Tag: Debt

Categories
Brandon Blog Post

TORONTO BANKRUPTCY TRUSTEES: 1 IN 5 ONTARIO RESIDENTS MAY BE INSOLVENT

Target liquidation program, Toronto bankruptcy trustees, bankruptcy alternatives, bankruptcy questions, credit card debt, living paycheque to paycheque, bankruptcy, Target, housing bubble, credit card debt, financial plan, debt, starting over starting nowToronto bankruptcy trustees believe that 1 in 5 Ontario residents may be insolvent (unable to pay their debts when they are due), as astonishing as this seems. Sadly it seems that many Ontarians who have been living paycheque to paycheque and on the edge of a financial crisis, have now fallen off the edge.

According to a recent Ipsos Reid poll:

  • Almost one in five Ontario residents owe more than they own or earn, making them technically insolvent and at risk of bankruptcy.
  • Eastern Canadians led the country in owing more than they own, with 28% in Quebec and 24% in Atlantic Canada.
  • Residents in Alberta, Saskatchewan and Manitoba tied at a 23%.
  • Ontarians at 16% and British Columbians are at 14%.

It’s no surprise that Toronto bankruptcy trustees are being asked about bankruptcy alternatives and bankruptcy questions by so many people stressed about money. The Canadian dollar is volatile, retailers like Target are closing their doors, the Target liquidation program is ongoing and many are worried about a housing bubble.

Toronto bankruptcy trustees are also aware of a Global News poll which reported that:

  • 45% of Canadians say that their income, or keeping a steady income, causes them stress.
  • 40% are stressed about saving for retirement.
  • 40% report that saving for big-ticket items, like a car or a down payment for a home is a cause of stress.
  • 33% say that paying bills on time and credit card debt is a cause of stress.
  • 33% are stressed about mortgage or rent payment.
  • 25% are stressed about caring for their dependents like aging parents or kids.

Toronto bankruptcy trustees summary

Times are tough for many people. If you’re teetering on the edge of financial disaster or have already reached the critical point, it’s time to turn to Toronto bankruptcy trustees for professional help. Contact Ira Smith Trustee & Receiver Inc. as soon as possible. With sound advice and a solid financial plan Starting Over, Starting Now you’ll be well on your way to a debt free life.

Categories
Brandon Blog Post

VAUGHAN DEBT COUNSELLING ADVISES BEWARE OF TAX SEASON SCAMS

Vaughan debt counselling, Vaughan, debt, debt counselling, trustee, receiver, bankruptcy, Canada Revenue Agency, CRA, tax scams, email scams, phone scams, starting over starting nowWhen we perform Vaughan debt counselling, we always advise that there is no miracle cure or quick fix when you owe money to the Canada Revenue Agency (CRA). For a real life example, see our discussion in an earlier blog The Tax Lawyer; Even A High Profile Tax Fighting Lawyer Has To Pay His Income Tax. Unfortunately there is more to worry about than the CRA during tax season. There are scam artists out there just waiting to take your money. Through our Vaughan debt counselling, Ira Smith Trustee & Receiver Inc., we are able to provide some valuable information and advice to help protect you from the villainous forces lurking at the other end of a phone call or email transmission.

In fact, it was through our Vaughan debt counselling that we learned of these scams. Scammers are sending emails and making phone calls, claiming to be the CRA. These communications, asking for information including credit card data, bank account numbers and passwords and passport numbers are designed to steal your identity and/or your money. Email scams frequently contain embedded malicious software that can harm your computer and put your personal information at risk. DO NOT click on any of the links in the emails. Typically an email or telephone scam involves one of these two scenarios.

  1. You have a refund pending from CRA and the communications will go on to instruct the receiver to provide personal information in order to receive the benefit.
  2. You or your company, as a result of an audit, owe “back taxes”. You are advised you have to “pay up” ASAP to avoid a fine or the person is told there is an outstanding arrest warrant which can be avoided if the tax payment is made promptly. In many cases individuals are being told they will be deported if the taxes are not paid right away.

