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PARTNERING WITH A LICENSED INSOLVENCY TRUSTEE: A LAWYER AND ACCOUNTANT’S COMPREHENSIVE GUIDE TO MASTERING INSOLVENCY LAW

This is an image of a professional woman and a professional man shaking hands to symbolize a successful partnership between a licensed insolvency trustee and a lawyer or accountant.

Definition of a Licensed Insolvency Trustee in Canada

A Licensed Insolvency Trustee (previously called Trustees in Bankruptcy) in Canada plays a crucial role in helping individuals and businesses with debt problems. Navigating financial difficulties can be overwhelming, but understanding the role of a Licensed Insolvency Trustee can provide clarity and guidance. In this comprehensive guide, we’ll delve into the responsibilities and significance of an LIT, shedding light on how they can assist individuals and businesses facing insolvency.

This is the second in a series of Brandon’s Blogs to encourage legal and accounting professionals not familiar with insolvency techniques to help clients navigate the Canadian bankruptcy system. Understanding essential principles and vocabulary about bankruptcy is essential before working together with experts in this area. We will discover the complexities of the insolvency meaning, and take a look at the varied forms of insolvency identified in Canada.

Licensed Insolvency Trustee: Qualifications and Licensing Requirements

To attain the designation of Licensed Insolvency Trustee candidates have to undergo a difficult journey of extensive training and meet stringent licensing prerequisites developed by the Canadian Government’s Office of the Superintendent of Bankruptcy (OSB). These licensing requirements include going before an Oral Board of Examination.

This rigid procedure assures that a Licensed Insolvency Trustee (LIT) has the indispensable understanding and abilities essential for expertly managing complex financial circumstances. Furthermore, LITs are bound by a stringent code of ethics, which emphasizes the utmost integrity, professionalism and reliability within their specialist practice. We must also continuously update our professional development.This is an image of a professional woman and a professional man shaking hands to symbolize a successful partnership

Roles and Responsibilities of a Licensed Insolvency Trustee

As Licensed Trustees in Canada, primary responsibilities revolve around assisting individuals and businesses facing debt challenges. This role is crucial in guiding people and companies towards making informed decisions about their debt management strategies. Let me walk you through the key tasks that make up my day-to-day responsibilities.

Financial Assessment: Helping Individuals Navigate Debt Management Options

As a Licensed Insolvency Trustee in Canada, my main obligations revolve around assisting people and companies dealing with debt obstacles. This function is critical in leading debtors toward making educated choices regarding the wide range of available debt relief options. Let me walk you through the crucial steps that make up my day-to-day obligations.

Among the most fulfilling elements of being a Licensed Insolvency Trustee is the opportunity to assist individuals in recognizing and choosing one of the most appropriate financial debt management options for their one-of-a-kind situations. By supplying individualized advice tailored to their financial conditions, I aim to equip individuals to take control of their financial debt and work in the direction of financial stability.

Among the key duties of Bankruptcy Trustees is to conduct a detailed analysis of a person’s or business’s financial situation. This includes reviewing assets, liabilities, income, and expenses to determine the most ideal course of action.

Exploring Options: Reviewing Debts and Providing Tailored Advice

When it involves handling your debt, there is no one-size-fits-all solution. As a Licensed Insolvency Trustee, I dive deep right into your distinct financial scenario and provide you with individualized advice that is tailored to your requirements. From the moment we take a seat for your initial consultation, my goal is to understand the specific difficulties you are facing to ensure that I can recommend strategies that not only address your immediate concerns but will also establish you on a course toward long-lasting financial success.

After very carefully examining your circumstances, I am here to help you or your company discover the most effective remedies for your money battles. We can explore numerous alternatives, including filing bankruptcy, a consumer proposal, or executing alternate methods to manage your financial obligations.

Whether we concentrate on producing a tailored payment plan, working out a repayment plan with your creditors, or taking into consideration different options, my major objective is to provide you with an uncomplicated course to financial freedom and stability. We work together to minimize your financial problems and pave the way for a brighter future.

Personal bankruptcy and consumer proposals are processes that feature certain legal protocols and safeguards. As a Licensed Insolvency Trustee, I play a vital function in making sure that people who file obtain full protection throughout as called for by the Bankruptcy and Insolvency Act (Canada) (BIA). In cases where either a consumer proposal or personal bankruptcy is deemed necessary, LITs administer the insolvency procedures. We communicate with creditors, prepare required documentation, and ensure conformity with pertinent legislation and policies throughout the process.

