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CONSUMER PROPOSAL ONTARIO: AMAZING GOVERNMENT PLAN TO REDUCE CONSUMER DEBT

 


Consumer proposal Ontario: Introduction

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

What is triggering the boost in these queries?

Consumer proposal Ontario: New Ipsos Canadian consumer debt survey

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

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

Consumer proposal Ontario: Bank of Canada benchmark interest rate hike

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Consumer proposal Ontario: The benefits to you

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

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

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

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

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

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

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

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

What this affect my credit score?

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

Just how much does it cost?

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

Consumer proposal Ontario: That freedom feeling

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

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

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

Call us today for your free consultation.consumer proposal ontario

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CANADIAN DEBT SOLUTIONS: AVOIDING THE BANKRUPTCY PROCESS

Canadian debt solutions: Introduction

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

Canadian debt solutions: The position of the stakeholders

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

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

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

Canadian debt solutions: How could this even happen?

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

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

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

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

Canadian debt solutions: Debt consultants cause harm

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

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

Canadian debt solutions: Technically or temporarily insolvent?

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

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

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

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

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

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

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

Canadian debt solutions: The Court’s concerns

The main concerns for the Court were:

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

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

Canadian debt solutions: The Court’s decision

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

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

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

Canadian debt solutions: Our approach

If you or your company are experiencing financial difficulties, you need a professional trustee. If yes, call the Ira Smith Team. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are at our front door.

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

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

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

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CANADIAN BANKRUPTCY DISCHARGE: CRITICAL ILLNESS INSURANCE IN A BANKRUPTCY

Canadian bankruptcy discharge: Introduction

Many times during the administration of a Canadian bankruptcy, the licensed insolvency Trustee (formerly called a bankruptcy trustee) (Trustee) comes across a novel issue. The decision of A.R. Robertson, a Registrar in Bankruptcy in Calgary, Alberta in the bankruptcy discharge application of Shirley Rose Cooke has such an issue within it.

The case is Cooke (Re), 2018 ABQB 628 (CanLII). The issue that came before the Court was, what happens to a critical illness benefit payment for the undischarged bankrupt? Does it go to the Trustee or is the undischarged bankrupt debtor able to keep it? This topic should be of interest to accountants, lawyers, insurance agents and financial planners, in addition to Trustees.

Canadian bankruptcy discharge: The issue

Registrar Robertson described this case as an “interesting application” for bankruptcy discharge. The matter was heard on July 9, 2018. Ms. Cooke is 62 years old. She filed for bankruptcy on April 12, 2016. The issue to be decided is whether a critical illness benefit payment she obtained in the amount of $25,000, forms part of her assets which fall to the Trustee. The Trustee’s position was that it is an asset of the bankruptcy Estate and Ms. Cooke’s creditors are entitled to it.

Canadian bankruptcy discharge: The facts

In March 2016, Ms. Cooke was diagnosed with breast cancer. She went through surgery and had radiation treatments until July 2016. Prior to her medical diagnosis, she worked full time as a healthcare worker. She stopped working in March 2016 as a result of her diagnosis and need to undergo surgery and radiation. She returned to part-time work at her former employer, in about August 2016.


Her evidence was that at the time that she left her full-time work, her employer informed her she had the critical illness benefit policy and that she should apply under it. Apparently, she was unaware of this policy as being part of her benefits package. She applied for the benefit payment.

When she made her assignment in bankruptcy, she did not divulge the critical illness benefit application to the Trustee. She advised the Court that she did not have any type of certainty that she would receive the benefit. Eventually, she did, in January 2017. When she did, she advised her Trustee.

Canadian bankruptcy discharge: The Trustee’s position


The Trustee took the view that the critical illness benefit payment was a component of the insolvent person’s income under s. 67 of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA). S. 67 of the BIA deals with property of the bankrupt, while s. 68 of the BIA deals with surplus income. However, s. 67 of the BIA does cover certain exclusions of types of payments a bankrupt may receive. The kinds of payments carved out are normally government type payments that have an overarching social aim, such as GST/HST tax credit payments.

It was very clear from the evidence that had she known she was going to get a $25,000 insurance payment from the insurance company, she would likely not have entered bankruptcy. Had she divulged the benefit application to the Trustee, the Trustee may very well have recommended she not go bankrupt.

The Trustee desires that Ms. Cooke pay the amount of $20,000 as a condition of her discharge. The Trustee states that in dealing with this critical illness benefit issue, including research, its fee now approximates that amount. I find it interesting that the Trustee is requesting the majority of her critical illness benefit payment as a discharge condition.

If the Trustee truly believes that the benefit payment should be considered as income under s. 67 of the BIA, then the correct treatment would be for the Trustee to redo its surplus income calculation under s. 68 of the BIA for Ms. Cooke. Then see what her surplus income obligation would be. If the Trustee is really trying to say the benefit payment is an asset that should come to the Trustee, then they should be asking for the entire $25,000. From my reading of the Registrar’s decision, it appears that the Trustee did neither but merely is asking for an amount to cover its costs!

Canadian bankruptcy discharge: The Registrar’s analysis


The Registrar indicated that in order to determine what is the appropriate condition if anything, he would have to assess the fees charged by the Trustee. If the Registrar really meant that he would have to tax the Trustee’s fee and costs, that makes sense. Otherwise, I am not sure what the connection is between the Trustee’s fee and costs, and whether a conditional discharge should be granted.

Ms. Cooke’s legal counsel referred to the Registrar the facts under s.173 of the BIA that could lead to an absolute discharge from bankruptcy not being granted. Her legal counsel indicated that none of the factors that would allow for a conditional, suspended or refused discharge apply in this matter.

The Registrar encouraged both parties to provide him with whatever additional information or authorities they thought appropriate by Tuesday, August 7, 2018.

The Trustee provided the Court with additional material. One such item was a copy of a letter sent by the Trustee to Ms. Cooke advising that, in the Trustee’s view, the critical illness benefit is a survivor benefit and not a wage or wage substitute. So much for it being part of surplus income!

