Tag: Debt

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A BALANCED BUDGET IS TO FINANCIAL HEALTH WHAT A BALANCED DIET IS TO PHYSICAL HEALTH – Part 1

balanced budget, financial health, household debt, mortgages, consumer credit, installment loans, credit card debt, debt, starting over starting now, Vaughan bankruptcy trusteeA balanced budget is to financial health what a balanced diet is to physical health. Where does the money go? Do you feel like you have a hole in your pocket? Is your spending out of control? Statistics Canada reports that Canadian household debt hit a record high during the third quarter of 2014, as it grew at a faster pace than disposable income. The total amount of credit market debt, which includes mortgages, non-mortgage loans and consumer credit, held by Canadian households increased to 162.6% of disposable income during the quarter. That means Canadians owed about $1.63 for every dollar of disposable income in the third quarter. No wonder we’re scrambling. According to Equifax Canada:

  • Debt levels are climbing fast to a record $1.422-trillion in the fourth quarter of 2014.
  • Installment loans, largely made up of car loans, were the fastest growing segment of debt, up 11% year over year.
  • Credit card debt rose 5.9% from a year ago.

Many of us don’t realize the importance of a balanced budget and as a result we live beyond our means and get into financial hot water. A balanced budget is to financial health what a balanced diet is to physical health. Everyone should have a budget. It’s an important money management tool that will show you exactly how much money you receive, how much you spend, what you spend it on and how much you save. It will help you to establish spending limits, reduce spending and allow you to live within your means.

If you’re suffocating under a mountain of debt, contact Ira Smith Trustee & Receiver Inc., your Vaughan bankruptcy trustee, today. One of the most important things when we are consulting with a consumer debtor is for them to have a balanced budget. We will work with you so that Starting Over, Starting Now you can live a financially healthy life. Watch for our next blog – A Balanced Budget is to Financial Health What a Balanced Diet is to Physical Health – Part 2 – when we’ll be discussing a case from our files and how important a balanced budget is when working with a trustee.

I and my colleagues wish you a healthy, happy and balanced New Year.

 

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CONSUMER PROPOSAL; THE GREAT ALTERNATIVE TO BANKRUPTCY

consumer proposalA Consumer Proposal is THE great alternative to bankruptcy. From the files of Ira Smith Trustee & Receiver Inc.: Sammy (not his real name), a 31-year old with no dependents, is the family member of a professional that refers work to us. Referrals are always the highest form of compliment because it demonstrates confidence and respect for our professional abilities, and the strength of our personal relationship. Unfortunately Sammy had fallen prey to the world of online gambling and really needed our help.

Sammy was gambling daily and he was using his credit cards to place his online debts. And, as is the case with compulsive gamblers, Sammy was losing and losing big until he had no more credit to gamble with. He couldn’t afford to make more than the minimum monthly payments on his credit cards and he came to the realization that he would never be able to repay his debts.

The Solution: Sammy agreed to perform a Consumer Proposal paying approximately 1/3 of what he owed over a 5 year period and his creditors agreed to the Consumer Proposal.

What is a Consumer Proposal? A Consumer Proposal is an alternative to bankruptcy, governed by the Bankruptcy and Insolvency Act (BIA). It’s available only to individuals whose total debts do not exceed $250,000, not including debts secured by their principal residence. Working with a trustee in bankruptcy you make a consumer proposal to:

  • Pay your creditors a percentage of what you owe them over a specific period of time
  • Extend the time you have to pay off the debt
  • Or a combination of both

Payments are made through the trustee, who is called the consumer proposal Administrator under the BIA, and the trustee uses that money to pay each of your creditors. The consumer proposal must be paid off within five years.

Additional help and support: We recognized that Sammy had to deal with his gambling addition in order to get out of trouble and stay out of trouble so we insisted that in order for us to support his Consumer Proposal he would have to attend Gamblers Anonymous meetings. Sammy attended Gamblers Anonymous meetings faithfully, stopped gambling, and was able to save enough from his work earnings to pay off his Consumer Proposal 1.5 years ahead of schedule. After completing his Consumer Proposal, Sammy obtained at least one promotion at work, is earning more money, continues to save and was able to purchase a condominium apartment for himself (and qualify for mortgage financing).

You can turn your life around with the will and the right professional help. If you’re experiencing serious financial problems, regardless of the cause, contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you can leave the past behind and work towards a bright future.