From launching the required paperwork to taking care of interactions with creditors and supervising the entire procedure, I work as a trusted intermediary to make sure that all stakeholders follow their roles and responsibilities. By upholding this lawful framework, I make sure that people undertaking the bankruptcy or proposal process, are provided the safety and comfort they need during this difficult time.

Being a Licensed Insolvency Trustee is not simply a task; it’s a dedication to guiding individuals and companies toward a brighter economic future. By helping them navigate through the best decision for them that they can make from all of the debt settlement options, and offering customized advice, I make every effort to make a significant difference in their lives and encourage them to get over their financial difficulties with self-confidence.

Official Documents and Filing Documentation

One of the primary obligations is preparing and filing essential documentation with the OSB and the Court. This action is vital as it officially initiates the financial obligation resolution process and establishes lawful protection for the person or organization seeking relief. By carefully finishing and filing the needed records, we make certain that all required details are properly recorded and processed.

Notifying Creditors to Stop Collections

An additional key facet of my duty is to inform creditors about the client’s decision to seek debt relief through an official filing, whether it is personal or corporate bankruptcy or a restructuring proposal. By notifying unsecured creditors concerning the filing declaration, we successfully stop creditors’ collection activities, including pestering collection calls, letters, and any possible lawsuits. This communication not only safeguards the debtor but likewise ensures that creditors adhere to the legal guidelines affecting debt collection.

Managing Creditor Claims and Assets

A Licensed Insolvency Trustee manages the sale of assets that are not exempt from seizure and also manages the creditor claims process. It is an indispensable part of the management tasks of a LIT. By assessing the assets and liabilities of the person or business, we identify just how to ideally address creditor claims within the framework of the bankruptcy or restructuring case. This includes working very closely with creditors to facilitate the proper valuation and classification of claims and make certain everyone is treated equitably and fairly.

Throughout a bankruptcy case, LITs take responsibility for managing and selling the debtor’s properties. We work for the highest return possible under the circumstances for creditors while providing debtors with a fresh start.

In summary, the administrative responsibilities of a Licensed Insolvency Trustee include a large range of jobs focused on helping with the debt resolution process while supporting the legal standards and securing the rights of both debtors and creditors. These responsibilities call for a focus on detail, adherence to laws, and effective communication to guarantee an effective outcome for all involved in the process.This is an image of a professional woman and a professional man shaking hands to symbolize a successful partnership

Licensed Insolvency Trustee: Client Support and Education

For consumers who have filed and taken on either a consumer proposal process or personal bankruptcy, I provide you with assistance and education throughout your journey to financial recuperation. As federally regulated debt experts in Canada, LITs’ duties include offering assistance and services to people and businesses dealing with debt challenges.

Providing Credit Counseling Sessions

One of the essential and required tasks when helping an individual through a consumer proposal or bankruptcy is to provide two credit counselling sessions targeted at assisting them in budgeting effectively and setting financial objectives. These sessions are developed to equip the person with the expertise and skills needed to handle their finances sensibly, leading the way for a much more secure economic future.

Past formal insolvency proceedings, LITs use these financial counselling sessions to aid people in gaining back control of their financial resources. This may consist of budgeting recommendations, financial debt monitoring strategies, and sources for enhancing financial literacy.

Assisting in Money Management

Managing cash properly throughout and after the debt resolution process is vital for lasting economic stability. I am right here to offer financial advice to help the person succeed with this process, supplying sensible suggestions and assistance to ensure that they can make educated decisions regarding their finances. Whether it’s producing a spending plan, focusing on expenditures, or exploring methods to enhance their earnings, I will certainly be by their side every step of the way.

Discharge Process for Bankrupt Individuals or Consumer Proposal Completion Certificate

Among the last steps in formally clearing your financial obligations is making an application for a discharge from bankruptcy or getting your certificate of full performance. This certification represents that you have efficiently satisfied your obligations and are currently debt-free. As your Licensed Insolvency Trustee, I will help you finish this process, making certain that you receive the essential documents to formally shut down this chapter of your financial life.