The Registrar correctly pointed out that none of the exemptions in s. 67 of the BIA mention a critical illness benefit payment. The Registrar could also not find a precedent exactly on point.


The closest cases the Registrar could find were those of when the undischarged bankrupt suffered an injury in a motor vehicle accident and had a claim for pain and suffering. In that case, the action is personal to the injured person, and therefore that claim does not fall under the definition of property of the bankrupt available to the Trustee.

The Registrar stated that he sees no sensible distinction why a tort-based damages insurance claim for pain and suffering would be dealt with in a different way than a contract-based insurance policy for the pain and suffering Ms. Cooke had from her illness.

Accordingly, the Registrar decided that the critical illness benefit payment did not create a component of property designated to the Trustee. He also stated that Ms. Cooke did not have to pay any amount, to the Trustee. The Registrar went on to say that the Trustee should have brought on an application to have this matter determined much earlier in the bankruptcy proceedings so that the Trustee would not have incurred as many costs as it had.

The Registrar directed that:

  1. Although the Registrar did not explicitly state it in his judgment, the implication certainly is that Ms. Cooke received an absolute discharge from bankruptcy.
  2. Moreover, the Trustee should bring on the application for the Trustee’s discharge.
  3. Similarly, the Trustee should keep the Registrar’s comments as to the Trustee should have brought on a motion on the critical illness benefit issue earlier when submitting its dockets to have its fee and costs taxed by the Court.

Canadian bankruptcy discharge: Do you have too much debt?

I hope that none of us ever suffer from such a critical illness. However, it is good that Ms. Cooke had that insurance coverage. Do you have too much debt, or debt that you can’t repay because life got in your way? Illness and job loss are two prime factors in reducing someone’s income and increasing their expenses. It could force people to have to live off of credit cards until there is no credit room left, and no ability to ever repay the debt.

If you have too much debt, contact the Ira Smith Team. We have years of experience in helping those people and companies where life got in the way. Perhaps you need a debt settlement plan. Alternatively, if bankruptcy is the only real answer, we can help ease the stress and pain of bankruptcy for you.

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

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FORM 31 PROOF OF CLAIM: HOW TO PROPERLY COMPLETE THE PROOF OF CLAIM

Form 31 proof of claim: Introduction

In last week’s vlog, I reviewed why it is important to complete a form 31 proof of claim truthfully, and the penalties for filing a false claim. For both personal and corporate insolvency files, creditors call asking how to complete the document. I discuss in this vlog why it needs to be completed properly. I also provide a link in this blog that you can click on to see how to properly complete the form step by step.

The reference to “form 31” is merely the number of the form given to the form 31 proof of claim form under the Canadian Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (“BIA”).

What is the form 31 proof of claim form?

Completing and returning form 31 is the second phase in the bankruptcy process. They are included with the notice of bankruptcy documents mailed out by the licensed insolvency trustee (formerly known as a bankruptcy trustee) (the “Trustee”) to formally notify the creditors of the bankruptcy.

When properly completed and filed by each creditor, they are what a Trustee uses to compare the debt as listed on the debtor’s bankruptcy sworn Statement of Affairs. The amount claimed by a creditor is normally different than the amount of the debt listed on the bankruptcy schedules. The reason for this is normally because the creditor’s records are accurate to the penny, while the bankrupt’s records are usually not up to date.

The process is the same whether you are filing a secured claim, an ordinary unsecured claim or a priority claim, which is also unsecured, under s.138 of the BIA. What is important is that you need to have a provable claim.

If the Trustee determines that you have either an unliquidated claim or a contingent claim, there will be additional steps you will need to take for the Trustee to be able to ascribe a value and for you to have a properly proved claim.

Form 31 proof of claim: Form 31

In every:

the Trustee will supply to all creditors form 31 document. If the debtor who intends to restructure first files a Notice of Intention To Make a Proposal, a claim form is not sent out at that stage. It will be sent with the actual restructuring proposal and other related documents.

The same document contains both where you can make your claim as well as complete the proxy form, if applicable. Creditors may experience difficulty completing the document. So, the Trustee provides instructions on how to complete the claim form and proxy. That is also why I have provided a step-by-step instruction sheet from the link below so you can follow exactly how to complete the form.

form 31 proof of claim
form 31 proof of claim

Form 31 proof of claim: Acceptability of proof of claim

It is important to properly complete the document. It must be completed fully and properly. The claim must include all necessary details called for under the BIA. Below is a link to an example on how to properly complete the form 31 proof of claim. A Trustee is required to review all proofs of claim received.

The purpose of this is to know what claims are acceptable to be admitted for voting at the First Meeting of Creditors. Also, all proofs received either before or after the creditors’ meeting must also be reviewed carefully to make sure that they are acceptable if there is a dividend to be paid on the claims in the insolvency proceeding.

The Chair of the creditors meeting has the power to admit or disallow claims for the purpose of voting at the meeting. The Trustee has the same power for the proofs of claim for dividend purposes. Most times the Trustee will also be the Chair at the meeting of creditors.

It is incumbent on the Trustee to communicate with creditors whose claims the Trustee believes to be deficient. The purpose is to obtain additional information to make a final determination. The Trustee has to decide whether to admit or disallow a specific claim.

As you can see, completing the document properly is essential.

Does a creditor have to file a claim?

Nobody will force a creditor to file a claim in a bankruptcy estate. A creditor’s claim becomes valid when the creditor files it and the Trustee accepts it. . When a creditor files a claim against a bankruptcy estate, the creditor is making a claim that the Trustee should record and count their claim so that the creditor will be entitled to receive their pro-rata share of any dividend payments that may be made.

The Trustee will issue the maximum payment each creditor is entitled to when the bankruptcy estate is liquidated. When a creditor files a claim, the creditor also becomes an interested party in the bankruptcy case. An interested party is a person who has a vested interest in the bankruptcy case. If the claim is filed before the First Meeting of Creditors in bankruptcy, then the creditor has the right to participate in and vote at the meeting.

Form 31 proof of claim: My example

CLICK HERE TO SEE AND DOWNLOAD PROPERLY COMPLETED

FORM 31 PROOF OF CLAIM

form 31 proof of claim
form 31 proof of claim

Can I file a proof of claim after the deadline?