As the miracle of Chanukah has been celebrated this past week, and as the miracle of Christmas will be celebrated in two days, I hope that this inspirational story of Sammy, last week’s inspirational story of how Molly turned her life around from addiction and debts to health and happiness in Personal Bankruptcy Can Be A Great Beginning and the first inspirational corporate turnaround story from two weeks ago, Restructuring and Turnaround of Corporations Saves Jobs & Companies, provides you with a glimpse of how modern day miracles can occur. I wish all of our readers Happy Chanukah, a very Merry Christmas, and a healthy, happy, prosperous New Year where we will all write and tell our own inspirational stories.

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RESTRUCTURING AND TURNAROUND OF CORPORATIONS SAVES JOBS & COMPANIES

restructuring and turnaround, corporate restructuring and turnaround, restructuring and turnaround proposal, debt, bankruptcy, trustee, insolvency and restructuring plan, bankruptcy and insolvency act, BIA, starting over starting nowRestructuring and turnaround services can produce great benefits as long as the company recognizes early enough that it has problems. As the holidays approach, we want to hear feel good stories. Here is a great feel good story.

There are good news financial stories out there and here is one from the files of Ira Smith Trustee & Receiver Inc. If caught early enough, we can save companies and jobs through corporate restructuring and turnaround services, and avoid bankruptcy.

The Company: Professional services company which had been in business for 16 years and was in need of restructuring and turnaround services.

Hard Assets: Negligible.

How The Company got Into Trouble: The principal’s husband was travelling on business for an extended period and she decided to take leave from her business. Rather than using technology, both new and old, to supervise the business while travelling and maintaining financial control throughout, she delegated all responsibility to senior management and senior staff. In the principal’s absence the senior management made a series of decisions that put the Company in serious jeopardy:

  • They leased extra space expecting the need to hire more staff to meet the anticipated increased business, but that business never came.
  • Their rent and staffing costs were too high.
  • Notwithstanding the increased staffing and staffing costs, they also outsourced more work than before.
  • The total costs and liabilities were increasing rapidly while revenue was declining.
  • They neglected to pay the payroll source deductions throughout and a secured claim to CRA arose in excess of $500,000.

Through a combination of incompetence and foul play, the senior management and staff encumbered the business with too much debt and had created a situation where many of the firm’s top clients were about to bolt. Without the intervention of a well planned yet swiftly implemented restructuring and turnaround plan, the company would surely die.

Upon the principal’s return, she sought the advice of her accountant and lawyer and was referred to us. The principal suspected the senior management’s actions were taken with a view to harm the company so that certain members of the senior management team could start their own firm and take certain staff members with them. It became clear to us that this company was a candidate for a restructuring and turnaround, not a candidate for bankruptcy. Working with the principal, we quickly devised and began implementing the restructuring and turnaround using a Proposal under the Bankruptcy and Insolvency Act (Canada) (“BIA”).

Restructuring & Turnaround: The Company was in the BIA Restructuring and Turnaround Mode for about 1.5 years.

  • The principal worked very diligently through the Proposal process to maintain the trust of key customers.
  • She was able to give back a portion of the premises to the landlord, thereby reducing premises leasing costs.
  • She terminated unnecessary staffing, including those senior staff that was responsible for the decline of the company. The staff did launch a wrongful dismissal suit but that litigation was settled within the Proposal process.
  • After about 1 year the Company was able to change Banks and obtain a more favourable financing package.

The restructuring and turnaround plan was in place and working!

The Result: Through the Restructuring and Turnaround Proposal, the company was able to amass sufficient cash to pay off in full the source deduction trust claim in excess of $500K and they successfully completed their Proposal by paying an additional amount of $250,000 to compromise $1.2 million of unsecured debt. The Company to this date continues to operate profitably, provides employment and also contributes in other ways to the community. The restructuring and turnaround plan worked!

Serious financial problems don’t have to mean the end for a company. There are solutions other than bankruptcy. Corporate restructuring and turnaround is one of them. Contact Ira Smith Trustee & Receiver Inc. today. If caught early enough, we can save companies and jobs through corporate restructuring and turnaround services, and avoid bankruptcy Starting Over, Starting Now.

Are you, or your company in need of a restructuring and turnaround? If so, don’t procrastinate; contact Ira Smith Trustee & Receiver Inc. now!

 

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RENT-TO-OWN OFFERS ARE REALLY EXPENSIVE DEBT

RENT-TO-OWN OFFERS ARE REALLY EXPENSIVE DEBT, rent-to-own, living paycheque to paycheque, the Canadian Consumer Handbook, debt, trustee, starting over starting now, bankruptcy canada faqRent-to-own offers sound great, but beware, because it is another form of very expensive borrowing. At this time of year we tend to shop much more than any other time on the calendar. And, from time to time we come across a great deal on a new television, or computer or piece of furniture but the credit cards are already close to their limit and there’s not much available cash. You’re about to walk away but then the salesperson tells you that they have a rent-to-own program and it sounds perfect! But, what the salesperson isn’t telling you is that rent-to-own can be VERY expensive. The reality is that the rental charge can amount to three or four times what it would cost to pay cash or finance the purchase on an installment plan.