These types of communication are not from the CRA, should be ignored and reported to the RCMP or Canadian Anti-Fraud Centre at 1-888-495-8501 or http://www.antifraudcentre.ca.

The CRA:

  • NEVER requests information from a taxpayer about a passport, health card or driver’s license.
  • NEVER divulges taxpayer information to another person unless formal authorization is provided by the taxpayer.
  • NEVER leaves any personal information on an answering machine or asks taxpayers to leave a message with their personal information on an answering machine.

If you find yourself in financial difficulties as a result of a scam or for any other reason contact Ira Smith Trustee & Receiver Inc. We serve the GTA through our Vaughan debt counselling and our other services that are bankruptcy alternatives. We can help get you back on the road to solid financial footing Starting Over, Starting Now. Watch for our next blog when we’ll be discussing the dangers of taking free tax advice.

Categories
Brandon Blog Post

HOUSEHOLD DEBT; CANADIAN LEVELS SOUND ALARM BELLS

household debt, debt, mortgages, consumer credit, Equifax Canada, credit card debt, living paycheque to paycheque, starting over starting nowHousehold debt has hit record levels according to Statistics Canada. The total amount of credit market debt which includes mortgages, non-mortgage loans and consumer credit held by Canadian households hit a record high in the third quarter of 2014, climbing to 162.6% of disposable income. That means Canadians owed about $1.63 for every dollar of disposable income.

Equifax Canada reports that household debt levels are climbing fast, to a record $1.422-trillion in the fourth quarter of 2014. Installment loans, primarily car loans, were the fastest growing segment of debt, up 11% year over year. Credit card debt rose 5.9% from a year ago.

These household debt figures have attracted international attention. A report, recently published by McKinsey & Company, singled out Canada and six other countries (The Netherlands, South Korea, Sweden, Australia, Malaysia, and Thailand) with “potential vulnerabilities in household debt.” One of the most alarming statements in this report is that Canadian household debt levels are higher than those that existed in the U.S. at the peak of the credit bubble. However the data suggests a “potential risk, but not an imminent crisis which is good news indeed. The risks that were identified in the report were:

  • Mortgages are the main form of household debt.
  • If the economy slows down and unemployment rises, many mortgages could become unaffordable.
  • If interest rates rise, it could create a much larger burden on households repaying debt.

Many Canadians may not realize it, but because of their household debt, they are one paycheque away from what could be a financial crisis. Even worse, what would happen upon the death of the debtor?

Do you owe more than your disposable income? Are you living from paycheque to paycheque? Don’t wait for financial disaster to strike. The earlier you seek financial help the more options will be open to you. Contact Ira Smith Trustee & Receiver Inc. today. We’ll review your individual issues and come up with a sound plan so that Starting Over, Starting Now you can enjoy financial peace of mind.

Categories
Brandon Blog Post

THE TAX LAWYER; EVEN A HIGH PROFILE TAX FIGHTING LAWYER HAS TO PAY HIS INCOME TAX

: the tax lawyer, debt, Canada Revenue Agency, CRA, Starting over starting now, DioGuardi, Phillipe DioGuardi, Paul DioGuardi, DioGuardiNothing is certain except death and taxes.

Benjamin Franklin
The tax lawyer learned another certainty that the Canada Revenue Agency (CRA) will get what’s coming to them even if your name is Philippe DioGuardi and you have a radio advertising campaign with slogans that include:

  • “I don’t cheat, I change the game.”
  • “Tax problems end here.”

