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DECLARE BANKRUPTCY: A COMPLETE GUIDE ON WHAT IS IT LIKE TO DECLARE BANKRUPTCY

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

What is it like to declare bankruptcy?

What is it like to declare bankruptcy? It is a scary life event, but filing bankruptcy is not as bad or terrifying as the majority of people think. Actually, you have already been through the worst of it before you declare bankruptcy.

If it’s the right option for you, it will get rid of the tension, stress, and anxiety from your life that you have been lugging with you for a very long time. It does not require that much of your time. You will usually have 3 to 4 visits with the licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee). If all works out, you will never ever see the inside of the bankruptcy court and all your debt will be removed.

The purpose of this Brandon’s Blog is to describe what it is like to declare bankruptcy and what the bankruptcy process is all about.

When to declare bankruptcy

Bankruptcy law exists to help people who have handled an unmanageable amount of debt. Most of the time, it is a result of unforeseen expenses or other unexpected life events that are no fault of the person. Two main examples of such life events are job loss and illness.

Before deciding to declare bankruptcy, make sure to explore all your alternatives, and weigh the benefits and negative aspects of each reasonable option. Part of the no-cost examination we give everyone is doing precisely that; going through the alternatives, taking into consideration the pluses and minuses of each, and making our ideal professional recommendation to every person’s unique scenario.

If you determine that bankruptcy is your only viable alternative as lots of other Canadians do each year remember that the blot on your credit score will not be forever. By using credit properly in the future and paying your debts on time, you can begin to reconstruct your credit rating and put bankruptcy behind you.

To declare bankruptcy, either a bankruptcy restructuring or bankruptcy liquidation likewise assists companies that have unrestrained debt levels. We also offer solutions to companies and businesses searching for debt settlement help.

declare bankruptcy
declare bankruptcy

What are the consequences for a person to declare bankruptcy?

Everyone assumes that if you declare bankruptcy, it takes a massive emotional toll on you. Our experience in working with people we help is the exact opposite. Their financial debts, the fear of not having the ability to pay it off along with the anxiety of the unknown is what is devastating to everyone.

Once people declare bankruptcy, they tell us that the automatic stay of proceedings and the involvement of the Trustee stopping creditors’ collection calls are great benefits. Individuals that file for bankruptcy have already looked over the cliff and feared the worst. When they figure out that their worst worries never happen, and they currently have peace and quiet from collection phone calls, they feel like a weight has been taken off of them. As we tell people, your creditors will certainly now bother the Trustee, not you!

Your bankruptcy is a matter of public record. The Office of the Superintendent of Bankruptcy (OSB) maintains a public database. The Trustee alerts your creditors, Canada Revenue Agency (CRA) as well as the OSB of your filing. People can look up any name they wish for $8 per search. Although it is public, very few people spend money to browse the OSB database. It is mainly for Equifax and TransUnion to place on your credit history report. It is also for the federal government to keep data concerning people and companies that declare bankruptcy in Canada. There are no billboards or flashing neon lights with your name on it for all the world to see.

The most effective repercussion when you declare bankruptcy is that you have the chance to release either all or most of your financial debts and start life once again hassle-free.

How do I declare bankruptcy?

Anybody who is insolvent and owes more than $1,000 qualifies for personal bankruptcy or also known as a consumer bankruptcy filing in Canada. If you are having a problem meeting your financial responsibilities or have actually stopped satisfying them, you remain in financial trouble.

The primary step is to get in touch with a federally licensed Trustee asap to discuss your options. The Trustee will certainly initially collect info from you regarding your assets, liabilities, your household income, and expenses. This allows the Trustee to get a very good understanding of your one-of-a-kind situation.

You and the Trustee will then review your choices. Bankruptcy is just one of the feasible range of options. There are numerous bankruptcy alternatives which include, however, are not restricted to, debt consolidation and consumer proposals.

The Trustee will use the information you gave to prepare the bankruptcy forms. When you declare bankruptcy, of the various bankruptcy files the Trustee prepares, you are signing, and the Trustee is filing what is called an assignment in bankruptcy.

What should I do before I declare bankruptcy?

Many people think there are several things they should do before they declare bankruptcy. Common questions include:

  • Should I transfer my interest in the matrimonial home to my spouse?
  • When should I transfer the cash in my bank account to my spouse’s bank account?
  • Should I stop working or not look for work so that I will not have to make any surplus income payments?

The reality is that by the time you are contemplating bankruptcy, it is too late. The time to do your valid creditor proofing is not when you are insolvent, but when you are solvent! When you are not experiencing any financial problems.

Transferring assets most likely will be successfully attacked by the Trustee. That means that the Trustee will go after the person you have transferred assets to for no or little value. You will not only have protected assets, but you will also have caused your loved one to incur legal costs and have to cough up the assets.