With a combination of credit counselling, strict money management, and the conclusion of needed paperwork, we work together to help you achieve financial liberty and satisfaction.This is an image of a professional woman and a professional man shaking hands to symbolize a successful partnership

Unique Role of a Licensed Insolvency Trustee

As a Licensed Insolvency Trustee in the Greater Toronto, Ontario Canada area, my role is vital in aiding people and companies to navigate complicated financial debt issues. A LIT is the only debt professional accredited by the federal government to offer extensive financial debt guidance and to carry out insolvency administration under the BIA. This means that when you are encountering overwhelming debt, I and my fellow Licensed Insolvency Trustees are the go-to people for specialist advice and remedies.

When individuals or companies are battling with financial debt, I act as an intermediary or umpire to ensure a fair and balanced process for both debtors and creditors while solving the debtor’s financial problems. I must help with communication, uphold laws, and supervise the financial obligation resolution procedure, making certain that the entire administration abides by the required regulations.

Partnering With a Licensed Insolvency Trustee Supplies Countless Benefits For People and Companies Facing Financial Obstacles

  • Professional Advice: LITs bring specialized knowledge and experience to the table, making sure of informed decision-making throughout the entire process.
  • Legal Protection: By working with a LIT in a formal insolvency process, debtors gain legal defence from creditor harassment and collection actions, providing much-needed relief and peace of mind.
  • Financial Debt Resolution: LITs aid debtors explore viable alternatives for fixing their financial debts, tailoring remedies to their special financial scenarios.
  • Financial Recovery: With financial therapy and support, LITs equip debtors to restore their monetary health and wellness and progress with confidence. More often than not, this also goes a long way to restoring mental health.

Licensed Insolvency Trustee: Conclusion

In summary, a Licensed Insolvency Trustee plays a crucial role in assisting individuals and businesses facing insolvency. From conducting financial assessments to facilitating legal proceedings and providing ongoing support, LITs serve as trusted advisors and advocates, in conjunction with a person’s or corporation’s lawyer and accountant, for those navigating challenging financial terrain. By understanding the role and significance of an LIT, debtors can make informed decisions and embark on the path toward financial stability and recovery.

By assisting clients in navigating insolvency matters proficiently, lawyers and accountants can empower them to take proactive steps towards a brighter financial future. This includes providing insights on debt restructuring, bankruptcy options, and other relevant strategies that can improve financial sustainability and stability. Ultimately, the goal of leveraging a foundational understanding of Canadian insolvency laws is to facilitate positive outcomes for clients, equipping them with the knowledge and resources needed to overcome financial obstacles and achieve long-term success. This also allows them to remain your client!

I hope you enjoyed this Licensed Insolvency Trustee Brandon’s Blog. Individuals and business owners must take proactive measures to address financial difficulties, consumer debt and company debt and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses with debt problems that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns and more associated with your company debt are obviously on your mind.

The Ira Smith Team understands these overwhelming debt financial health concerns. More significantly, we know the requirements of the business owner or the individual who has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious. It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore.

The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now! We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt.

On the contrary. We helped turn their companies around through financial restructuring. We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel. Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, to begin your debt-free life, Starting Over, Starting Now.This is an image of a professional woman and a professional man shaking hands to symbolize a successful partnership

 

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UNLOCKING THE MYSTERIES OF A REVIVED CANADIAN CONSUMER PROPOSAL: A LOOK BEYOND THE ESSENTIAL 5-YEAR BARRIER

a happy couple who just unlocked the secret to fixing their financial problems

Reviving a Canadian consumer proposal: Introduction

If you’re fighting with financial debts and want to stay clear of filing for bankruptcy, a consumer proposal might be a great alternative to take into consideration. A current Court decision in Ontario highlights the significance of making your Canadian consumer proposal payments on time to guarantee its success.

In this Brandon’s Blog, the situation is analyzed, as well as the factors that determine whether a Court can revive a consumer proposal more than five years after it was filed are discovered. This Brandon’s Blog provides useful information for people seeking a fresh financial start.

What a Canadian consumer proposal is all about

A Canadian consumer proposal occurs as an intricately structured contract, between an individual and their unsecured creditors, with the single function of agreeably resolving their burdensome financial debts. Once agreed to, it stands as an irrevocable pact, wielding the power to instantly save the beleaguered debtor from the unrelenting pursuit by his or her creditors, while simultaneously affording the debtor the ability to systematically repay a portion of their debts over an extended period of no more than 5 years. After making the required payments laid out within the Canadian consumer proposal, the outstanding unpaid amount is erased.