For those of you who are unfamiliar with Philippe DioGuardi, he is the tax lawyer who has been bombarding the radio airwaves with spots that represent him as a one man crusader against the unfair tactics of the CRA. A recent Toronto Star investigation revealed some shocking information regarding the tax lawyer Philippe DioGuardi’s own tax problems with the CRA. Some of these startling revelations include:

  • He over-drew $2 million from the law firm he co-owns with his father Paul.
  • Ontario’s legal regulator is investigating nine complaints against him.
  • The tax lawyer only recently settled his own $147,000 debt to the CRA.
  • His estranged DioGuardi wife Elena wants spousal support of $25,000 a month.

By 2012 Philippe’s overspending was out of control. His father Paul was left with no alternative but to come out of retirement and take control of the law firm. In order to prevent Philippe from continuing to over-draw from the firm’s bank account, Paul changed the signing authorities and put the tax lawyer on a strict budget.

Philippe DioGuardi’s story sounds like a bad reality television program. The tax lawyer blames many of his financial problems to his estranged wife’s (who he’s been describing as a Russian mail-order bride) spending habits and his financial commitments to his 3 children from a previous marriage. All of the dirty laundry is being aired in public and financial documents submitted by the tax lawyer in the divorce action show that:

  • Between the years 2009 and 2012, the firm had annual revenues of about $6 million, and spent about $2 million a year on advertising and marketing.
  • As of 2012, Philippe DioGuardi owed the CRA more than $140,000, including $58,000 in unpaid taxes from 2011.
  • By 2013, the CRA was trying to get a response from DioGuardi, with no luck.
  • The arrears were paid off in full over time, through an arrangement the tax lawyer negotiated with the CRA.

The reality is that even a high profile tax fighting lawyer has to pay his income tax. There is no miracle cure or quick fix when you owe money to the CRA. If you’re having serious financial difficulties and owe money to the CRA, contact Ira Smith Trustee & Receiver Inc. We don’t have a $2 million advertising campaign. Our philosophy is that corporate or personal financial problems can be solved given immediate action and the right plan so that Starting Over, Starting Now you can live a debt free life.

Categories
Brandon Blog Post

TARGET CANADA LIQUIDATION BEGINS FEBRUARY 5; ATTENTION TARGET CANADA SHOPPERS

Target Canada liquidation, Target Canada, Companies’ Creditors Arrangement Act, CCAA, 17,600 employees, debt, Target Corporation, liquidation plan, creditor protection, Ira Smith Trustee & Receiver Inc., Starting Over Starting Now, restructuring of insolvent corporations, restructuringThe Target Canada liquidation plan for the sale of its inventory, fixtures, store leases and other real estate was approved by Order of The Honourable Regional Senior Justice Morawetz on February 4, 2015. In this blog, we will focus only on the Target Canada liquidation of the inventory, furniture and fixtures located at its retail stores, distribution centres and corporate head office. Hopefully, we will succeed in explaining it in plain English!

Target Canada sought and obtained creditor protection on January 15, 2015 under the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (“CCAA”), a Canadian federal statute. As we indicated in our earlier blog, TARGET CANADA CLOSING: $5.4 BILLION AND COUNTING, the CCAA, which is normally used for the restructuring of insolvent corporations with debts over $5 million, in order to preserve all or a portion of the business and jobs. This time, rather than being used for a restructuring and turnaround, it is being used to provide for an orderly liquidation.

The closing of the Target Canada stores will put 17,600 people out of work over the next five months. The Initial Court Order provided for an Initial Stay Period was to expire on February 13, 2015. In order to carry out the Target Canada liquidation plan, part of the relief it sought and obtained was an extension of the Stay Period to May 15, 2015.

The two questions that we have been asked the most are: 1. what is the Target Canada liquidation plan for its inventory and chattels and how long will it take; and 2. will the suppliers receive everything they are owed from the liquidation?