There are really only two important deadlines when it comes to filing a claim. The first is before the First Meeting of Creditors. As mentioned above, if you wish to participate in that meeting, then you need to have filed a properly completed valid claim before the start of the meeting. However, if you don’t file it by then, although you won’t be able to vote at the meeting, you have not lost out on anything else.

Once all the realization of assets of the bankrupt has been completed, being both the current assets, fixed assets, and possibly even intangible assets, if the Trustee has sufficient funds to issue a dividend payment, then the Trustee has to review all the claims filed. The Trustee also has to compare the claims register containing all of the creditor claims filed against the names and amounts listed in the bankrupt’s sworn Statement of Affairs.

If any creditors have not yet filed, and there will be a payment made to the unsecured creditors, the Trustee has to send a specific notice pursuant to the requirements of the BIA to each such creditor. The notice in writing says that a dividend will be paid, and if you don’t file your claim by a specific date, then you will be barred from receiving any payment.

How do I object to a form 31 proof of claim?

First, you have to be a creditor with a proven claim accepted by the Trustee. The BIA states that any creditor can inspect the claims filed. So if you have personal knowledge that a party listed on the sworn Statement of Affairs is really not a creditor, then you would be assisting the Trustee by reviewing the claims filed and pointing out any claims you believe are invalid, and why. However, it is very unusual for a creditor to take the time to do so.

The next opportunity and really the only time it matters, for a creditor to object to a claim filed by a creditor is if a dividend distribution is going to be made and the Trustee sends out the Final Dividend Sheet. If you think there are errors, then you can object to the approval of the Trustee’s Final Statement of Receipts and Disbursements and the Dividend Sheet.

Reasons that you may feel one or more claims are incorrect could be:

  • You do not believe that someone that has filed as a secured creditor can provide adequate proof of security with their claim.
  • You feel that the compromise of claims being proposed is improper.
  • There may be details of payments received by a creditor are missing and therefore their claim is overvalued.
  • The priority of claims listed is improper.
  • The priority of payment as listed in the Trustee’s Final Statement is incorrect.
  • Some of the more complicated claims, such as the claim of lessor, a claim by wage earner, claim by farmer or another claim for employees have been incorrectly calculated by the Trustee.

If you have any concern that there is an error with the amounts being claimed, or if you believe that there are circumstances where one or more claims are not valid, you should immediately communicate this to the Trustee.

Keep in mind that once the Trustee issues the Final Statement with Dividend Sheet and has the intention of making a payment to all creditors with valid claims, you have to file your own objection within 30 days of the date on which the notice was issued.

Form 31 proof of claim: Do you need help?

Do you or your company have too much debt? Is a financial restructuring or debt settlement plan necessary but you just don’t know where to start? If so, then you need the help of a professional trustee.

The Ira Smith Team has years of experience of helping individuals and companies successfully complete their restructuring proposal debt settlement plans. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are at our door.

form 31 proof of claim
form 31 proof of claim

You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity. Call us today for your free consultation.

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DEBT SETTLEMENT VS CONSUMER PROPOSAL CANADA: ENGLISH REALITY STAR NEEDS IT

Debt settlement vs consumer proposal Canada: Introduction

This debt settlement vs consumer proposal Canada Brandon’s Blog is to tell you a story how a once very rich person can run into debt troubles. If you want specific information about the difference between debt settlement and consumer proposal, read our blog “DEBT SETTLEMENT OR CONSUMER PROPOSAL CANADA: NEW CANADIAN GOVERNMENT REPORT EXPOSES DEBT SETTLEMENT COMPANIES HARMING CONSUMERS” published May 3, 2017. You may also wish to read our blog “FAMOUS CELEBRITY BANKRUPTCIES HAPPEN TOO”. Katie Price certainly fits into that crowd.

To find out more about how a consumer proposal works, you can also use the search function in our Brandon’s Blog site for any of the following phrases:

  • is consumer proposal worth it
  • consumer proposals faq
  • disadvantages of consumer proposal
  • consumer proposal vs credit counselling
  • how much does a consumer proposal cost
  • consumer proposal pros and cons
  • what happens after a consumer proposal

This will bring up more of our blogs on this topic.

Debt settlement vs consumer proposal Canada: The Katie Price Story

English former beauty model, reality TV star, and businesswoman, Katie Price, was a self-made success that had scooped ₤45 million after years of brilliant business transactions and plain old hard work. Unfortunately, the former glamour model will not have the ability to delight in the fruits of her work. It is said Katie is on the brink of bankruptcy having spent all her fortune.

Debt settlement vs consumer proposal Canada: Working for a pair of “knickers”

Things seem to be so bad the for the reality TV star mom. She once was paid for a social media post with one pair of slacks. Her ₤2 million Sussex estate has fallen under a state of disrepair. The swimming pool is dirty, yards are thick with growth and the tennis courts are abandoned. Katie, 40, has additionally begun marketing her horses and llamas. The ₤77,000 Audi she purchased for separated hubby Kieran Hayler for his 30th birthday celebration is also for sale.

The modelling jobs have dried up and last month she even admitted staging lewd images in Thailand with toyboy Kris Boyson. She was spotted mowing her own lawn amid claims she’s started laying off staff to stay in the black.

Debt settlement vs consumer proposal Canada: How Katie Price spent her money

Taking to Instagram, she also admitted the bailiffs had visited her house to demand £3,000 for an electricity bill. But what has the mother-of-five spent all her money on? On top of that, she’s said to have spent £120,000 on housekeepers, gardeners, and nannies – one of whom Kieran claimed to have had a year-long affair with.

Katie Price was also visited by bailiffs demanding the £3,000 she failed to pay an electrician. Her monthly heating bill apparently comes to £2,000 because she keeps it on 24-7, and her other monthly outgoings include £1,500 for twice-weekly manicures and pedicures, £1,000 on getting her hair done, £800 on massages every other day, £800 on a makeup artist, £400.

And that’s not to mention the apparent £60,000 a year she’s forking out on farm machinery such as a tractor and milking machine. She also spends on a £25,000 annual cosmetic budget.

