, from one or more of the following:
- job income
- self-employment income earnings
- benefits relating to pregnancy or parental leave from the province

The program was designed to help Canadian employees and self-employed Canadians who lost their jobs or saw a significant decrease in income due to the COVID-19 pandemic and the COVID-19 lockdown order resulting in business shutdowns. The program came to an end on December 2, 2020. cerb canada

Sending your CERB Canada payment back

If you have received a letter from Service Canada asking you to repay an overpayment, the CRA says you need to follow the instructions on the letter to return the payment.

You will have the opportunity to provide more evidence to support your claim that you were entitled to the CRA’s full CERB benefit payment. Based on your responses, you may need to repay the full amount you received.

If you received any CERB Canada payments and they now say you didn’t fit into the group of eligible workers, you have the option to pay back what you owe in full right now or over time. They expect you to repay it in full either way.

Now consider this. The federal government paid nearly $12 million in CERB Canada payments to more than 1,600 people with foreign addresses during the first seven months of the pandemic! How did that happen if one of the criteria of this program was you had to be a resident of Canada?

The way the CERB Canada benefit is taxed is by taking it out of your paycheque – wasn’t that enough?

The CERB Canada benefit was not a grant or any other kind of freebie. Anyone who received it had to include it in their taxable income. That is fair because the benefit was meant to replace lost income.

In April 2020, Prime Minister Trudeau announced that the Government of Canada would be taking extensive and decisive action to support Canadians and businesses who were struggling due to the COVID-19 global pandemic through an expansion of this program.

The Prime Minister went on to say that no Canadian should have to choose between protecting their health, putting food on the table, paying for their medication or caring for a family member. He said this is why the government introduced the CERB Canada Benefit, a taxable benefit.

There have even been CRA, Employment and Social Development Canada and court decisions confirming that the CERB Canada payments are taxable and that it was definitely not a free ride. The demand for repayment of benefits from Canadians who CRA and Service Canada now feel were not eligible workers seems totally anti-social. The program was rolled out hastily and under unclear, confusing circumstances, and Canadians have been paying income tax on the benefits they received. Surely our federal government has better places to spend its time clawing back wasteful spending. cerb canada

Mom was shocked when her maternity leave benefits were cut in half due to the CERB Canada benefit

A mother was shocked to see that her most recent parental benefits instalment had been cut in half. She said that maternity and parental benefits are paid to parents so they can take time off from paid work to do another kind of work: care work.

She was receiving half of her parental leave benefits for three weeks, which were already about half of her regular earnings. The reason for the reduction was because it was determined that the CERB Canada benefit she received for every four-week period, increased her income to the point where the reduction was warranted.

Then she received a demand for repayment. She hadn’t expected to have to repay the benefit. Shortly after the COVID-19 outbreak hit in March 2020, she was let go from her work because there wasn’t enough work to go around. She thought she qualified under the eligibility requirements for the CERB Canada benefit.

She couldn’t repay the full amount in one shot so she tried to arrange a repayment plan with CRA. She said that she had to fax about a dozen documents and field several questions from federal government employees to prove she is experiencing “financial hardship” in order to qualify for a payment plan. I don’t understand why payment plans have to be approved rather than just being automatically set up. These are not rich people that they are demanding repayment from, so why make them jump through hoops?

The British Columbia court has ruled that the CERB Canada payment must be deducted from the damage award for wrongful dismissal

Here is another example that the CERB Canada benefit is not a tax-free payment or a non-taxable grant. In Reotech Construction Ltd. v Snider, 2022 BCSC 317 the trial judge awarded the employee damages for a 4.5-month reasonable notice period and declined to deduct his CERB Canada payments.

After reviewing the case, the Supreme Court of British Columbia decided that the original trial judge was incorrect in choosing not to reduce the damage award by the $9,000 in benefits received. The court decided that these payments should be deducted from the award.

There was no indication that the employee would have to repay the CERB Canada benefit to the government. If the CERB payments are not deducted, then the employee would be in a better position than if there had been no breach of the employment contract. The employee would not have received the benefit if he had not been dismissed, making the benefit an indemnity for the wage loss caused by the dismissal. cerb canada

How to repay the CERB Canada benefit

If you received the CERB Canada and now find out that you did not meet the eligibility requirements, as shown above, you must repay the money. There are a few different ways that you can repay the amount demanded.