The first question is easier to answer than the second. First, below in point form is a summary of the Target Canada liquidation plan for its inventory and chattels which is now approved by the Court:

  1. An exclusive agent was approved to conduct the Target Canada liquidation of the inventory, furniture and fixtures located at the retail stores, distribution centres and corporate head office, to liquidate in its entirety.
  1. The exclusive agent is a contractual joint venture comprised of Merchant Retail Solutions ULC (“ULC”), Gordon Brothers Canada ULC and GA Retail Canada. ULC will collectively act as the exclusive agent.
  1. The current time estimate is that the Target Canada liquidation will end no later than May 15, 2015 for the stores, April 30, 2015 for the distribution centres and March 31, 2015 for the corporate office. Circumstances may alter this schedule, but this is the current plan.
  1. All sales will be “final sales” and “as is” and all advertisements and sales receipts will reflect same.
  1. The exclusive agent has guaranteed that Target Canada will receive a net minimum amount of 74% of the “Cost Value” of the Merchandise (the “Guaranteed Amount”), computed in accordance with the Agency Agreement, and subject to adjustment in accordance with the Agency Agreement, if: (i) the aggregate Cost Value of the Merchandise is less than $445 million or greater than $475 million; and/or (ii) the Cost Value of the Merchandise as a percentage of the Retail Price of the Merchandise exceeds 63%. (This part was not plain English!!).
  1. What this means is that if there is no adjustment to the Guaranteed Amount calculation based on the Agreement, Target Canada is guaranteed to receive a minimum estimated amount of $340 million from the liquidation of the inventory, furniture and fixtures (based on an average Cost Value of $460 million).

Now for the second question. Target Canada owes money to nearly 1,800 businesses around the world, from India to Shanghai and Brampton to Winnipeg. It is impossible to estimate at this time what suppliers may expect to receive from the Target Canada liquidation, for the following reasons:

  1. There is no current estimate for what the net proceeds may be from the sale of the Target Canada store leases and real estate.
  1. There will be further deductions from the Target Canada liquidation including the:
  • trust claims of any party, statutory or otherwise, against the assets, properties and undertaking of Target Canada;
  • operating costs and liquidation specific costs for which Target Canada will have used its own cash flow rather than having borrowed those funds;
  • exclusive agent’s Charge and Security Interest (on the Limited Inventory Charged Property only);
  • Administration Charge (to the maximum amount of $6.75 million);
  • KERP Charge (to the maximum amount of $6.5 million);
  • Directors’ Charge (to the maximum amount of $64 million);
  • Financial Advisor Subordinated Charge (to the maximum amount of $3 million); and
  • DIP Lender’s Charge.
  1. The final amount of claims to ultimately be filed and admitted in the Target Canada liquidation are unknown. All we know is that in its initial motion material, Target Canada stated that it owed a total of $5.1 billion, of which $3.1 billion was owed to an entity related to Target Corporation in the United States. Target Corporation has stated that it will subordinate its $3.1 billion claim to those of the unsecured creditors.
  1. What claims may come before the claims of unpaid suppliers? The unpaid suppliers are ordinary unsecured creditors. The scheme of distribution, which has not been developed yet by Target Canada or submitted to the Court for approval, will have to reflect that the claims of trust claimants, other secured creditors and preferred creditors must be paid first before the claims of the ordinary unsecured creditors.

On paper, it seems that the Target Canada liquidation will provide sufficient proceeds to pay off all creditors in full, with assets and liabilities both in the $5-billion range. But the true value of the recorded assets will be less than stated. So for now, this second question cannot be answered.

We will continue to watch and blog about the Target Canada liquidation. If your business is showing signs of financial stress, contact Ira Smith Trustee & Receiver Inc. before your business problems lead to your business closing. The earlier you begin to deal with debt, the more options you’ll have. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Starting Over, Starting Now you can live a debt free life.