Last Christmas she confessed ₤2,000 spent on decorations. She feared it may be her terminally ill mother Amy’s last one.

Debt settlement vs consumer proposal Canada: How Katie Price is now earning money

And while back then she generated millions from her scents, publications, reality TV show as well as x-rated shoots, nowadays her only source of work seems to be her program, My Crazy Life Now. She is determined to make back some money. Katie claimed to be intending to revive her beauty version alter ego Jordan. She also plans a release of a variety of sex playthings.

One source was quoted as saying “Katie told me when all else fails sex sells”. “It’s the way she’s taking things – she’s bringing back Jordan to fix her finances. She said that it was a no-brainer to go back to her old image.”

Debt settlement vs consumer proposal Canada: Are you in need of debt settlement?

If you’re thinking about debt settlement or a consumer proposal or are looking for ways to end your financial debt call Ira Smith Trustee & Receiver Inc. We understand the stress and pain your financial problems are causing you. We feel your pain and we can end it for you.

Our strategy for every single person is to develop a result we’re Starting Over, Starting Now comes true, starting the minute you walk through our door. You’re just one call away from taking the necessary actions to get you your debt settlement and back on the road to leading a healthy and stress-free life.debt settlement vs consumer proposal canada

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BANKRUPTCY AND INSOLVENCY ACT: COURT MAY NOT LISTEN TO BANKRUPTCY TRUSTEE

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Bankruptcy and insolvency act: Introduction

I want to describe to you a very interesting case that was recently decided in the Court of Appeal of British Columbia, Randen v. HPCB-Online Ltd., 2018 BCCA 123 (CanLII). The bankrupt’s creditors applied to have the transactions reviewed under section I00 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”). One of the areas of contention was that the judge in the lower court found he could not rely on the bankruptcy trustee’s opinion of value in the circumstances.

The applicants, Shawn and Edvige Cody, were the principals of the bankrupt, Half Price Computer Books Ltd. (“Half Price”) and the applicant HPCB-Online Ltd. (“Online”). About ten days before Half Price was assigned into bankruptcy, Online bought roughly 10% of the book inventory of Half Price.

The application under s.100 was originally made by the bankruptcy trustee, and later transferred to creditors David Randen, The Innovative Alliance Inc., J.R. Trading Co. Inc. and Fairmount Books Inc. under section 38 of the BIA. The lower court judge found Online acquired property from Half Price at much less than reasonable market value. The lower court judge ordered Online and the Codys to pay back the difference which he established to be $287,000.

Bankruptcy and insolvency act: Section 100

Section 100 of the BIA. The section was repealed in 2009, but applies on transactions before then. The main purpose of that section was for reversing the effects of non-arm’s length transactions that reduced value from the estate of a bankrupt person or company.

Until 2009, s. 100 of the BIA provided:

“100 (1) Where a bankrupt sold, purchased, leased, hired, supplied or received property or services in a reviewable transaction within the period beginning on the day that is one year before the date of the bankruptcy event and ending on the date of the bankruptcy, both dates included, the court may, on the application of the trustee, inquire into whether the bankrupt gave or received, as the case may be, fair market value in consideration for the property or services concerned in the transaction.

(2) Where the court in proceedings under this section finds that the consideration given or received by the bankrupt in the reviewable transaction was conspicuously greater or less than the fair market value of the property or services concerned in the transaction, the court may give judgment to the trustee against the other party to the transaction, against any other person being privy to the transaction with the bankrupt or against all those persons for the difference between the actual consideration given or received by the bankrupt and the fair market value, as determined by the court, of the property or services concerned in the transaction.”

Bankruptcy and insolvency act: The questionable transaction

The brand-new company Online bought roughly 10% of Half Price’s stock, or 44,000 books. These books were clearly selected by Mr. Cody as the best-selling. Online paid $21,964.50 for these books, about $0.50 CDN for each publication. The books and records of Half Price, including an e-commerce website which Half Price created at its expense and was the property of Half Price, were copied and used by Online to aid in the sale of these publications at the instructions of Mr. Cody.

The Half Price sorting software and mailing software program that was later used to retail these books by Online, which software was the property of Half Price, was duplicated and taken or transferred to Online. Additionally, there was a claim that the goodwill of Half Price was made use by Online. There was no evidence that Online paid anything for the use of the software and goodwill.bankruptcy and insolvency act 1

Bankruptcy and insolvency act: The lower court’s first problem

The lower court found that Online paid conspicuously much less compared to fair market value. It must pay to the bankruptcy Estate for the benefit of the creditors which he determined to be $287,000. The lower court judge noted that this was not a case in which the trustee was driving the application. The trustee assigned the action to specific creditors.

Normally, the bankruptcy trustee would have to submit evidence to the court in a section 100 application as to the value of the property in question. Since the trustee had assigned its interest to specific creditors, there was no report from the trustee. The creditors said the value of the joint assets is close to $1.07 million. The lower court had to look at the trustee’s actions in determining what the trustee must have thought the value was.

The lower court acknowledged the need in s. 100 to accept the trustee’s viewpoint about the value, unless other values are confirmed. The court however discovered it could not depend on that viewpoint in this case. The first problem was that they were standing in the place of the trustee. The trustee had determined that the software and other assets was of no value. In addition, the trustee did not figure out that there was any kind of goodwill value to this.

Bankruptcy and insolvency act: The lower court’s second problem

The second problem was that Half Price could have moved the best publications to Online at the direction of the Codys. The remaining books, being 90% of the book inventory, sold for around the same value as the 10% of publications. Though this is not entirely determinative of worth, it shows that the inventory, software and goodwill was not as valuable as these creditors represented to the lower court..

The BIA required the lower court judge to accept the trustee‘s viewpoint as to the value, or in this situation the point of view of those creditors, unless other values can be confirmed. The lower court considered the trustee’s activity when the bankruptcy first happened, that those assets had no value. The lower court found that it could not rely on any trustee viewpoint on worth.