Declaring bankruptcy is an emotional as well as a scary thing. There is only one thing you should do before you declare bankruptcy. You must meet with a Trustee for a no-cost initial consultation and be honest with them. Make full disclosure so that the Trustee can provide you with your realistic options. The Trustee will also fully explain to you what the process will look like and what might happen to you if you declare bankruptcy.

When is bankruptcy a good idea? The answer depends on your situation

Bankruptcy is not naturally negative or excellent, but it is vital for the honest but unfortunate debtor who finds themselves in big trouble with financial debt. Bankruptcy is actually for honest people that have come upon tough times. They need to look to bankruptcy due to the fact that they can’t see a way out. Even the Bible calls for debt mercy at the end of every 7 years (Deuteronomy 15:1).

If you find yourself in a hard financial situation and cannot see a way out, meet with a Trustee. Do not let fears or stereotypes stand in the way of getting the relief and your household need. To declare bankruptcy must be considered as taking a positive step in helping you and your family begin again on the right track.

declare bankruptcy
declare bankruptcy

Is filing bankruptcy bad? Can it be good?

You’ll listen to a great many people effectively say: “bankruptcy is bad”. Yet why? Why is the general consensus that filing for bankruptcy is a negative thing? While it is true that when you declare bankruptcy or a consumer proposal it is evidence of difficulty with your finances, that’s not the whole story.

A large part of the reason that people state bankruptcy is bad is that they do not understand the procedure. No two bankruptcy instances are alike. People are forced into bankruptcy for a whole host of different factors, most of which are outside their control and for that reason, not their fault.

What Happens to a company when it goes to declare bankruptcy?

The BIA regulates exactly how companies can liquidate or restructure and recover from crippling debt. An insolvent company may make use of Part III Division I of the BIA to reorganize its business and try to end up being profitable again. Management remains in place to run the daily activities of the company. Any significant change in the business organization should need to be approved by the Trustee, the bankruptcy court, or both.

Under a pure liquidation bankruptcy filing, the company stops operations and goes completely dark. The Trustee is assigned to sell the firm’s possessions and the money is used to pay for the bankruptcy administration and to make a distribution to creditors. The priority of payouts is governed by the BIA.

Trust claimants and secured creditors are paid first. For instance, secured creditors take less risk due to the fact that the money that they lend is backed by the firm’s assets. If the lender is concerned that the assets may not at any time be enough to fully cover the loan, it will also require additional backup by way of the personal guarantee of the entrepreneur. That personal guarantee can be either an unsecured promise or additional collateral by the entrepreneur pledging personal assets. They do this to limit their risk of loss if the company declares bankruptcy.

Bondholders have a better potential for recovery than shareholders because bonds are a financial debt of the business. The company promises to pay interest on the money it takes in through the sale of bonds. The company also promises to repay the principal according to the terms of the bond issuance.

Shareholders own the company and also take a higher risk. They might make more if the company does well, yet they could lose money if the company is not successful. The shareholders are last in line to be repaid if the company stops working. Bankruptcy laws establish the order of payment.

If I declare bankruptcy, what happens with the CRA garnishee?

If you declare bankruptcy or file a consumer proposal, personal income tax debt is one type of debt in the category of ordinary unsecured debts. When you’ve filed for bankruptcy or a consumer proposal, CRA can’t take any kind of further collection activity against you. This includes wage garnishment or freezing your bank account. Your Trustee will certainly alert CRA once you declare bankruptcy. The Trustee will also advise CRA to quit any type of collection activity against you.

What is it like to declare bankruptcy summary?

To declare personal bankruptcy is a major life event. However, it is a necessary thing to rid yourself of crippling debt. Most people who declare bankruptcy have been faced with a major life event. The main examples are illness, pay cuts, job loss, or divorce. It is not your fault. I hope this Brandon’s Blog has given you helpful information.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

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

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

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.
Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

declare bankruptcy
declare bankruptcy
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WILL JULIAN ASSANGE FACE CANADIAN BANKRUPTCY LAWS?

canadian bankruptcy laws

If you would prefer to listen to this Brandon’s Blog, please scroll down to the bottom and click on the podcast

Canadian bankruptcy laws Introduction

I got your attention with this silly Brandon’s Blog title, didn’t I? The answer to the question “will Julian Assange face Canadian bankruptcy laws?” is of course, no. He may face the justice systems of Britain, Sweden or the United States, or all three. But as far as I know, he isn’t wanted by the Canadian authorities.

However, there are many Canadians having problems paying all of their debts. Many have actually quit satisfying their financial commitments. If this is where you find yourself, then you are in financial difficulty and may even be insolvent.