To launch a Canadian consumer proposal, one must employ the services of a duly licensed insolvency trustee, also referred to as a LIT or Trustee. The LIT meticulously scrutinizes the person’s financial world and then crafts a detailed debt settlement repayment plan for them.a happy couple who just unlocked the secret to fixing their financial problems

The benefits of a Canadian consumer proposal

Going with a Canadian consumer proposal presents a person with the bankruptcy alternative that provides a myriad of advantages that can be likened to a world of financial peacefulness:

Immediate Shelter: Upon the submission of a Canadian consumer proposal, a debtor finds themselves wrapped up in a bulletproof shield of creditor protection. It legally protects them against the claims of their creditors. This bars creditors from starting or continuing any legal actions to recover what is owed to them. This includes collection calls and other collection actions on things like credit card debt or income tax debt.

Financial Debt Settlement: The borrower’s obligations go through a metamorphic reduction, changing them right into a workable sum that the borrower can repay over some time. As a result, just a portion of the debts are paid back. After making all the required payments, the unpaid balance is written off.

Structured Settlement Blueprint: The Canadian consumer proposal allows the debtor the opportunity to get into a binding agreement with their creditors to fix their debt problems across an extended period, not surpassing the five-year mark. This gracious break grants the borrower the latitude to pay an amount they can afford, all while finding support in the eyes of their creditors. The debtor also benefits through the two mandatory financial counselling sessions.

Unified Monthly Commitment: Instead of juggling a myriad of creditors paying them inconsistent amounts, a consumer proposal streamlines the borrower’s financial trip. Right here, the debtor need only make the agreed-upon regular payments to their appointed Trustee. The LIT manages to pay the funds out according to the ratified debt settlement plan.

Eligibility requirements for a Canadian consumer proposal

The Office of the Superintendent of Bankruptcy and the Bankruptcy and Insolvency Act (Canada) (BIA) clearly lay out the eligibility requirements for this Canadian consumer proposal legal process. People coming to grips with frustrating debt and satisfying particular financial standards could find themselves suitable prospects for starting a consumer proposal.

These prerequisites include an overall debt level ranging from $1,000 to $250,000 (not including any mortgages or lines of credit secured against the person’s principal residence), while at the same time not being able to pay their debts as they come due. An essential element for restructuring one’s financial debts within the realm of a Canadian consumer proposal is having a consistent source of income.

Additionally, individuals cannot file a second consumer proposal if they are already in one. Also, if a debtor defaults on making all the payments under a consumer proposal, they cannot file another one (more on this soon). It is necessary to understand that each person’s circumstances are unique. So consulting with a Trustee is of the utmost significance in determining one’s eligibility as well as figuring out the personalized plan for debt reduction, including the amount that needs to be paid.a happy couple who just unlocked the secret to fixing their financial problems

Types of debt covered by a Canadian consumer proposal

A Canadian consumer proposal addresses unsecured debt responsibilities. This includes credit card indebtedness, unsecured personal loans and lines of credit, payday loans, and the worry of income tax obligations. It is incumbent to recognize that secured financial encumbrances owing to secured creditors, such as home mortgages and vehicle loans, do not drop within the ambit of consumer proposals.

Nevertheless, if a debtor’s unsecured debts are significantly affecting their ability to pay off their secured debts, the consumer proposal might yet manifest as a probable option. Student loans do not typically get discharged with consumer proposals, except in cases where the borrower has stopped being a full or part-time student for no less than 7 years.

In summation, the Canadian consumer proposal emerges as a pragmatic solution for people facing monetary problems, earnestly in search of a break from the weight of their insolvency.

Annulment of a Canadian consumer proposal

The annulment of a Canadian consumer proposal is the cancellation of the commitment binding a debtor to their creditors, as laid out in section 66.3 of the BIA. This termination transpires when the borrower either falters in the discharge of their duties or due to a change in their circumstances, making them incapable of sticking to the agreed-upon payments.

The beginning of the annulment procedure can be initiated by the LIT, functioning as the consumer proposal Administrator of a Canadian consumer proposal, or, by any of the creditors. When annulled, the borrower gives up the sanctuary provided by a Canadian consumer proposal, protecting them from legal proceedings.