Bankruptcy and insolvency act: The Court of Appeal

The Court of Appeal confirmed that a trustee in bankruptcy is an officer of the court and has an obligation to offer all relevant facts to the court in a dispassionate, non-adversarial fashion. It went on to say that the creditors do not have the same responsibilities. They got the right to pursue the proceedings in their very own passionate way. The Court of Appeal went on to say that it was open to the court to decline the trustee’s opinion on the evaluation of a fair market price.

The Court of Appeal finally concluded that although the Court did not have to accept the trustee’s opinion of value, there was insufficient evidence for the lower court judge to place a value. So the Court of Appeal ordered a new trial in the lower court. Now both the creditors, and certainly the trustee, will have to submit evidence about what the fair market value was, in their respective opinion. That way, the lower court will be able to rely on experts, an officer of the court and real evidence.

Bankruptcy and insolvency act: The licensed insolvency trustee

Licensed insolvency trustee is the relatively new name for a bankruptcy trustee. Is your company experiencing financial problems? Are you, or somebody you care about, experiencing personal financial problems?

Bankruptcy is the last thing we try to do for a company or person in financial difficulty. If caught early enough, we can get involved in a turnaround situation for your company to keep jobs and value. We also carry out debt settlement plans for people.

If you’ve personally fallen victim to money mistakes and are in pain and stressed out, it’s time for professional help now too.

The Ira Smith Team knows that you are worried because you are facing significant financial challenges. Your business provides income not only for your family. Many other families rely on you and your company for their well-being. The stress placed upon you due to your company’s financial challenges is enormous. We understand your pain points.

Contact the Ira Smith Team today. We know how to solve both corporate and personal financial challenges, remove your pain and put things back on a healthy path. Contact us today for your free consultation so that we can save your company, Starting Over Starting Now.

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AFTER BANKRUPTCY DISCHARGE CANADA: LIVE WELL AFTER A BANKRUPTCY DISCHARGE

after bankruptcy discharge canada

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After bankruptcy discharge Canada: Introduction

The purpose of my blog is to provide ideas and suggestions on how a person can fulfill one of the aims of the Canadian insolvency system. That is to carry out successful financial rehabilitation and live profitably and happily after bankruptcy discharge Canada.

After bankruptcy discharge Canada: You are not alone

In 2017, 122,198 Canadians went for either bankruptcy or a restructuring proposal. The split was roughly even. These people and their families underwent significant financial and emotional pain. In January and February 2018 together, 19,082 Canadians went for either bankruptcy or a restructuring proposal. The split favoured restructuring proposals slightly.

After bankruptcy discharge Canada: Your financial slate is now clean

Your financial slate is wiped clean. However, your credit score has taken a beating. Now is the time to not squander the opportunity you have for financial rehabilitation. Notation of your bankruptcy stays on your credit report for 7 years after your bankruptcy discharge. In the case of a restructuring proposal, the notation remains on your credit report for 3 years after successful completion of your financial restructuring.

After bankruptcy discharge Canada: My 10 step program to live profitably after a bankruptcy discharge

So how can a discharged bankrupt hop on a rapid course to a bankruptcy rebound? Here are my suggestions:

  1. Use your bankruptcy experience to improve your financial education. Take a course on practical money management.
  2. You won’t have any credit cards so you have to rely more on cash. Use an envelope system so that every payday you segregate your cash into envelopes, each marked with an essential family expense. Make sure the cash is used only for those essential purposes and no cheating. No borrowing from the envelopes!
  3. Points 1 and 2 above lead naturally into the next point. Sit down with the entire family and work out a monthly budget. Your total expenses cannot be more than your total income, after income tax, for the month. If everyone is involved in setting it up, then they will all understand if you just can’t afford something in a certain month. Also, they will all be helping you stay on budget.
  4. You do need to find a way to start rebuilding credit. Obtain a secured credit card. Not the drug store variety, but the kind issued by a real credit card company. You have to deposit funds with the credit card issuer and then you get a credit limit equal to the funds deposited. Use that credit card each month, but pay off the FULL balance each month. The credit card company then reports to the credit reporting agencies that you are using credit wisely. Over time, this will improve your credit score.
  5. Always remember the behaviours that got you into financial trouble in the first place and don’t repeat them. If it was an event outside of your control like job loss or a medical emergency, it was not your behaviour that was the cause of your financial problems.
  6. Establish SMART goals. Specific, Measurable, Achievable, Realistic and Timely goals. Setting and reaching your goals will certainly make you an economic success.
  7. Begin building up savings. You need to be financially prepared for a life emergency. As a bare minimum, begin setting up a reserve so that you can withstand a 6 to 9 month emergency that increases your expenses or reduces your income.
  8. Start investing in an RRSP using an RRSP loan. Take out a small RRSP loan. Use your tax savings to pay it down, and work into your budget repaying the rest of the loan, with interest, during the year. Do the same thing the following years. Not only will you build up RRSP savings, the reported loan repayments will improve your credit rating because you are using credit wisely again.
  9. Purchase based only on your needs that are in your budget; never on your “wants”.
  10. Do not purchase anything on impulse. Research, research and research to make sure that you are getting the best deal possible.

After bankruptcy discharge Canada: The takeaway

The takeaway? It is not easy to recover after bankruptcy discharge Canada. It is a series of small steps using modified behaviour and healthy money management skills. But it is possible. I have seen many of my past clients do it. There is not a magic pill you can take. It is a matter of concentrating and working on moving on and learning from your past mistakes. Working at it one day at a time, you will regain your self-respect and feeling of self-worth by restoring your financial and credit report health and wellness.

After bankruptcy discharge Canada: What if you have too much debt?

I hope that you have found this information helpful. Bankruptcy is the last thing we try to do for a person in financial difficulty. If caught early enough, we can get involved in a debt settlement restructuring program for you.

The Ira Smith Team knows that you are worried because you are facing significant financial challenges. The stress placed upon you is enormous. We understand your pain points.

Contact the Ira Smith Team today. We know how to solve your financial challenges, remove your pain and put things back on a healthy path. Contact us today for your free consultation so that we can save your life, Starting Over Starting Now.