I tell everyone that bankruptcy should be your last option. There are many ways to avoid bankruptcy. It really depends on how early on in your situation you consult a professional for advice and guidance.

The purpose of this Brandon’s Blog is to answer what seems to be the 10 essential problems bothering people thus far in 2019 for people facing financial challenges and considering filing for bankruptcy.

What happens if I declare bankruptcy in Canada?

When you declare bankruptcy, you must assign or hand over your assets to the licensed insolvency trustee (previously called a bankruptcy trustee) (Trustee). Each province regulates what assets are exempt from seizure.

So in bankruptcy, you will not lose all your assets. There is a listing of things that are excluded from seizure in Ontario:

  • Necessary clothing for you and your dependents.
  • Home furnishings and appliances that are of a worth not more than $13,150.
  • Tools and various other personal effects not worth more than $11,300, made use to earn revenue from your business. If you are an Ontario farmer, this amount increases to $29,100 for everything, including your livestock.
  • One car or truck that is worth not more than $6,600.
  • The cash surrender value of life insurance if your beneficiary is what is called a “Designated Beneficiary”.
  • Your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or Deferred Profit Sharing Plan (DPSP) other than for any amounts contributed in the 12 months immediately preceding your date of bankruptcy.
  • $10,000 of equity in your home but only if your share of the equity is less than $10,000 in total.

Earnings are not impacted by bankruptcy yet you will need to submit a monthly Income and Expense Form providing your household revenue and expenditures; this becomes part of your budgeting procedure. If your earnings go beyond specific criteria developed by the Office of the Superintendent of Bankruptcy (OSB), you will certainly have to pay part of the excess into the bankruptcy estate via the Trustee. This is called surplus income.

When you declare bankruptcy, the assets that are not exempt from seizure must be turned over to your Trustee. Those assets will be offered for sale and the cash gained from the sale of your possessions will be available for the Trustee to pay a dividend to your creditors.

Also, see below the discussion of will you lose your house and car in bankruptcy, as these assets may be handled differently.

How much does it cost to file bankruptcy in Canada?

The irony is that it does cost money for an insolvent person to file bankruptcy in Canada. The cost of a no asset, no surplus income administration is in the $1,800 to $2,000 range. If you have neither assets nor income, then you or someone on your behalf will have to make satisfactory arrangements with the Trustee for payment of this cost.

If there are assets and/or surplus income, this will most likely change the calculation of the amount the Trustee is entitled to charge for administering your insolvency file. However, the Trustee is entitled to take the Court approved fee from the funds obtained through the sale of assets and/or the surplus income payments received. In this case, the cost of your proceeding to you may very well be no extra charge!

Will I lose my house and car if I file bankruptcy in Canada?

A complete discussion of the issues involved can be found in my April 2019 blogs:

The Trustee is entitled to your equity in your home and car when you file for bankruptcy. As these other blogs of mine discuss, if someone can purchase the value of your equity, subject to the Ontario exemptions, then the Trustee will not have to take possession of your house and car.

Can you file bankruptcy and keep your credit cards?

The issue of a bankrupt keeping his or her credit cards is governed by Section 158(a. 1) of the Bankruptcy and Insolvency Act (Canada) (BIA) and Directive No. 3 issued by the Superintendent of Bankruptcy (OSB). The title of Directive No. 3 is, “Duties of the Bankrupt to Deliver Credit Cards to the Trustee”. It is provided to define under what conditions a bankrupt shall supply to the Trustee, for cancellation, all charge cards issued to and in the ownership or control of the bankrupt.

In all conditions, the Trustee shall require that the bankrupt supply to the Trustee, for termination, all credit cards issued to and in the ownership or control of the insolvent person with one exception. Except for those bank cards discussed in the next paragraph, in a bankruptcy, all credit cards must be given to the Trustee. This is regardless that there may be a zero balance on that charge card.

There is only one exception to this requirement. The insolvent person need not supply to the Trustee a credit card in the possession and control of the bankrupt where the primary cardholder is a third party (e.g., employer, spouse, friend, parent) and the primary cardholder has obtained a supplementary card in the name of the insolvent and about to be bankrupt person.

How long does bankruptcy last Canada?

The length of time you will be an undischarged bankrupt will rely on mainly three factors:

  1. Is this is your first time or is it your 2nd or more time in bankruptcy?
  2. Do you have a surplus income amount?
  3. Have you given one or more of your creditors, or your Trustee, reason to oppose your discharge?

If this is your 1st filing with no surplus income and nobody opposes your discharge application, your bankruptcy will last for 9 months. If this is your 1st time and you do have surplus income and no one opposes your discharge, it will last 21 months.