Debtors need to comprehensively grasp the implications of annulment and get expert advice if they encounter difficulties in meeting their commitments. The annulment of a consumer proposal has significant financial consequences and should be avoided whenever feasible.a happy couple who just unlocked the secret to fixing their financial problems

The Canadian consumer proposal before the Ontario Court

Background

This case, Re Cumberbatch, 2023 ONSC 5287 is very instructive. It involved a hardworking individual battling financial difficulties, who made a consumer proposal to manage her debts effectively. As she struggled to meet her monthly debt obligations, she realized that a consumer proposal could provide her with much-needed relief and a structured repayment plan.

In the case heard by the Associate Justice, his pronouncement in this circumstance conveys very useful insights. This case featured a person trying to come to grips with the unrelenting stress of financial misfortune, who, in a positive step, filed a Canadian consumer proposal as a strategic method of efficiently navigating her financial obligation problems. As she faced the tough task of meeting her financial responsibilities, the realization dawned upon her that a consumer proposal might function as the cure-all, delivering the much-coveted respite that a skillfully created structure for financial debt negotiation provides.

She approached a LIT who assessed her financial situation, including her income, expenses, and outstanding debts. After careful evaluation, the Trustee determined that she was eligible for a consumer proposal and worked with her to develop a reasonable and manageable debt repayment plan.

Before diving into the Court’s reasoning, let’s first provide some background information about the case. The consumer proposal was initially filed by the debtor to deal with her outstanding debts.

However, due to a collection of unanticipated events, the debtor defaulted under her Canadian consumer proposal by not keeping up with her payments. The debtor defaulted in making payments to the Administrator under the consumer proposal.

As a result of missing 3 months of payments due the consumer proposal was deemed annulled by subsection 66.31(1) of the BIA.

Jurisdiction to revive a Canadian consumer proposal

In the realm of bankruptcy and insolvency law, consumer proposals provide individuals with an alternative to personal bankruptcy. A consumer proposal, as defined under the Bankruptcy and Insolvency Act (BIA), allows debtors to negotiate with their creditors, proposing a plan to repay a portion of their outstanding debts. However, there are instances where a consumer proposal becomes dormant or inactive, leading to questions regarding the Court’s jurisdiction to revive such proposals after the initial five-year period.

The issue of jurisdiction was significantly addressed by the Supreme Court of Canada in the landmark case of A. Marquette & Fils Inc. v. Mercure. In that case, the Supreme Court of Canada stated about the BIA (then called the Bankruptcy Act):

“has its origins in the business world. Interpretation of it must take these origins into account. It concerns relations among businessmen, and to interpret it using an overly narrow, legalistic approach is to misinterpret it.”

In making this commentary, the highest Canadian Court said the purpose of the BIA, is to provide a framework for the effective administration of insolvency matters and to facilitate the rehabilitation of debtors. The Court acknowledged that the successful completion of a consumer proposal is aligned with this purpose, as it allows debtors to repay a portion of their debts in an organized manner.

Bankruptcy courts, applying this philosophy to consumer proposals, have determined that they have the jurisdiction to revive a Canadian consumer proposal that was annulled. The thorny issue before the Court in this case was that more than 5 years had passed since this Canadian consumer proposal was filed. The Court needed to consider if it had the jurisdiction to revive a consumer proposal that on the calendar, would take more than 5 years to complete.

Factors considered by the Court in deciding whether to revive a Canadian consumer proposal

In establishing whether to exercise its jurisdiction to revive a consumer proposal, the Court developed several factors to consider:

  • The debtor’s persistence in attempting to finish the proposal within the five-year duration.
  • The reasons for the consumer proposal becoming inactive.
  • The prejudice or lack thereof to creditors in reviving the proposal.
  • Any other pertinent factors, such as the debtor’s existing financial circumstance.

The Court emphasized that the decision to revive a dormant Canadian consumer proposal needs to be led by factors to consider fairness to both debtors and creditors. The Court needed to take on a balanced and discretionary approach when exercising its jurisdiction.

Recognizing the Court’s jurisdiction to revive a Canadian consumer proposal supplies higher clarity to debtors and creditors alike, eventually contributing to a much more reliable and equitable insolvency system.

Factors considered for reviving a Canadian consumer proposal

The LIT who acted as the consumer proposal Administrator in this Canadian consumer proposal process, made the application to the Court to revive the proposal. The Court had to take into consideration whether to provide this restoration and also evaluate the effect of reviving the proposal.