The easiest way to repay the CERB Canada amount is through your online service CRA My Account. You can log into your account and select “Repay CERB” under the “My Account” tab. If you do not have a CRA online account, you can repay the amount you owe either by sending a cheque through Canada Post to the CRA mailing address you can find online. You can also pay it at your financial institution using the government-issued remittance form.

But what if you are just one of the many hard-working Canadian workers living paycheque to paycheque? What if you do not have the money to repay what they say you owe, either all at once or by taking an amount out of each of your future paycheques that CRA will agree to?

What if you cannot repay because the government stepped up its efforts to verify CERB Canada payments and made demands on you?

As stated above, if you cannot afford to repay the full amount being demanded of you all at once, you can hopefully convince CRA that you deserve a payment plan over time due to “financial hardship”. This assumes that the government is right that you were not originally entitled to the amount that you received for the CERB Canada benefit. But what if you cannot afford to repay it at all, no matter what sort of payment plan you can enter into?

The outcome will depend on if you are insolvent. Being insolvent doesn’t necessarily mean bankruptcy. Insolvency (aka financial failure) is a financial condition that occurs when a person or company doesn’t have enough assets to pay off all debts if they were to be liquidated. It also means that the person or company has stopped paying their bills on time in the normal course.

If the person is NOT insolvent, they are expected to sell assets or use cash on hand to pay their bills.

If you’re insolvent, you can take advantage of Canadian insolvency legislation, the Bankruptcy and Insolvency Act (Canada) (BIA). The debt to repay the CERB Canada benefit is an ordinary unsecured claim that will be eliminated through a successful financial restructuring under either a consumer proposal or a Division I proposal. As a last resort, you could also file for bankruptcy.

I would rather refer you back to some of my earlier Brandon’s Blogs that go over the requirements for each insolvency option, rather than go through all of them individually here. They are:

Consumer proposal –CONSUMER PROPOSAL TORONTO: THE COMPLETE #1 WAY TO ELIMINATE DEBT IN ONTARIO
Division I Proposal –THE EASIEST WAY TO ACTUALLY LIKE WHAT IS A DIVISION i PROPOSAL ONTARIO
Personal bankruptcy – BEYOND BANKRUPTCY SERVICES: OUR BEST PERSONAL INSOLVENCY FAQ 2 JUMPSTART YOUR FINANCIAL LIFE

CERB Canada: Canadian workers now under fire

In summary, CRA now says it’s “time to pay up” for Canadians who were paid the CERB Canada benefit during the pandemic. Although CRA has a right to claw back the amount if it is correct that the person was not eligible, what CRA’s insistence means for many Canadian workers is they now have to choose between paying back their CERB or paying for food, rent or medicine.

This is so ironic because the benefit payments were designed to help those people in making those payments when their incomes dried up. The amounts were taxed so the government earned income that way. Now they are causing unneeded stress and worry to the people they aimed to help.

I hope this Brandon’s Blog was helpful to you in understanding more about this problem now facing many Canadians. If you or your company has too heavy a debt load, we understand how you feel. You’re stressed out and anxious because you can’t fix your or your company’s financial situation on your own. But don’t worry. As a government-licensed insolvency professional firm, we can help you get your personal or corporate finances back on track.

If you’re struggling with money problems, call the Ira Smith Team today. We’ll work with you to develop a personalized plan to get you back on track and stress-free, all while avoiding the bankruptcy process if at all possible.

Call us today and get back on the path to a healthy stress-free life.

Brandon Blog Post

BEYOND BANKRUPTCY SERVICES: OUR BEST PERSONAL INSOLVENCY FAQ 2 JUMPSTART YOUR FINANCIAL LIFE

Post author By Brandon Smith
Post date May 16, 2022

Bankruptcy services and FAQ information

Bankruptcy is a last resort for Canadian individuals, entrepreneurs and companies looking for a debt solution. However, bankruptcy services are just one of the available options we canvass with you to provide the opportunity to rebuild your financial affairs and your life.