If this is your 2nd time and you do not have any surplus income, you are not eligible for a bankruptcy discharge for 24 months. However, you should consider if there is something in your pre-filing affairs that will give rise to someone opposing your discharge. For example, if the reason for your 2nd time is the same as your 1st time, your Trustee will be bound to oppose your discharge.

If you are a 2nd timer and you do have surplus income, then you will not be eligible for a discharge for at least 36 months. Again, consider your pre-filing conduct to estimate the likelihood of opposition.

In the case of an opposition, either by one or more of your creditors or by your Trustee, then it becomes a Court process. A discharge hearing will be scheduled in Court. The timing is then driven by the Court process. If your discharge is being opposed, you would be wise to consult with a bankruptcy lawyer.

Does bankruptcy ruin your credit forever?

A person that declares bankruptcy is given the lowest possible credit score. For a first time bankrupt, the information that negatively impacts your credit rating is inevitably gotten rid of approximately 6 years after your discharge from bankruptcy.

One of the purposes of the Canadian bankruptcy system is financial rehabilitation. Once you are discharged from bankruptcy, you can begin to repair and rebuild your credit.

Two easy ways are:

  1. Get a secured credit card. This is one where you put funds on deposit to equal your credit limit. The secured credit card issuer reports your activity to the two Canadian credit agencies monthly. By paying the balance off every month, you start to rebuild and repair your credit.
  2. Take out an RRSP loan and invest the money in your RRSP. Pay the loan off over the next 12 months and then rinse and repeat. By borrowing money in a manner the Bank will lend to you through the RRSP loan and paying the loan off in a year, you are rebuilding and repairing your credit. By the way, you also enjoy the tax benefit of the RRSP deduction and you are starting to build your retirement savings.

Do you have to declare your bankruptcy after 7 years?

This question was recently asked of me. At first, I didn’t quite understand what the person meant. After some further discussion, it became clear that what the person was really asking was two questions as follows:

  1. Will my bankruptcy filing show up on my credit report after 7 years?
  2. After 7 years, do I have to report the fact that I was bankrupt?

The first question is answered both above and below. As far as reporting the fact that you filed for bankruptcy, there are several issues. First, you don’t need to tell anyone unless you are specifically asked. Second, you will only be asked on an application for a loan or credit card, a job where handling cash and/or bonding is required, on an insurance application or in connection with a professional license that you hold. Sometimes the question may be limited, such as, “in the last 5 years”. You have to read the question carefully and answer truthfully.

Does a bankruptcy automatically come off?

When you file bankruptcy, Canadian bankruptcy laws require your Trustee to inform your creditors, the Canada Revenue Agency (CRA), credit rating coverage firms and the OSB. The OSB maintains a database of insolvency filings that anyone can search. So the fact you filed for bankruptcy is public. That information exists forever.

Your filing will also show up in your credit report. For personal bankruptcy, as indicated above, it will remain on your credit report for about 6 years after you get your bankruptcy discharge.

Additionally, specific insolvencies, both for personal and corporate bankruptcy call for a legal notice to be placed in a local newspaper.

What are the disadvantages of filing for bankruptcy?

There are certain disadvantages of filing for bankruptcy. In no particular order:

  • Your non-exempt assets will be handed over to the Trustee to be sold in order to obtain the value in cash so that a distribution can be paid to your creditors.
  • As indicated above, your bankruptcy will certainly show up on your credit report for about 6 years after you get your discharge from bankruptcy. This could be for as much as 7-10 years from your date of bankruptcy.
  • A bankruptcy drops you to the lowest possible credit score rating.
  • You have to turn over all of the credit cards in your control or possession where you are the primary cardholder. The credit card companies will also cancel any card you may have forgotten to give to your Trustee.
  • A bankruptcy might impede your capacity to get a home mortgage or a loan for several years.
  • If you did not have adequate life insurance before you filed for bankruptcy, your ability to obtain life insurance without being rated will be difficult.
  • If your employment requires you to be bonded, a bankruptcy could affect your job.
  • Although your discharge from bankruptcy operates to discharge you from your debts, there is a list of debts that are not discharged.

They are:

    • secured loans – home mortgage or vehicle loan;
    • certain student loans (remember the 7-year rule I just mentioned?);
    • penalties or fines enforced by the court;
    • spousal support and alimony you have to make in your separation agreement or divorce proceedings; and
    • any debts from fraud.

It is for these reasons that I always advise people that filing for bankruptcy should be a last resort. There are many options to avoid bankruptcy. Which ones might work, depends on how long you have waited to see me and how severe your situation has become. Various options to avoid bankruptcy are:

Do I need to retain a bankruptcy lawyer near me?