In figuring out whether a revival of that consumer proposal was appropriate, the Associate Justice meticulously analyzed different variables. These aspects played a significant role in deciding upon the expediency and justness of revitalizing this consumer proposal. Some of the crucial elements the Court took into consideration included the reason for annulment, the amount already paid under the proposal, and any creditor opposition.

Reason for annulment of the Canadian consumer proposal

The Court paid attention to the reason why the consumer proposal was initially annulled. Reasons that can lead to annulment are usually non-payment by the debtor of at least 3 months’ worth of payments or non-compliance with other provisions of the proposal. If the reason for annulment results from situations beyond the debtor’s control, such as an unexpected further financial setback such as job loss or a substantial life event, the Court may be inclined to revive a Canadian consumer proposal once the debtor shows the ability to continue and complete the outstanding payments.

However, if the reason for annulment is an outcome of the debtor’s deliberate non-payment or unyielding disregard for the proposal, the Court will probably decline a revival application. In such instances, the debtor will need to offer a convincing argument backed by evidence to show why the revival is appropriate.

Amount paid under the Canadian consumer proposal

Another vital aspect is the amount paid by the debtor under the consumer proposal before it was annulled. The Court examines whether the debtor has made a considerable contribution towards their financial obligations as agreed upon in the Canadian consumer proposal. If the debtor has fulfilled their payment responsibilities before the annulment and has shown an authentic initiative to meet their remaining financial commitment under the consumer proposal, the Court is more likely to consider the revival as a practical option.

On the other hand, if the debtor has fallen short of making significant payments or has constantly defaulted on their obligations, a revival probably will not be viewed favourably by the Court. The debtor needs to offer a legitimate reason for their previous repayment shortcomings and show the ability to fulfill the balance of the payments they originally agreed to.

Creditor opposition

The Court thinks about the level of resistance from creditors about the resurgence of the consumer proposal. Creditors play an essential function in the overall decision-making process. If a considerable variety of creditors reveal solid opposition to the revival, it can heavily affect the Court’s decision.

Nonetheless, the Court likewise considers the reasons behind creditor resistance. If creditors are opposed entirely as a result of their positions or an unwillingness to engage, the Court may offer much less weight to their arguments. On the other hand, if the creditors raise valid issues concerning the debtor’s conduct, ability to fulfill their obligations or the fairness of the recommended revival strategy, the Court will thoroughly evaluate these issues.a happy couple who just unlocked the secret to fixing their financial problems

This Canadian consumer proposal disposition: The Court’s decision in the case of Re Cumberbatch

When it comes to Re Cumberbatch, the Associate Justice made an important choice about the revival of a Canadian consumer proposal.

The Court very carefully assessed the situation surrounding the annulment of the consumer proposal and the reasons presented in support of a revival by the Administrator. It recognized that the unintentional expiry of the proposal was not an intentional act, but instead an oversight. The Court took into consideration the best interests of all stakeholders, consisting of the debtor, the creditors, and the Administrator.

Among the key variables that influenced the Court’s decision was the reality that given that the debtor validated that she would be able to pay the balance of her Canadian consumer proposal, its revival supplied the very best possibility for the debtor to pay off a portion of her debts in an organized and structured fashion. The Court recognized that the debtor had made significant initiatives to satisfy her commitment via the original proposal, and reviving it would allow her to continue on the path toward debt resolution.

Furthermore, the Court additionally took into consideration the interest of the creditors. Reviving the consumer proposal provided a structure where they would certainly receive more of a repayment than if the consumer proposal was not revived and the debtor filed for bankruptcy.

This approach by the Court prioritized fairness as well as guaranteed that the debtor’s financial situation was managed responsibly. The Court likewise followed the Supreme Court of Canada decision as well as others, to use its jurisdiction in a reasonable as well as business-like fashion in deciding that it could revive this Canadian customer proposal, even though doing so means it would take more than 5 years for the consumer proposal to be completed.

So with this set of facts, it is feasible for a Canadian consumer proposal to be revived and finished, in more than 5 years.