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ONTARIO BANKRUPTCY DISCHARGE CERTIFICATE: CANADIAN BANKRUPTCY LAW

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Ontario bankruptcy discharge certificate: Introduction

I have written before on the more practical aspects of Ontario bankruptcy discharge certificate issues and process within Canadian bankruptcy and insolvency law. The most recent blogs are:

  1. BANKRUPTCY DISCHARGE: THE TOP 8 THINGS THE BANKRUPTCY COURT WILL CONSIDER ON ANYONE’S BANKRUPTCY DISCHARGE APPLICATION – September 13, 2017
  2. GAMBLING DEBT BANKRUPTCY: CAN GAMBLING DEBT BE DISCHARGED IN BANKRUPTCY? – January 31, 2018

I recently reviewed the Ontario Court of Appeal decision in Cole v. RBC Dominion Securities Inc., 2017 ONCA 1009. This case is very interesting as it highlights an issue that we often don’t talk enough about when advising a person on what they might expect at their hearing under Canadian bankruptcy and insolvency law.

The facts

Henry Cole, age 52, had a Bankruptcy Order made against him in 2011 upon motion by Royal Bank of Canada (“RBC”), after he misappropriated $5 million from clients while working as their investment advisor. While in bankruptcy, he had a net monthly income of $14,600, resulting in surplus monthly income of $12,500. He nevertheless failed to make any surplus income payments.

To understand what surplus income in a bankruptcy is, see my June 1, 2016 vlog titled WHY SURPLUS INCOME IS SO POPULAR UNTIL YOU ARE FORCED INTO BANKRUPTCY.

The Ontario Court of Appeal (“ONCA”) upheld the two lower Court decisions

As is the case in bankruptcy matters, Mr. Cole’s bankruptcy discharge hearing came before the Master in Bankruptcy Court who also sits as the registrar in bankruptcy. Mr. Cole appealed the Master’s decision (discussed below) unsuccessfully to a Judge of the Bankruptcy Court. The Judge dismissed Mr. Cole’s appeal, thereby upholding the Master’s decision. As indicated above, the ONCA agreed with the Judge (and the Master) in dismissing Mr. Cole’s appeal.

Now for the interesting stuff!

Now for the interesting stuff. The Master determined that there was enough evidence to show that Mr. Cole, as a bankrupt, committed various bankruptcy offenses. The Master determined facts for which discharge may be refused, suspended or granted conditionally, under Section 173(1) of the Canadian bankruptcy and insolvency law called the Bankruptcy and Insolvency Act (Canada) (“BIA”).

The Master determined that Mr. Cole had failed to provide information to enable the Licensed Insolvency Trustee to calculate surplus income. Mr. Cole also conceded to the following facts:

  1. his assets upon bankruptcy were not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities. Mr. Cole gave no evidence why he should not be held responsible;
  2. he failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities; and
  3. he brought on, or contributed to, his bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of his business affairs

With these findings, the Master, under Section 172(2) of the BIA, had to not grant an absolute discharge and to:

  1. refuse the discharge of a bankrupt;
  2. suspend the discharge for such period as the court thinks proper; or
  3. make the bankrupt, as a condition of his discharge, to do such acts, pay such moneys, consent to such judgments or comply with such other terms as the court may direct.

I must point out that the options available to the Master are not mutually exclusive. So, just like in Mr. Cole’s case, you could have the Court come up with a mixture of a suspension and a condition to pay moneys.

What the Master decided

The Master made several decisions. First, the Master dealt with the surplus income issue. The Master ordered Mr. Cole to pay $284,346 to the Trustee as surplus income, payable at a rate of $5,000 per month.

The Master also considered Mr. Cole’s criminal behaviour and that he had real income while not working any longer as an investment advisor. Given the amount of Mr. Cole’s liabilities, and for the integrity of the Canadian bankruptcy system, the Master ordered as further conditions that:

  1. Mr. Cole pay an extra $5,000 per month to the Trustee for a further six years for a total more payment of $360,000; and that
  2. his discharge from bankruptcy be suspended for two years.

The dismissed appeals

Mr. Cole argued before first the Judge, and then the ONCA, primarily that the Master’s treatment of surplus and other income was in error. He also argued that the Judge’s finding in dismissing his appeal was an error. The ONCA disagreed and dismissed his appeal.

ontario bankruptcy

So what is the lesson to be learned?

It is important for the Trustee, when sitting down with the person contemplating an insolvency proceeding, to understand all the facts. By properly understanding all the facts, we can provide proper professional advice and guidance.

Someone who had a facts situation like Mr. Cole, we would have strongly advised him or her to avoid bankruptcy and to contemplate performing a Division I Proposal to compromise his debts. The reasons we would have advised this are:

  1. the debtor has real income to successfully do a Proposal;
  2. Mr. Cole never would have qualified for an absolute discharge from bankruptcy given his facts situation and any discharge conditions would be onerous;
  3. avoiding the ongoing calculation of surplus income up to the time of his bankruptcy discharge hearing; and
  4. with the support of his major creditors, it is possible that the Proposal amount could have been somewhat less than $644,000 (subject to knowing the value of his assets at the date of bankruptcy).

he person needs our advice in plain English before making any decisions

We also would have advised the debtor the type of the rough ride they were in for if they chose to go ahead with the bankruptcy option. We would have explained in detail how we believed the Canadian bankruptcy and insolvency law system would treat him, so at least there would be no surprises during the bankruptcy administration.

Many times people we speak with do not like to hear the truth, and begin “Trustee shopping” until they find a Trustee that does not tell them all the bad news up front. People like this believe that if they aren’t told it, it can’t happen. This is a mistake. We believe everyone deserves to know the truth about their situation, to help them make the best decision possible.

In Mr. Cole’s case, not only did he find out the hard truth from the Court, he then spent money on his lawyers appealing the Master’s and Judge’s decisions. That obviously was extra money spent with no benefit received.

FULL DISCLOSURE: Our firm has never met with Mr. Cole and was not considered to be his Trustee.