In simple situations, I would say it is not necessary. When you have an initial free consultation with a Trustee, he or she can tell you whether or not they believe it would be in your best interest to consult with a bankruptcy lawyer.

Remember that there is no such thing as Trustee-bankrupt confidentiality. In fact, as part of the documentation for an insolvency filing, you will have to acknowledge your understanding that under the Personal Information Protection and Electronic Documents Act (S.C. 2000, c. 5), certain information will be disclosed and will be public.

So, if your situation is complicated, or if you require advice on a matter you need to be kept confidential, you should retain a bankruptcy lawyer. That way you can discuss those issues and obtain the advice you need and be assured of confidentiality.

BONUS ISSUE: Can I get a credit card during bankruptcy?

I thank you for getting this far along in my blog. So here is an 11th bonus question that I am asked from time to time – can I get a credit card during bankruptcy?

Applying for a credit card is just like applying for a loan. You are asking a lender to advance you money that you promise to repay. Under Section 199 of the BIA, it is a bankruptcy offense to obtain a credit of $1,000 or more from any person without telling the lender that you are an undischarged bankrupt.

Once you make that disclosure, or they find out otherwise, I highly doubt they will approve of you. There may be some companies that will give a car loan to an undischarged bankrupt, but, the amount you can borrow will result in your not getting a very good car. Also, the fees and interest rate that they will charge you will be extremely high.

The only exception is that you could apply for a secured credit card. As I noted above, a secured credit card is a good way to start rebuilding your credit.

Canadian bankruptcy laws summary

If you have too much debt and are facing financial challenges, I hope this Brandon’s Blog has provided some insight for you. The above questions are what I have found to be the 10 essential problems bothering people thus far in 2019 when facing financial challenges and considering Canadian bankruptcies laws.

If you are one of the many Canadians facing debt problems and not knowing what to do about them, call the Ira Smith Team today. We have decades and generations of experience aiding people and companies trying to find and work through a successful financial restructuring or debt settlement approach. As a licensed insolvency trustee, we are the only experts recognized, approved and supervised by the Federal government to provide insolvency help and solutions to help you to avoid bankruptcy.

Call the Ira Smith Team today so you can do away with the stress and nervousness debt concerns produce. With the distinct roadmap we develop special to you, we will rapidly return you right into a balanced, healthy and carefree life.

You can have a no-cost evaluation to aid you so we can repair your debt issues. Call the Ira Smith Team today. This will definitely enable you to go back to being productive, healthy and balanced, Starting Over Starting Now.

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DEBT FORGIVENESS CRA: CANADA REVENUE AGENCY BEATS DONOVAN BAILEY

debt forgiveness craDebt forgiveness CRA: Introduction

Last week we told you about professional athletes who earned enormous fortunes and blew it all on lavish, unsupportable lifestyles. The end result was bankruptcy. There is another group of professional athletes who also earned millions and ended up using a bankruptcy alternative to avoid bankruptcy, but not because they blew it all. They were trying to shield their money from taxes through complex offshore tax structures. However, the Canada Revenue Agency (CRA) reassessed them and now they had a huge tax bill and needed debt forgiveness CRA.

CRA debt forgiveness: Donovan Bailey tries to race Canada Revenue Agency

This is certainly not a new phenomenon. The newspapers and tabloids often feature stories about famous people who the tax department reassesses for using complex tax structures designed by agents, managers, accountants, and lawyers. In this case, our very own Olympian, Donovan Bailey, had to file a proposal under the Bankruptcy and Insolvency Act (Canada), as a result of an offshore tax scheme to try to beat the CRA. And, sadly, he’s not the only one.

Debt forgiveness CRA: Her Majesty outruns the offshore tax scheme

The offshore tax scheme that nearly bankrupted Donovan Bailey was designed to lessen the amount of income tax to be paid. Donovan Bailey made a “charitable donation”. It went through a complicated series of transactions. The money made its way back to Mr. Bailey, through an offshore account. It was supposed to come back in tax-free.

The problem was that the tax authority reassessed Donovan Bailey. They said the charitable donation was no more than a sham to avoid paying taxes. Instead of tax-free money Donovan Bailey found himself in debt to the CRA to the tune of $2.3 million in unpaid taxes and ended up in bankruptcy court.

Debt forgiveness CRA: CRA gets tough

The CRA has vowed to get tough on tax evaders and the tax professionals who help them. CRA threatens with increased fines and jail sentences. They have a strategy to root out high-risk wealthy Canadians and corporations that stash cash in offshore accounts to avoid taxes. And, they’re spending $444 million on these measures, and expect to recoup $2.6 billion in added revenue over five years.