Categories
Brandon Blog Post

FINANCIAL INFIDELITY DEFINITION: HAVE YOU EXPERIENCED IT?

financial infidelity in marriage, financial infidelity, financial plan, trustee, bankruptcy, financial crisis, debt, starting over starting now

Financial infidelity definition: Introduction

Financial infidelity in marriage is the biggest danger to your marriage. Contrary to popular belief, a spouse with a roving eye is not the biggest danger; it is financial infidelity. You may be surprised to learn what the financial infidelity definition is. Financial infidelity in marriage is more common than you think. According to a 2014 survey by the National Endowment for Financial Education:

  • 33% of people with joint finances have lied to their partner about money.
  • 30% concealed a purchase, bank account, statement, bill or cash from the other.
  • 10% lied about their finances, earnings and debt.
  • 35% have been financially deceived by a partner.

Financial infidelity definition: How much damage can financial infidelity cause?

How much damage does financial infidelity in marriage cause? According to the same 2014 survey by the National Endowment for Financial Education:

  • 76% of those surveyed said financial deception has adversely affected their relationships.
  • 47% admitted it caused an argument.
  • 33% reported that it had resulted in less trust in the relationship.
  • 10% said that the deception ultimately resulted in divorce.
  • 8% blamed it for a separation.

Financial infidelity definition: Money is the top predictor of divorce

The top predictor of divorce is arguing about money, regardless of the couple’s income, debt or net worth, according to a Kansas State University study. If you have financial infidelity in marriage, the secrecy has to end and you must be open and honest. Full disclosure is the only way. You need to:

  • Have an open and honest conversation about money and shake all the skeletons out of the closet.
  • Create a budget that you can both live with.
  • Set financial rules and goals.
  • Seek financial help

Financial infidelity definition: We can help get you out of trouble

Contact Ira Smith Trustee & Receiver Inc. We are professionals who serve companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. There is a way back from financial infidelity in marriage. It takes a solid financial plan and hard work. Call us today for a consultation and take the first step towards getting your marriage and finances back on track.

Categories
Brandon Blog Post

DEBT: HOW ARE YOU MANAGING IT? NEED HELP WITH YOUR FINANCIAL PLAN?

debt, holiday debt, debt repayment, financial plan, mortgages, starting over starting now, managing debtDebt. It is easy to get into debt that is way beyond your means to repay it. And, it seems that managing it and repaying it is on everyone’s minds these days. CIBC’s yearly poll on consumer financial priorities has revealed that repayment of debts is becoming increasingly important to Canadians who are nearing retirement age; with 31% of those aged 45-54 saying repayment is their top priority. This is certainly not a surprise as a Manulife survey reports:

  • 50% of respondents expect to be in debt when they retire.
  • 10% planned to borrow against their current homes.
  • 8% were looking to downsize and use money from the sale of their home as income.

“Using home equity as a “fallback plan” suggests some Canadians are struggling to balance retirement with paying down debt”, says Manulife Bank CEO Rick Lunny. “If people think they’re going to take out second mortgages and larger mortgages when they retire, that’s a pretty concerning view and evidence of no financial plan whatsoever,” Lunny said.

Many Canadians have no financial plan what-so-ever and as well are not really financially literate. However, some mortgage brokers are recognizing the importance of client education. “There is no doubt that client education should be the cornerstone of any mortgage broker’s marketing plan,” Jackson Middleton of Kilted Media wrote on MortgageBrokerNews.ca.

If you’re like many Canadians who don’t have a plan to deal with debt repayment, you need professional advice. Contact Ira Smith Trustee & Receiver Inc. before your debt load becomes critical. The earlier you begin to deal with it, the more options you’ll have. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Starting Over, Starting Now you can live a debt free life.

 

Categories
Brandon Blog Post

Target Canada owes more than $5-billion to creditors

Target Canada, Canada Revenue Agency, creditor protection, out of work, Canada, creditor protection, Ira Smith, Ira Smith Trustee & Receiver Inc., Starting Over Starting Now, debt, trustee
Image courtesy of The Toronto Star

This blog about Target Canada is courtesy of the article written by Francine Kopun, Business reporter, The Toronto Star, published on Thursday January 22, 2015. Our Ira Smith is quoted extensively.