What to do if you have too much debt

Declaring personal bаnkruрtсу in Canada is a big deal. So is getting your Ontario bankruptcy discharge certificate. While it can be a way out for the honest but unfortunate debtor who is deep in debt and looking for a new start, there are rules, rеѕtrісtіоnѕ and fіnаnсіаl rаmіfісаtіоnѕ.

That is why the Ira Smith Team always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:

The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.

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CREDIT CHECK FAILED REASONS: 5 STUPID REASONS STOPPING YOU FROM GETTING THE LOAN YOU COULD ACTUALLY REPAY

Credit check failed reasons: Introduction

Below is our list of 5 stupid credit check failed reasons stopping you from getting that loan you can repay. You likely recognize that not paying your credit card on schedule or missing out on a settlement could harm your credit score. That is probably the most common credit check fail. So, those reasons are not on our list of credit check failed reasons. There are much less clear methods to sink your rating. You could be doing some without understanding the influence you’re triggering.

Below are 5 unexpected methods you could be damaging your credit score:

  1. Credit check failed reasons: Decreasing your credit line

You might assume that you’re increasing your credit score by reducing your credit line on your credit card. However that could be having the other impact. Credit score use is the second-most vital credit score aspect, after history of credit card repayments.

Your credit use is your compared with just how much you’re using. When you lower that proportion, that is a good thing. Many professionals suggest maintaining it around 30 to 35 percent.

By reducing your authorized credit amount, you’re really increasing your credit use proportion.

Toronto financial advisor Seun Adeyemi says that most people are not aware that cancelled credit lines, even after making full repayment, can hurt your credit score.

Here is an example. Say you have 2 credit cards:

  1. a Visa with a $1,500 balance as well as a $4,000 credit limit;
  2. as well as a MasterCard with $1,500 outstanding and a $6,000 credit authorization.

Your credit usage is just 30 percent since you’re making use of $3,000 of your readily available $10,000.

If you reduced your credit limit to $4,000 on that MasterCard, you’re currently utilizing $3,000 of a readily available $8,000. This presses your credit usage to over 35%.

credit check failed reasons 2
credit check failed reasons

  1. Credit check failed reasons: Leasing an automobile with a debit card as opposed to a credit card

When you’re leasing, it’s a great deal less complicated when you make use of a credit card.

Utilizing your debit card will lead to a pull on your credit report. While it could be a soft pull– implying it does not harm your debt– there’s a chance it might be a hard check. A hard check does affect your credit rating.

The procedure changes slightly in the auto rental business. Making use of a debit card will certainly result in a soft credit inquiry. However, when using a debit card to rent a car, there will probably be a hard pull on your credit rating at the first time (when you check-in and get the car).

There would not be a credit check if you use of a credit card for renting a car.

An included incentive of renting your car with a credit card as opposed to debit: Many credit cards offer vehicle rental insurance coverage. This saves you even thinking about taking the car rental company’s costly insurance package.

  1. Credit check failed reasons: Not paying your library fines (yes, libraries still exist!)

Not paying your penalties might lead the library to withdraw your privileges, as well sending your past due account to a collection company. When a collection agency obtains your overdue account, if you don’t pay, it will be noted on your credit report that you are in collection and have not paid. This will adversely influence your credit score.

credit check failed reasons
credit check failed reasons

Normally, you need to owe around $40 or more before the account being sent to collections. To prevent all this, check your public library’s plan on fines, as well as, obviously, paying your late charges in a prompt fashion.

  1. Credit check failed reasons: Not paying your parking tickets

When it concerns vehicle parking tickets, you have 2 choices:

  1. you could pay them; or
  2. go to Court and fight them.

Just what you do not want to do is disregard your parking tickets.

If you do choose to or forget to pay them, after a specific duration, your account will certainly go to collections. The policies on vehicle parking penalties differ by city. For instance, in Toronto, the use of debt collectors starts when your vehicle remains in plate rejection. This is when you could not restore your plate sticker label or acquire brand-new plates– for 2 years. Also, your tickets outstanding balance is more than $300.

  1. Credit check failed reasons: Owing the taxman

If you have an outstanding amount payable on your income tax return, it’s important to settle that financial obligation to the Canada Revenue Agency (CRA). Overdue tax obligations could cost you in penalties and interest. It will also make it more challenging to get loans.

When submitting your tax return, any amount owing is due on April 30th, or the next Monday if April 30 falls on a weekend.

Credit check failed reasons: Not paying CRA is a self-inflicted indirect hit

Not paying your taxes does not directly hit your credit rating. However, two standard questions on any loan application are:

  1. what is the last year you filed your income tax return for; and
  2. how much do you owe to CRA for personal tax.

Not being current in your filing, or having an amount owing to CRA, will limit your chances to get that loan you are applying for.

When applying for a mortgage or home equity line of credit, most lenders ask for a duplicate of your Notice of Assessment from the previous 2 years. If the potential lender sees that you owe the CRA a great deal of money, they might offer you a higher rate of interest than the posted rate or worse, refuse your application.

Credit check failed reasons: What to do if you can’t repay your debts – even if you still have an OK credit score

Maintaining a good credit score is more than just paying your credit card on schedule, yet it does not need to be made complex. You should always aim to pay any type of arrears in a prompt style, as well as understand how every activity or transaction can affect your credit score.

If you are having problems repaying your debt, don’t be afraid to seek professional help. Don’t be enticed by the commercials for debt settlement. A recent study by the federal government shows that people who first go to a debt settlement company, end up paying more to settle their debts than if they just went to see a . That same study shows that ultimately, the debt settlement program alone does not work and the person ends up filing a consumer proposal with a licensed insolvency trustee.

credit check failed reasons
credit check failed reasons

The Ira Smith Team has helped many people in debt get back on track and living debt free lives Starting Over, Starting Now. Take the first step and give us a call today.

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DEBT REDUCTION PROGRAM: MY TOP 10 STEPS ANYONE CAN START IMMEDIATELY TO STOP BEING IN DEBT VIDEO

Debt Reduction Program: Introduction

My top 10 debt reduction program steps is for anyone to start immediately to reduce or eliminate debt in order to regain control of your life. By following these steps, there is no need for you to seek out a debt settlement company. I am giving you a foolproof program for free. Debt settlement companies would charge you thousands of dollars for this information!