Debt forgiveness CRA: What to do if you have too much debt

No one likes to pay taxes, but trying to hide money from the CRA could land you fines, jail time and/or bankruptcy. If you’re considering bankruptcy because of income tax debt or for any reason, we can show you bankruptcy alternatives to get CRA debt forgiveness. We can end your debt pain through a consumer proposal, debt consolidation, and credit counselling. Contact a professional that you can trust – Ira Smith Trustee & Receiver Inc.

The Ira Smith Team has a cumulative 50+ years of experience dealing with diverse issues and complex files. We deliver the highest quality of professional service. Don’t settle for less. Give us a call today and Starting Over, Starting Now you can overcome your financial difficulties.

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FORMER PRO ATHLETES WHO ARE BROKE: EARN OVER $400 MILLION & GO BANKRUPT?

former pro athletes who are brokeFormer pro athletes who are broke: Introduction

I know that earning over $400 million and going bankrupt seems unbelievable to most of you, but it’s true. Just ask Mike Tyson. And he’s not the only one. There are many former pro athletes who are broke. They have made fortunes and lost them, with nothing to show for it. No secure investments, no retirement fund, nothing put away for a rainy day.

Former pro athletes who are broke: They don’t know where the money went

They wake up one day and the money’s all gone, the credit cards have been cancelled, the bank has foreclosed on the mansions and the fleet of exotic cars is being repossessed. The worst part is that most of them don’t even know where the money went.

Former pro athletes who are broke: Evander Holyfield

It’s easy to blow through a fortune. Evander Holyfield spent $230 million in no time flat. He bought a 235-acre Utah estate with 109 rooms that included at least one monthly electric bill of $17,000. There was also a $550,000 loan he took out to pay for landscaping; $200,000 in back taxes, plus alimony and child support for three ex-wives and 11 children.

Former pro athletes who are broke: Boris Becker

It adds up fast when you’re spending like a drunken sailor. Boris Becker is the latest of the sports stars to declare bankruptcy in spite of enormous earnings. The marriages, girlfriends, children and an unsupportable lifestyle finally caught up with Boom Boom. The list of these bankrupt athletes goes on and on and on.

Former pro athletes who are broke: According to Charles Barkley….

​Charles Barkley estimates that 60% – 70% of professional athletes go broke and there are many reasons.

  • Buying lavish gifts and giving money to family and friends
  • Unsupportable lifestyles
  • Mansions around the world
  • Yachts
  • Exotic cars
  • Bad business ventures
  • Bad money managers
  • Not understanding financial matters
  • Zero savings
  • No rainy day fund
  • No retirement plan
    ​

Former pro athletes who are broke: So what does it all mean?

Having enormous amounts of money is no guarantee of financial security as you can see. And financial problems can plague both the rich and not-so-rich.

If you’re having trouble paying the bills, don’t wait until you’ve hit rock bottom. The earlier you seek help, the more options will be available to you. With immediate action and the right plan, the Ira Smith Team can have you on your way to financial peace of mind Starting Over, Starting Now. Give us a call today.

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CREDIT SCORES ONTARIO: USE YOURS TO SCORE THAT DREAM DATE!

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Credit scores Ontario: What is it?

Credit scores Ontario is a judgment about your financial health, at a specific time. It indicates the risk you represent for lenders, compared with other consumers. There are many ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900.

In Canada, the magic number is probably 650. A score above 650 will likely qualify you for a standard loan while a score under 650 will likely bring difficulty in receiving new credit.

Credit scores Ontario: How is it calculated?

The credit score formula takes all or most of the following into account:

  • Your payment history
  • The total amount you owe
  • Length of your credit history
  • New credit accounts
  • New credit inquiries, whether approved or not
  • Types of credit in use

Credit scores Ontario: Good credit scores do have sex appeal

A good credit score has shown that money does play a big role in the dating world; it is a reality. It’s sad but true; your income does play a big part in how attractive you seem to a potential partner. And, did you know that good credit scores have sex appeal?

Credit scores Ontario: Like it or not, a good credit score makes you attractive

There’s an old joke that says there’s no such thing as an ugly man in a Ferrari. But, let’s be honest, if you were on an online dating site and saw a potential date who was attractive but unemployed or in what you perceived as a low paying job, would you reach out to that person?

Conversely, if you saw someone who wasn’t movie star attractive but reported a high income or listed their profession as CEO, lawyer or doctor, wouldn’t they look a lot better to you?