From India to Milton, Target Canada owes money.

Target Canada owes money to nearly 1,800 businesses around the world, from India to Shanghai and Brampton to Winnipeg.

The list runs 44 typed pages. It includes 3greenmoms, makers of eco-friendly sandwich bags in Potomac, MD ($3,751); 20th Century Fox Home Entertainment in Toronto ($3.7-million) and the Banhat Rattan Bamboo Co-operative in Ho Chi Minh City ($1,596).

Target Canada owes $1,926 to the Retail Council of Canada and $433,248 to Roots Canada Ltd. Roots was behind the popular Beaver Canoe line of goods tailor-made for Target Canada.

Target Canada owes Revenue Quebec $6.529-million. It owes more than $12-million to the Canada Revenue Agency.

“Did I see this coming? No,” said Jennifer Carlson, founder, Baby Gourmet Foods Inc., an Edmonton-based company owed $62,701.

Carlson said her first thought, when she heard the news of Target Canada shutting down, was for the employees who would be losing their jobs, and their families.

“Target was a great partner for us and at this point, it’s going to be (about) growing with our other retail partners,” said Carlson.

Target Canada announced last week it was seeking creditor protection as it winds down operations, closing all 133 stores and putting 17,600 people out of work over the next five months.

As of Thursday, all Starbucks operating within Target Canada stores will be closed, a Target spokesman confirmed.

“Generally speaking, the team members will be re-assigned to other areas of the store,” said Target Canada’s Eric Hausman.

Unable to keep shelves stocked and customers interested in their retail offering, Target executives made the decision to leave Canada rather than spend another five years chasing profits.

It has lost about $7-billion on its Canadian operations so far.

On paper, it seems that Target Canada is in a position to pay off all creditors in full, with assets and liabilities both in the $5-billion range. But the true value of the recorded assets is always less than stated, said Ira Smith of Ira Smith Trustee & Receiver Inc.

“Everything gets recorded at original cost — what they paid for the assets. When they do the inventory sale, they will not recoup the original cost. The racking and fixtures, once they shut down, is by the pound,” said Smith.

Some assets listed by Target Canada include credit owing from vendors, but as Smith points out, once Target Canada stops paying the vendors, the vendors won’t be making good on those credits.

What Target Canada will be able to realize from the sales of leases and properties it owns will also likely be less than what they originally paid.

“Who is going to step in and pay what Target Canada did? No one,” said Smith.

Some – not all – the properties leased to Target Canada, were guaranteed by the parent corporation in Minneapolis.

Target Canada likely has its own internal estimate, but that is not something it is going to share, said Smith.

Target Canada has 30 days from the date of filing for creditor protection to present a plan that will satisfy creditors. It may also seek a 30-day extension from the courts, said Smith.

The parent company is owed at least $3.1-billion, but Smith, who has read the filings, said the amount is unsecured.

Contact Ira Smith Trustee & Receiver Inc. before your business problems lead to your business closing. The earlier you begin to deal with debt, the more options you’ll have. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Starting Over, Starting Now you can live a debt free life.

Categories
Brandon Blog Post

HOLIDAY DEBT; ARE YOU DROWNING IN IT?

Some debts are fun when you are acquiring them, but none are fun when you set about debt, debts, holiday debt, New Year’s resolutions, budget, credit counselling, debt consolidation, consumer proposal, bankruptcy, bankruptcy alternatives, starting over starting now
retiring them.

Ogden Nash

Holiday debt; every year, one of the top New Year’s resolutions is to reduce debt and 2015 is no exception. In December, Equifax Canada reported that the average Canadian household was $20,891 in debt. In spite of already carrying a dangerously high debt load, many Canadians threw caution to the wind, and without a financial plan and/or a budget, they spent way too much money to burden themselves with holiday debt.