1. Debt Reduction Program: Say No To Debt

When you have determined, “I’ve had it”, take your charge cards out of your wallet. Then follow your budget (which means you have one) as well as swear NO MORE DEBT. No ifs or buts … no more debt, NO MATTER WHAT. Either lock the charge cards away, or even better, cut them in half and send them back to each issuer. Ask that they no longer send you any and that your account should be capped at its current balance.

2. Debt Reduction Program: Take Your Head Out of the Sand

Determine your revenue, your monthly costs, and your financial debt total amounts. Acknowledge your past errors with money and progress. Today is a brand-new day as well as you are no more living in denial about your financial resources.

Every financial choice from now on should be based upon a plan. A plan that is based upon realities. Facts from your budget as well as financial goals.

3. Debt Reduction Program: Develop a Monthly Budget (with your spouse or partner if you are not single)

If you are to do just one of these ten practices, please do this one. Living by a written budget is the ESSENTIAL trick to living a financially secure life. When you prepare a monthly budget plan, there was no other way in refuting that you were investing $400+ in totally optional spending on non-essential items; $20 there and $50 here that were amounting to $100’s every month … WASTED!

Your written spending plan provides you with a strategy to spending cash on what you “need” as well as “want” and NOT losing it away. Do you recognize the ordinary person making $50,000/ year will have over $2 MILLION go through their fingertips??? Don’t YOU want to have a plan for those $$$?

4. Debt Reduction Program: Cash not credit

Yes, using cash can be bothersome and a hassle but it is IMPOSSIBLE to spend greater than you have and go over budget. It also hurts a lot more to use cash money then simply swiping plastic.

Those adorable shoes do not look so cute when you think of handing over the last bill in your pocket. It would most likely be easier to live without the most up to date digital gadget when you think of taking all that cash out of your wallet. At that point, your current phone, while not the latest model, looks pretty useful all of a sudden!

Try it. After a few months you will see how your costs reduce. Your behaviour will transform so significantly that you will be shocked how much money you have used unnecessarily in the past.

5. Debt Reduction Program: Priorities

Your financial decisions mirror what you as well as your household regard as a top priority in your life. This will be noticeable in your month-to-month budget plan.

Establish your family’s top priorities. Make certain your regular monthly budget mirrors these top priorities. With a proper budget, you may begin to seem like “inadequate me, I don’t really go out to dinner.” Remember your family has various top priorities and you are compromising one meager dish at your favorite restaurant to have a lifetime of financial safety and security. This definitely puts things in perspective when you are in a moment of weakness.3bestaward

6. Debt Reduction Program: Remove Temptation

Do not set foot in your preferred non-essential shop. If the lure is not there, you will not spend money on things you do not need. Attempt to restrict on your own to only food store. Shop with a checklist as well as stay with the checklist.

If you have difficulty with internet shopping, unsubscribe from store e-mails that promote sales and new products. You are as well concentrated and functioning also hard on your financial goaks to have a slip up on something that was not in the budget plan.

7. Debt Reduction Program: Free Entertainment

Sometimes this financial debt elimination phase is going to seem like it has drawn out all the “enjoyable” things in your life. Just because you are on a tight budget does not mean you shouldn’t enjoy your new life.

Choose cost-free or cheap entertainment. Activities such as walking, barbecue in the park, borrow publications & flicks from the library (yes, they still exist!), free concerts in the park, playing cards and other games, volunteering your time, digital photography, checking out a museum or historical site on a “cost-free entry day.” The possibilities are unlimited, be innovative!

8. Debt Reduction Program: Decrease Food Expenses

Food can be one of the highest costs in your budget plan (2nd to housing). Great news, there are MANY ways to lower the cost of food.

Grocery Store: Have a listing. Use “Budget Friendly Recipes” to make a dish strategy to stay clear of food waste. Do not acquire or dramatically decrease the buying of already prepared foods (anything pre-cut, pre-cooked, pre-prepared).

Dining establishments: Avoid them as long as possible. Cooking a meal in the house will certainly ALWAYS be less costly than eating at a restaurant (unless somebody else is picking up the tab). When you do eat at dining establishments use vouchers, Groupons, happy hour price cuts, as well as basically anything to lower the price.

9. Debt Reduction Program: Team Work

I could not stress enough how crucial it is, to collaborate with your spouse or partner with your financial resources. You are in this with each other. When one of you is having a harsh day, the other needs to urge and remind you why you are sacrificing, why you got on this trip.

One of you might take on the role as the captain, pushing your “team” to the absolute limitations to pay off financial obligations. It might be the spouse or partner who is the MVP, that continuously gets you through the battles and the “bad days”.

10. Debt Reduction Program: Develop Goals

When your financial priorities are established, it will be simple to jot down goals. I recommend composing one or two short-term financial objectives. Your financial goals may be something like:

  • Having a debt free Christmas in 2017 and after
  • Pay off credit card debt by July 2018
  • Eliminating our home equity line of credit balance by February 2019
  • Having a cash reserve of $2,500 in case of an emergency
  • Reward ourselves by taking at least 2 vacations in 2020 because of what we have accomplished so far

Now that you have your objectives developed, this is where you need to circle back to make sure that it is accounted for in your written budget. Your objectives will certainly aid you to stay focused and also provide you inspiration to continue your financial trip.

Debt Reduction Program: What if you haven’t started to reduce debt early enough?

Are you too deep in debt? Is the monthly interest charge on your credit cards more than your monthly amount available to pay down the credit card debt? Being threatened with lawsuits or being sued?

Then you need to consult with a licensed insolvency trustee for some surgery. All of the 10 points listed above will be part of your financial rehabilitation. However, you need to have the time clock stopped now to give you breathing room.

A licensed insolvency trustee can develop such a plan for you and get you the relief you deserve and need. The Ira Smith Team has much experience in handling debt problems like yours. We have helped many people and companies return to financial health and live a stress-free life.

Contact the Ira Smith Team today for your free consultation. We will develop a practical plan for you to get out of debt and regain control over your life, Starting Over, Starting Now!image

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