I help people and senior company management understand bankruptcy and the other options available to rebuild their life. Frankly, bankruptcy is always the last option and hopefully in most cases, can be avoided.

In this Brandon’s Blog, I provide my best FAQ answers to common questions about personal bankruptcy services. The answers below will contain all the information you need to know. So here we go. In the future Brandon’s Blogs, I will talk about corporate bankruptcy services in addition to personal and corporate restructuring as alternatives to bankruptcy services.

Bankruptcy services: Who files for bankruptcy and why?

Many people who are considering looking into the need for the bankruptcy process may feel alone and lost. This is because they may not know anyone who has gone through the same thing, making them feel like they have no one to talk to about it. Bankruptcy can be very scary and intimidating, especially if you feel like you’re the only one experiencing financial difficulties.

Financial problems affect people from all walks of life and all income levels. It doesn’t discriminate, affecting married and single people alike, regardless of age. Seniors and those just starting out in life, consumers and companies are all susceptible to needing bankruptcy services.

The Office of the Superintendent of Bankruptcy Canada (OSB) keeps insolvency statistics. It used to be affiliated with a part of the federal government called Industry Canada. Now it is part of what is called Innovation, Science and Economic Development Canada. The OSB has not yet released the 2021 annual insolvency statistics. In 2020 99,244 insolvencies were filed in Canada. This was a 29.5% decrease in insolvencies filed with the OSB in 2020 compared to 2019. This is the largest annual decrease ever. The decrease can be largely attributed to the outbreak of COVID-19 and the various emergency response measures that followed.

The number of consumers filing for insolvency decreased from 137,178 to 96,458, while the number of businesses filing for insolvency decreased from 3,680 to 2,786. The proportion of proposals among consumer insolvency filings increased from 60.3% to 65.9%.

There are two things to remember from these statistics:

You are not alone. Many people face financial difficulties.
There are options available for avoiding bankruptcy services.
bankruptcy services

Bankruptcy services: Can bankruptcy clear debt in Canada?

Most outstanding debt owed to unsecured creditors is cleared not by a person filing for bankruptcy, but by that person receiving their absolute bankruptcy discharge.

Even after bankruptcy, some debts still need to be paid. This includes a student loan if it has been less than 7 years since you stopped being a student, alimony and child support, fines and penalties imposed by the court, and any debts due to fraud.

Also, any secured debts, such as a registered car loan or mortgage against real estate are not discharged by a bankruptcy – either personal bankruptcy or corporate bankruptcy.

What debts cannot be discharged through personal bankruptcy services in Canada?

See the section “Bankruptcy services: Can bankruptcy clear debt in Canada?” directly above.

Bankruptcy services: How much debt must you accumulate in order to file for bankruptcy in Canada?

The minimum amount of unsecured debt needed to file for bankruptcy in Canada is $1,000, as stipulated by the Bankruptcy and Insolvency Act (Canada) (BIA). In addition, the person, partnership or company must also be insolvent. Bankruptcy is a legal process. Insolvency is a bad financial situation.

Bankruptcy services: What debts are not erased in bankruptcy?

See the section “Bankruptcy services: Can bankruptcy clear debt in Canada?” directly above.

bankruptcy services

Bankruptcy services: What are the three types of bankruptcies?

There are several ways I could answer that question. For example, there are:

Personal bankruptcy is also sometimes referred to as consumer bankruptcy.
Small business bankruptcy. This would mainly be for a proprietorship or partnership.
Corporate bankruptcy – small or large companies.

Another way of answering the same question would be:

Voluntary bankruptcy – an assignment in bankruptcy being filed by the person or company.
Involuntary bankruptcy – a bankruptcy happening because one or more creditors issued a bankruptcy application resulting in a bankruptcy order.
Bankruptcy protection is not bankruptcy at all. It is a financial restructuring performed by a licensed insolvency trustee. The Office of the Superintendent of Bankruptcy Canada maintains a searchable list of individuals licensed to act as a licensed insolvency trustee in Canada.