Credit scores Ontario: Credit score dating backed by scientific studies

Don’t take my word for it. This is all backed up by science. There are many studies on the subject including a recent one co-authored by behavioural economist Dan Ariely who in the journal Quantitative Marketing and Economics reported:

  • Men and women prefer a high-income partners over low-income partners
  • This income preference is more pronounced for women

Credit scores Ontario: Beware – high income is only one part of it

Income only tells part of the story. Find out how they spend their money. Are they living within their means? They may have a big income but is it enough to cover the expenses of the fancy sports car, big house and exotic vacations? Big earners, celebrities and even Presidents (and President-elects!) declare bankruptcy too:

Credit scores Ontario: what to do about too much debt

We aren’t in the dating business, but we can help you get your debt issues under control. Give the Ira Smith Team a call today so that Starting Over, Starting Now you can live a debt free life, and you may have better luck dating.

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LICENSED INSOLVENCY TRUSTEE TORONTO SAYS LOTTERY JACKPOT CAUSES BANKRUPTCY

licensed insolvency trustee toronto

Introduction

As a licensed insolvency trustee Toronto, when I first came across this study, frankly I was quite surprised. After all, how could my neighbour’s good luck have such an adverse effect on me? Nevertheless, according to a study co-authored by University of Alberta professor, Barry Scholnick for the Federal Reserve Bank of Philadelphia, if your neighbour wins a big lottery you could go bankrupt.

Why would the neighbours of lottery winners go bankrupt?

It all boils down to “keeping up with the Jones”. The study says that your going bankrupt likelihood increases when your neighbour buys a big house, fancy cars, boats; anything that’s highly visible or showy. Then the neighbours, feeling pressure to keep up or compete, also go on a spending spree. However, without the cash from a lottery win, the neighbours’ finance their spending sprees with debt and beat a clear path to bankruptcy. Sadly, it’s not just the neighbours of lottery winners that go bankrupt. As a licensed insolvency Trustee Toronto I can say that a high percentage of lottery winners go bankrupt too.

How many lottery winners go bankrupt?

  • 44% of those who’ve ever won large lottery prizes became broke within five years, according to a 2015 Camelot Group study.
  • 33% declared bankruptcy according to the Certified Financial Planner Board of Standards.
  • Other studies show that lottery winners often become estranged from family and friends, and incur a greater incidence of depression, drug and alcohol abuse, divorce, and suicide than the average person. As a licensed insolvency trustee Toronto, we must also help the person seek help for their medical condition/addiction, as part of helping them solve their financial problems.

All of a sudden lottery winners have an enormous amount of money on their hands and they have no idea what to do with it. Instead of seeking financial advice from a licensed professional and investing a large part of their money for the future, they go on wild spending sprees and pretty soon they’re worst off then they were before. Then they have to go see someone like me, the bankruptcy trustee.

Can a licensed insolvency trustee Toronto help me?

What the study shows is that a big lottery win will not grant you immunity from bankruptcy. Regardless of the reasons that you’re in serious debt, you need the help of a professional trustee. Ira Smith Trustee & Receiver Inc. approaches every file with the attitude that we will solve your corporate or personal financial problems given immediate action and the right plan. Give us a call today and take the first step towards a debt free life. We are a licensed insolvency trustee Toronto that can get you back on the road to financial health, Starting Over, Starting Now.

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SENIOR CREDIT CARD DEBT RELIEF OR DECLARE BANKRUPTCY-SENIORS IN DEBT, PART 3

senior credit card debt relief, should seniors file a consumer proposal, bankruptcy, personal bankruptcy, declare bankruptcy, trustee, bankruptcy alternatives, bankruptcy process, credit counselling, debt consolidation, consumer proposals, wagesLast week we discussed why the majority of seniors are in debt. This week we’ll be addressing if seniors should try and pay off their debts to obtain senior credit card debt relief or declare bankruptcy.

Life is very difficult for many seniors who anticipated that their golden years would be a carefree retirement. Instead, according to the Vanier Institute for the Family, Canadians over the age of 65 have the highest insolvency and bankruptcy rates in the country. With increasing expenses and a significantly reduced income and return on investments, more seniors are contemplating bankruptcy; but is it the best and/or only option?

While it’s true that bankruptcy can eliminate many of your debts, people typically file personal bankruptcy as a means of protection from creditors. If you are working, bankruptcy will protect you from creditors garnisheeing your wages. However, if you are retired and your sole source of income is your pension, then there are no wages to garnishee. It is very difficult for a creditor to garnishee a pension with one notable exception. If you owe the CRA (Canada Revenue Agency) for unpaid taxes, they are permitted to garnishee all types of pension income under Section 224.1 of the Income Tax Act. It is rare that the CRA will garnishee your pension income, but it is a possibility. If you have a significant tax debt and the CRA has threatened a pension garnishment, the bankruptcy process is an option that has to be considered.

The right debt relief option you ultimately decide upon will depend on whether or not you have assets, who you owe money to, and how much you owe. For seniors in debt there are bankruptcy alternatives – credit counselling, debt consolidation, consumer proposals – which in many cases are better options than declaring personal bankruptcy. In our next blog, we will be considering various options, including should seniors file a consumer proposal?