After the spending spree was over, many Canadians made New Year’s resolutions to pay off debt in 2015. CIBC did a poll on Canadian’s financial priorities for 2015 and reported the following:

  • Paying off what they owe: 22%
  • Building savings: 12%
  • Paying bills or getting by: 10%
  • Budgeting or managing day-to-day spending: 9%

No one’s ever achieved financial fitness with a January resolution that’s abandoned by February.

Suze Ormon

 

The reality is that January has now arrived and so have the credit card bills, with the holiday debt showing up for payment. You have no idea how you’re going to pay these bills but you made resolutions to pay them.

Without vision you don’t see, and without practicality the bills don’t get paid.

Paul Engle

You need more than resolutions and good intentions to pay off your holiday debt; you need professional help in the form of a trustee. Contact Ira Smith Trustee & Receiver Inc. as soon as possible. If you’re in serious debt, from holiday debt or otherwise, there are many options including credit counselling, debt consolidation, consumer proposal and bankruptcy. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan for you. Debt is an enemy that can be conquered and Starting Over, Starting Now we can get you back on the path towards a debt free life.

Don’t let holiday debt ruin your 2015 so early in the New Year. Take positive action by contacting us today!

Categories
Brandon Blog Post

BANKRUPTCY TRUSTEE SAYS A BALANCED BUDGET IS TO FINANCIAL HEALTH WHAT A BALANCED DIET IS TO PHYSICAL HEALTH

balanced budget, bankruptcy trustee, budget, financial health, debt, bankruptcy, proposal, credit card debt, trustee, starting over starting nowIn our last bankruptcy trustee blog A Balanced Budget Is To Financial Health What A Balanced Diet Is To Physical Health – Part 1, we discussed the importance of a budget to help you establish your spending limits, reduce your spending and if you stick to your budget, live within your means. This week in A Balanced Budget is to Financial Health What a Balanced Diet is to Physical Health – Part 2, we’ll be discussing a case from our files and explaining how important a balanced budget is when working with a bankruptcy trustee.

When we consult with a consumer debtor, one of the most important things for them to have is a balanced budget. In the cases of bankruptcy or proposal, a balanced budget is not optional; it is a requirement that they present us with a balanced budget as it needs to be filed in the public domain as part of their bankruptcy or proposal. In fact I will not sign off on one that doesn’t balance (except in extenuating circumstances). There are several reasons that a bankruptcy trustee says a balanced budget is a requirement for bankruptcy or proposal:

1. An insolvency filing cuts off access to credit for the debtor so they have to live within their means.
2. It is a requirement of the Act to show rehabilitation.
3. Living off credit is a likely contributor to the financial difficulty in the first place. While a proposal or bankruptcy will settle the present debts, if the lifestyle changes aren’t made the greater problem, chronic debt, won’t be solved. A bankruptcy trustee has the duty to ensure that rehabilitation has taken place.

From the files of Ira Smith Trustee & Receiver Inc.: Brian and Julie are married with no children. They can no longer afford their present lifestyle based on their income. Brian works limited part-time hours (and clings to the belief that he needs to be home at all times to work on call so he can work his way up in the ranks). Julie lost her full-time job and is having trouble finding one with equivalent hours/pay. This has been going on for over 2 months now and they have not readjusted their budget to account for the change in income. Although they do not live an extravagant lifestyle, they have become reliant on credit to maintain their lifestyle. Now they are caught in a viscous cycle; they are taking on new debt at a time they are seeking relief from the old debt they can’t pay. The reality is that until they balance a budget, even on a temporary basis, as a bankruptcy trustee, we can’t help with the old debt as they cannot live on their combined family income without incurring more debt. Therefore, they are stuck in limbo.

There are many ways to get into debt, but getting out of debt is not a do-it-yourself project. If you’re experiencing serious debt issues you need professional help from a bankruptcy trustee as soon as possible. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now we can put you back on track to financial health.

Call a Trustee Now!