According to a CBC News investigation, Canadians spend $260 million every year for rent-to-own products, often paying exorbitant prices that would not be allowed in some U.S. states. Canada lags behind the U.S., where the majority of states have enacted laws to protect rent-to-own customers by requiring more transparent advertising. Five states have actual price controls. Not a single Canadian province has followed suit with specific rent-to-own legislation. Rent-to-own targets low-income and credit-constrained consumers who are living paycheque to paycheque by offering low weekly and monthly payments for household goods.

Before considering rent-to-own, The Canadian Consumer Handbook has suggested four questions to ask yourself:

  1. Is the item something I absolutely have to have right now?
  2. Can I delay the purchase until I have saved enough money to pay cash?
  3. Have I considered all my credit options, including applying for retail credit from the merchant or borrowing money from a credit union or bank?
  4. Would a used item purchased from a garage sale, classified ad or second-hand store serve the purpose just as well as something new?

Don’t sign a rent-to-own contract without calculating what it’s really going to cost you and ask yourself if it’s really worth it. Getting into more debt is not the way out of debt. You need professional help to solve your debt issues. Contact Ira Smith Trustee & Receiver Inc. We can help you get back on solid financial footing so that Starting Over, Starting Now you’ll be well on your way to conquering debt. Check out our bankruptcy Canada faq yourself to start finding answers.

 

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FINANCIAL TROUBLE; GOING CASHLESS CAN LEAD YOU THERE

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financial trouble

Financial trouble; today’s cashless purchasing options can lead you there. Gone are the days when people walked around with big wads of cash in their pocket. Things have changed so dramatically that now we often find ourselves with no cash at all.

We have wallets full of reloadable coffee cards and credit cards and technology has now enabled us to make payments with our smartphones. The problem is that keeping track of our spending has become very difficult. If we are not on top of our spending and making sure that we are not spending more than we earn, financial trouble will find us.

In the good old days we paid for everything with cash. We knew exactly what we were spending and sticking to a budget was much easier. Impulse buying was virtually impossible. Shopping digitally or with plastic is somewhat unreal. And, it’s becoming easier and quicker. Paying with smartphones is becoming more and more prevalent and smartwatch payments will soon be readily available.

Even shopping with plastic has gone high tech; we no longer sign credit card receipts; we tap and we’re done. It really doesn’t feel like a financial transaction anymore. You see something that appeals and wave a smartphone at it or tap a credit card and it’s yours. We’re spending more on purchases that are virtual and we’re losing control of our spending – hence financial trouble.

I know it’s old fashioned, but try using cash for a while. Any time you make a purchase, take real money out of your pocket. You may find the impulse to buy is not quite so great. Credit cards and digital payments are convenient, but it’s very easy to lose control and you may find yourself in financial trouble.

If you’re now in financial trouble because you’ve lost control of your spending, you need professional help. Contact Ira Smith Trustee & Receiver Inc. as soon as possible. The earlier you deal with debt, the more options you’ll have. We approach every file with the attitude that your financial problems can be solved given immediate action and the right plan so that Starting Over, Starting Now you can take the first step towards a debt free life.

 

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MILLENNIAL HOME OWNERSHIP: MILLENNIALS ARE STRUGGLING WITH DEBT

Millennials, Gen Y, debt, student loans, credit card debt, credit counselling, debt consolidation, consumer proposals, bankruptcy, millennial home ownership, starting over starting nowMillennial home ownership may be out of reach because there is no doubt that Millennials are struggling with debt and it’s a serious issue. We’ve addressed this problem in two previous blogs – Millennials Debt; A Plan for Escape and Gen Y Trapped: Millennials in Debt. For those of you unfamiliar with the term Millennial, the Census Canada definition is kids born between 1977 and 1994. In Canada Millennials represent a large group; they make up approximately 27% of the population. And unfortunately they also have a lot of debt, the majority of which is student loans and a good proportion can also be attributed to credit card debt.