My final way of answering the same question is:

Consumer proposal – This is a financial restructuring under the BIA to avoid bankruptcy for a person who owes $250,000 or less not including any debts secured against the person’s principal residence.
Proposal – This is a financial restructuring under the BIA to avoid bankruptcy for a person who owes more than $250,000 (not including any debts secured against the person’s principal residence) or for a company with any amount of debt.
Financial restructuring under the Companies’ Creditors Arrangement Act – This is what the media calls bankruptcy protection in order to restructure and avoid bankruptcy. To qualify to file under the Companies’ Creditors Arrangement Act statute, the company must have a debt load of $5 million or more.

All of the above bankruptcy services can only be administered by a licensed insolvency trustee (formerly called a bankruptcy trustee or trustee in bankruptcy), but they are not all bankruptcy.

I guess these are really 9 types!! It all depends on how you wish to look at it.

Bankruptcy services: What are the consequences for your assets when declaring bankruptcy?

A bankruptcy does not mean you have to give up all your assets. There are rules about bankruptcy exemptions in bankruptcy law. Also, every province/territory has laws that say what assets you can keep and how much equity you can have. These types of assets are called exempt assets. There are certain assets that you are allowed to keep that are not accessible to your creditors during a bankruptcy. These assets are exempt under federal law, provincial law or both.

In order to understand what exempt assets are in bankruptcy in Ontario, we must first look at the BIA. Section 67(1) of the BIA addresses the bankruptcy exemption issue specifically. It outlines what property of the bankrupt is available to creditors does and does not include.

Property that is not included is:

Property that is held in trust by the bankrupt for any third party.
Assets that are not subject to seizure under provincial law.
Payments to the bankrupt are made under a program that can be described as social assistance provided by the federal or provincial government.
Retirement Savings Plans – The bankrupt’s RRSP (other than for the total of payments made in the 12 months before bankruptcy) or RRIF cannot be touched even in bankruptcy.

As mentioned before, one type of asset that cannot be seized during bankruptcy is any property that is protected under provincial law. In Ontario, the amounts prescribed for exemptions are outlined in the Ontario Execution Act.

These exemptions include:

Household furnishings and household appliances – $14,180.
Tools and other personal property used to generate income:
Exemptions for farmers, being a debtor engaged exclusively in cultivating the soil or farming (and therefore it is that farmer’s principal source of primary income), $31,379 for livestock, fowl, bees, books, tools and implements, and other chattels ordinarily used by the debtor; $14,405 for any other case.
$7,117 for a motor vehicle.
$10, 783 for a principal residence.

Since these exemptions are provincial, you need to look at provincial/territorial laws for other jurisdictions in Canada.

bankruptcy services

Bankruptcy services: What are the implications of personal bankruptcy on retirement plans?

There are 4 main ways Canadians save to live comfortably in retirement. They are:

The principal residence.
RRSP..
Investments.
Private pension plan.

#1 – The principal residence and bankruptcy

For many Canadians, their house is the biggest investment they make and the majority of their savings are tied up in it. Owning a home makes people more confident about their financial future.

If the owner of a home becomes bankrupt, either through an assignment in bankruptcy or bankruptcy order, the debtor’s equity in the home is an asset for the licensed insolvency trustee to sell. The exception is if the home is fully encumbered so that there is only $10,783 or less of equity (in Ontario) in the home.

If the bankrupt is a joint owner, then the Trustee only has access to the bankrupt’s interest, which would be half the equity.

The loss of wealth from the sale of the house or the encumbrance of the house will make it take much longer to build back the equity by paying off the mortgage(s). In the case of joint ownership, the natural purchaser would be the non-bankrupt spouse or partner who owns the other half. The person would likely have to take on more debt to buy the equity from the Trustee.

The loss of wealth as a result of bankruptcy can mean having to work longer than originally planned. This is one way that bankruptcy can affect retirement.

#2 – Your RRSP and bankruptcy

It is the rare debtor that seeks an insolvency option and has a significant amount in their RRSP. This is notwithstanding that a creditor cannot seize your RRSP funds in Ontario.

If you think about it, if you have a 7-figure RRSP and a 6-figure total debt, then you are not insolvent. To be eligible to use the Canadian insolvency process, you must meet certain conditions, one of which is being insolvent.