Unfortunately too few Canadians are properly prepared for the financial reality of retirement. They get caught up in a downward financial spiral and some pass away leaving significant debt. The family is then left with the unpleasant options of paying the debt themselves or bankrupting the estate. If you are a senior in serious debt, consult a professional Trustee as soon as possible. Contact Ira Smith Trustee & Receiver Inc. for professional advice and an action plan that’s right for you. Starting Over, Starting Now we can give you the help that you need to deal with your financial problems, and peace of mind.

Watch for our next blog when we’ll be discussing some advice we have for seniors in debt.

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HIDING YOUR ASSETS IN A BANKRUPTCY COULD LAND YOU IN PRISON

hiding your assets, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy court, bankruptcy file, Criminal Code, Office of the Superintendent of Bankruptcy, declaring bankruptcy, trustee, trustees, what is bankruptcyIf you think that hiding your assets in a bankruptcy is a good way to hang onto your property; think again. This is not a minor matter. In fact it’s a violation of the Bankruptcy and Insolvency Act (BIA) and the Criminal Code and it’s punishable by hefty fines and/or prison time. You will find yourself in a world of trouble if you:

  • Fraudulently dispose of property before or after the bankruptcy
  • Make false entries in a statement of account or hide, destroy or falsify a document related to your property or affairs
  • Conceal or fraudulently remove property, or conceal claims or debts
  • Refuse to respond fully and truthfully to questions posed during an examination held in accordance with the BIA

Committing fraud against the government is never a good idea and the likelihood is that you will get caught. The Office of the Superintendent of Bankruptcy (OSB) identifies possible offences through its detection programs or through complaints received from creditors, trustees or the public. When the OSB has reason to believe that an offence has been committed, it sends the file to one of its three special investigation units. The investigation units work closely with the Royal Canadian Mounted Police (RCMP) and in some cases files are transferred to the RCMP. The OSB encourages people to report fraudulent activities that relate to a bankruptcy file and they even have a toll free number to call or use an affordable background check USA 1-877-376-9902.

In addition to fines and/or prison time, if you hide your assets from the bankruptcy court:

  • You will not be able to discharge your debts
  • The trustee can revoke your discharge and those debts cannot be discharged in subsequent bankruptcies

Still think that hiding your assets in a good idea?

Honesty is always the best policy. If you are thinking of declaring bankruptcy, contact Ira Smith Trustee & Receiver as soon as possible. We will guide you through the process and Starting Over, Starting Now get you well on your way to living a debt free life.

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TANK YOUR CREDIT SCORE RATINGS, DECLARE BANKRUPTCY, IMPROVE YOUR LIFE!

credit score ratings, bankrupt, Bankruptcy, Consumer Proposal, credit report, credit score, declare bankruptcy, insolvent, toronto bankruptcy, vaughan bankruptcy, what is bankruptcyAre you the poster child for financial responsibility? You have a good job, you take care of your family, your bill payments are all current and you have an excellent credit score. So, what can possibly be wrong with this picture and why would we think you should tank your credit score ratings, declare bankruptcy and improve your life?

The reality is that as many as 70% of bankruptcy filings are made by people with strong credit scores, according to TransUnion. Why isn’t a great credit score a predictor of whether or not someone will go bankrupt? “Many people are hopelessly insolvent but they’re not delinquent. From a credit report they are making their payments on time but they’ve got no reasonable prospect of ever paying this debt off,” said Mr. Mantin, senior vice-president of E. Sands & Associates Inc. According to Ira Smith, President of Ira Smith Trustee & Receiver Inc., “This is a very telling comment. Most people believe that as long as you make the minimum payment, you are “current”, especially when it comes to credit cards, even though deep down you know that you will never be able to pay off the debt. Current used to mean that when you received the credit card statement, you paid off the balance in full and you were delinquent if all you made was the minimum payment. This is a huge societal mind shift.”

When you are staying afloat by making the minimum payments, it doesn’t take much to tip you over the edge. Any major life changing experience can do it – loss of job, divorce, serious health issues, unexpected major expense – and all of a sudden you go from paying your bills on time and having a great credit score to not paying your bills and looking at bankruptcy.

What should you do? If you are struggling with a mountain of debt, even if you are making your monthly payments and have a great credit score, contact Ira Smith Trustee & Receiver Inc. A great credit score won’t solve your debt problems, but a consumer proposal or bankruptcy can help you both financially and emotionally, alleviating the monthly stress when the bills are due. Starting Over, Starting Now you can take charge of your financial future and improve your life.

Call a Trustee Now!