As a result of student debt, credit card debt and lower than anticipated salaries, many Millennials can’t even dream of buying a house and millennial home ownership is a fading dream. In fact, many can’t even afford an apartment and are living at home with their parents or sharing an apartment with multiple roommates. This situation has affected more than just the Millennials and their families; the lack of millennial home ownership has seriously impacted the housing market. “The first-time homebuyer is really absent from the market,” says David Crowe, the chief economist for the National Association of Home Builders. He says only 16% of new-home sales are to first-time homebuyers. That is half of normal. And in terms of the numbers of new homes getting built, “We’re not even halfway back,” Crowe says. This phenomenon will eventually rebound, but it will take time. Millennials will need to feel comfortable that their debt reduction plans are working before millennial home ownership, and therefore a large group of first-time home buyers, will again be able to enter the real estate market.

Millennials need help dealing with debt. Maxing out credit cards is not a solution. If you’re a Millennial in debt, you need professional help. Responsible hard working millennials deserve to have millennial home ownership included in their reality.

Contact Ira Smith Trustee & Receiver Inc. With sound professional advice and a solid plan in place, you can conquer debt. There are many ways to deal with debt which include credit counselling, debt consolidation, consumer proposals and bankruptcy. It may sound ominous, but the Ira Smith team will guide you through the process and Starting Over, Starting Now you can live a debt free life and plan for your future.

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SENIORS ACQUIRING MORE DEBT DELAYS RETIREMENT

debts, debt, retirement, credit counselling, credit card debt, line of credit, trustee, starting over starting now, seniors acquiring more debtSeniors acquiring more debt seems to be more the norm than the commercials featuring retirees driving convertible sports cars, travelling to exotic locations and wining and dining in upscale restaurants, you’ve no doubt watched. The question that seniors acquiring more debt must be asked is will debts prevent your retirement?

Seniors acquiring more debt are not going to be living the life of luxury depicted on television. How many of you are drowning in so much debt that retirement isn’t even an option? According to the BMO Retirement Institute debt is the number one barrier preventing Canadians from saving for retirement and that their priority should be to retire free of debt, including a home mortgage.

The reality is:

  • National Foundation for Credit Counseling says one-third of its 3 million clients last year were 55 or older.
  • More than 41% of families with heads of household between age 55 and 64 had credit card debt in 2010 (up from 33% in 1989), according to the AARP Public Policy Institute and the Demos research group.
  • The median total debt for 55- to 64-year-old households is $76,600, says the Employee Benefits Research Institute.

Among those retired Canadians with debt, a Harris/Decima poll for CIBC found:

What should seniors acquiring more debt, or anyone with too much debt, to get debt under control? Make a budget, stick to it and pay down high interest debt like credit card debt. If these measures are not enough to deal with your debt issues, you need professional help.

Seniors acquiring more debt should contact a professional trustee as soon as possible. The Ira Smith team are here to help. With a cumulative 50+ years of experience, we deliver the highest quality of professional service. We offer practical advice so you can clearly see the way to move forward Starting Over, Starting Now. Contact Ira Smith Trustee & Receiver Inc. today.

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CANADA REVENUE AGENCY SOCIAL MEDIA

Canada Revenue Agency, CRA, CRA audit, social media, social media sites, Facebook, LinkedIn, Instagram, Pinterest, trustee, income tax debt, debt, trustee, starting over starting now, Canada revenue agency social media, receiverCanada Revenue Agency social media investigative staff review your latest photos and news on social media sites that you post to. Did you know that? If you do post to social media sites and you did not know that Canada Revenue Agency social media investigative staff may be looking at your postings, then you’re like most of the adults online.

Sharing everything from your marital status to what you’re eating at a restaurant on social media sites has become second nature. We have a great need to share, without giving it a second thought. According to Pew Internet Research, as of September 2013:

  • 71% of online adults use Facebook
  • 17% use Instagram
  • 21% use Pinterest
  • 22% use LinkedIn

You may think that participating in social media is a harmless activity and you may even post some white lies, but after all, the Internet encourages creativity. And, who could it hurt anyways? The answer is you! It’s not just your friends checking out your Facebook page, the Canada Revenue Agency (CRA) may be checking you out as well. The Canada Revenue Agency social media investigative staff use an audit technique called Indirect Verification of Income.

The CRA is on the lookout for folks living a high income life – big house, fancy cars, and exotic vacations – without reporting the income to sustain such a lifestyle. This kind of behaviour is a huge red flag for the CRA and you could be in for an audit. Rest assured that the CRA, including the Canada Revenue Agency social media investigative staff which is an increasingly important component of the investigation side, will leave no stone unturned in search of the unreported income.

We had an interesting file that demonstrated exactly how deep in trouble you many find yourself if you post everything on social media sites, and lie. A high income earner was trying through a Proposal to compromise $400K of his income tax debt (amongst others). Throughout his entire professional career he had photos of himself in front of yachts, mansions and fancy cars to show how successful he was. The only problem was that none of it was ever his. It took a year to convince the CRA that neither he nor his spouse ever owned such assets!! Ultimately we were successful in satisfying CRA’s concerns and the CRA voted in favour of his Proposal.