The only amount of your RRSP that is affected by bankruptcy is any contributions made to the RRSP in the 12 months before the bankruptcy happened. That amount is subject to seizure by your Trustee. Rather than seizing that amount from your RRSP, the Trustee will require you to pay that amount to the Trustee for the benefit of your bankruptcy estate.

Not having a sizeable RRSP to start withdrawing at retirement obviously will affect your retirement plans.

#3 – Bankruptcy and investments

People who are able to save for retirement invest their money to make it grow in addition to an RRSP and principal residence. Investments such as stocks, bonds and mutual funds are very typical. There are two general ways these investments can be held: (i) investment in funds maintained by a life insurance company naming a designated beneficiary (either a spouse or blood relative); and (ii) investments held with your broker.

If you have investments through a contract of insurance and you name your spouse, child, parent, or grandchild as the beneficiary, then those investments are exempt from seizure in Ontario. If you file an assignment in bankruptcy will not have any effect on these investments, and you will be able to keep them. Therefore, this will not affect your retirement plans.

If your investments are through the brokerage arm of your bank, then your investments can be seized in Ontario. These investments will be lost in your bankruptcy and this will affect your retirement plans. If your spouse or partner purchases your interest in these investments from the Trustee, then whatever debt the purchaser had to take on to buy them may affect retirement plans.

#4 – Bankruptcy and a private pension plan

Not everyone in Canada has a private pension plan through their employer. Individuals who are self-employed certainly don’t have it. Having a private pension plan can relieve some of a person’s financial worries as they head toward retirement.

In Ontario, private pensions are protected from seizure and therefore not available for the Trustee. However, if you are already retired and are receiving the private pension income, that income is taken into account when calculating any surplus income payments you may have to make to your Trustee.

bankruptcy services

How bankruptcy services work in Ontario: What is the average length of time for a person to be discharged from bankruptcy in Canada?

To be discharged from bankruptcy in Canada can differ based on whether it is a first or second bankruptcy, and whether the bankrupt has any surplus income contributions to make. For a first-time bankrupt it can take 9 months (no surplus income) -21 months (with surplus income contributions). For a second time or more bankruptcy, it takes 24 months (no surplus income) to 36 months (surplus income).

Bankruptcy services: Surplus income

Surplus income is not an ideal term to describe the extra money an individual has. Many people would not feel they have surplus income, especially when they are dealing with debt. However, in the bankruptcy context, surplus income refers to a calculation that determines how much money a bankrupt individual must pay into their bankruptcy estate for the benefit of their creditors.

When you file an assignment in bankruptcy or have a bankruptcy order made against you in Canada, your monthly income is taken into consideration. To have what is supposed to be a practical standard of living during the bankruptcy period, the Office of the Superintendent of Bankruptcy Canada establishes a standard on an annual basis.

The earnings criteria are adjusted for inflation each year and based on information collected by Statistics Canada. Your licensed insolvency trustee decides how much you pay by making monthly payments into your bankruptcy estate each month based on these standards.

It is really the Canadian poverty line that is established by the Office of the Superintendent of Bankruptcy Canada. Regardless of where you reside in Canada, there is no difference between an expensive city as well as a remote area. Just the most fundamental demands of individuals in addition to members of the family are considered.

Bankruptcy services: Debt problems got you down? Feeling overwhelmed?

I hope this Brandon’s Blog on personal bankruptcy services was helpful to you in understanding more about the personal bankruptcy system in Canada.

If you or your company has too heavy a debt load, we understand how you feel. You’re stressed out and anxious because you can’t fix your or your company’s financial situation on your own. But don’t worry. As a government-licensed insolvency professional firm, we can help you get your personal or corporate finances back on track.

Call us today and get back on the path to a healthy stress-free life.

Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA): Introduction

Overview of BIA Section 215

BIA: The Motion Judge’s Decision

The BIA case background

Did the undischarged bankrupt have the right to launch the Action under the BIA?

The Court of Appeal for Ontario’s analysis

The Court of Appeal for Ontario’s decision

BIA: Conclusion

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