Before you post your life story on social media sites, ask yourself what the Canada Revenue Agency social media investigative staff will think if they crawl your pages.

If you’re having serious financial issues related to income tax debt or any other cause, contact Ira Smith Trustee & Receiver Inc. With a solid financial plan in place Starting Over, Starting Now you can free yourself of debt.

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NON-COMPETE CLAUSE; DON’T IGNORE IT

non-compete clause, enforceable non-compete clause, non-compete, owed wages, bankruptcy, owes you wages, debt, Bankruptcy and Insolvency Act, financial restructuring, trustee, starting over starting now
Courtesy of RocketLawyer.com

Ignoring a non-compete clause can be very tempting, especially if you left your employer feeling that you weren’t given proper notice or that you were owed wages or commissions. Don’t let this type of situation cloud your better judgement because ignoring an enforceable non-compete clause can be very costly. Even bankruptcy won’t discharge you of this debt.

Recently there was an action that demonstrates clearly why not to ignore a non-compete clause. An employer terminated its agreement with one of its associates. Although a non-compete clause was in place, the associate chose to ignore it and continued doing business with several of his former boss’s customers or former customers. The employer brought action against his former associate to recover losses allegedly sustained as a result of the former associate ignoring the non-compete clause in his contract and therefore breaching his agreement with his former employer.

The claim under the judgement the employer obtained against the former associate for loss of profits was not discharged by the former associate’s bankruptcy, given that it was ruled to be a debt incurred for breach of fiduciary duty, which is a type of debt not discharged under section 178(1) of the Bankruptcy and Insolvency Act (Canada).

Don’t let your emotions cloud your better judgement. Even if you think your former employer owes you wages, ignoring an enforceable non-compete clause is not the answer. As you can see by this action, whether you leave an employer voluntarily or otherwise, if there is an enforceable non-compete clause in place, and you take customers away from your former employer during the non-compete period, not only can they obtain a judgement for the lost profits, bankruptcy also won’t discharge you of that debt.

For more information on this or any issue related to insolvency or bankruptcy contact Ira Smith Trustee & Receiver Inc. We’re an insolvency and financial restructuring practice for individuals and companies in the Greater Toronto Area (GTA) facing financial crisis. Our speciality is serving individuals and the private company entrepreneurial market, regardless of size. If you’re experiencing financial difficulties, we can help you recover financially Starting Over, Starting Now.

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MILLENNIALS DEBT; A PLAN FOR ESCAPE

I recently read an article on millmillennials, millennials debt, Gen Y, Boomers, Baby Boomers, bankruptcy alternatives, debt, student loan debt, trustee, bankruptcy, credit, counselling, debt consolidation, consumer proposals, restructuring and turnaroundennials debt that actually referred to Millennials as “The Generation of Debt”. We recently reported on this very serious problem in our blog “Gen Y Trapped: Millennials in Debt”. Pew Research reports that Millennials are more distrustful of people than ever, less likely to belong to a party or religion, more in debt, and say they are unable to marry because they lack a solid economic foundation. In addition Millennials are also the first in the modern era to have higher levels of student loan debt, poverty and unemployment, and lower levels of wealth and personal income than their two immediate predecessor generations (Gen Xers and Boomers) had at the same stage of their life cycles.

I found this millennials debt issue particularly interesting because just a few days ago I had a conversation with a Millennial who said that her friends felt disenfranchised and angry with the Baby Boomers who have enjoyed benefits that they expected and will never have like company defined pension plans and old age security benefits at age 65.

Clearly one of the major issues is that Millennials had expectations but no financial plan and many are now trapped in a debt cycle that they don’t know how to escape. Millennials debt is a problem that needs to be dealt with as soon as possible. And dealing with debt is not a DYI project. If you’re a Millennial facing serious debt issues and an uncertain financial future, contact a professional trustee. Contact Ira Smith Trustee & Receiver Inc. There are many ways to deal with debt as well as bankruptcy which include credit counselling, debt consolidation and consumer proposals.

We’re here to help. We can discuss with you the various bankruptcy alternatives for the restructuring and turnaround of millennials debt and your entire financial life leading to your overall well-being. We can put you back on the path to lead a healthy and productive life so that you can escape the millennials debt trap. Make an appointment with the Ira Smith team today so that Starting Over, Starting Now you can live a happy, productive, debt free life.

Call a Trustee Now!