Canadian consumer proposal: Conclusion

In the matter of Re Cumberbatch, the Court’s deliberation regarding the approval of the Administrator’s request to reinstate the consumer proposal exemplifies the unwavering dedication of the judicial system to equity and the facilitation of avenues for debtors to remedy their fiscal obligations through the Canadian insolvency legislation. This particular case vividly underscores the paramount importance of procedural precision. Furthermore, it underscores the imperative need to ensure that unforeseeable external factors, which lie beyond the debtor’s sphere of control and yet obstruct the successful completion of a Canadian consumer proposal within the stipulated 5-year timeframe, do not constitute an impediment to the equitable resolution of debt-related affairs.

I hope you enjoyed this Canadian consumer proposal Brandon’s Blog. If you’re struggling with managing your overwhelming debt in a high-interest environment, don’t worry – there are some things you can do to take control of the situation. First, it’s important to create a realistic budget and track your expenses. From there, you can prioritize your debt repayment and make consistent payments to chip away at what you owe. It’s also a good idea to seek professional financial advice to help guide you through the process. Just remember, managing debt is a gradual process that requires commitment and determination, but you can do it! So don’t hesitate to reach out for help from financial professionals.

Individuals and business owners must take proactive measures to address financial difficulties and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses with debt problems that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind.

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

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now!

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

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

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

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.a happy couple who just unlocked the secret to fixing their financial problems

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CONSUMER DEBT PROPOSALS: UNLEASH THE MANY PROFOUND BENEFITS OF ELIMINATING DEBT

consumer debt proposals
consumer debt proposals

consumer debt proposals

Consumer debt proposals eliminate your debt stress

Are you stressed out and overwhelmed by debt and don’t know how to begin to eliminate it? We know your pain and can help you because this Brandon’s Blog “Consumer Debt Proposals: The Ultimate Solution for Managing Debt” has got you covered! I provide realistic advice on how to manage and even get rid of debt through a binding debt settlement agreement.

I describe what consumer debt proposals are all about and also look at other debt-relief options like debt consolidation and credit counselling. I will also talk about the recent Canadian government’s warning about taking on high-interest debt from certain companies.

Consumer debt proposals: How Does a Consumer Proposal Work?

If you’re in a tough spot financially, in Canada you can submit a consumer proposal if you owe $250,000 or less (not including any debt registered against your home is one of the types of secured debts that must be paid according to your secured loan repayment terms). It’s an official way to get some debt relief, and it’s all legit according to the Bankruptcy and Insolvency Act. Basically, you work with a Licensed Insolvency Trustee who helps you come up with a plan for paying off what you owe. Then you negotiate with your creditors and hopefully, they accept the proposal.

Making a consumer proposal that unsecured creditors will accept is one of the debt solution alternatives to bankruptcy that requires a few steps to get it done:

  • Reach out to a qualified Licensed Insolvency Trustee and book a no-cost debt assessment consultation.
  • During the appointment, answer any questions the Trustee may have truthfully and to the best of your ability.
  • The Trustee will work with you to come up with a payment plan that fits into your budget and allows you to pay off your debt.

Once you’ve submitted your consumer proposal, your creditors will look it over and then decide if they want to accept it as is or negotiate an adjustment (higher) to your periodic payments to eliminate the amount you owe. They have the option to do either one.

Your creditors can decide to:

  1. Agree to the terms you have proposed (cast their vote in favour).
  2. Decline the terms (vote no).
  3. Decline the terms and suggest a meeting with creditors.
  4. Take no action (which is the same as voting yes).

Your consumer proposal is automatically approved unless more than 25% of the dollar value of the claims of your creditors indicates that they would like to have a meeting of creditors. In that case, that is what will happen.

Once you’ve taken the step of filing for a consumer proposal, you’ll be able to rest easy knowing that you have immediate legal protection from creditors and debt collectors through this financial and legal process. This is called a stay of proceedings where your creditors cannot chase you for the money you owe.

Filing under the bankruptcy process in Canada isn’t your only option! You can work out a legally binding agreement with your creditors through the popular alternative and powerful alternative of consumer debt proposals. With a consumer proposal, you and your creditors can come to an agreement on what portion of the debt you can pay off- and the rest will be written off!

consumer debt proposals
consumer debt proposals

Consumer debt proposals: The voting process

When it comes to a consumer proposal, it’s important to understand the process of how creditors come to a decision to accept or reject the plan. This section will provide insight into how the voting process works.

Once a consumer proposal is submitted, creditors are allowed 45 days to express their decision. They can either accept the proposal or reject it in one of the following ways: replying to the Licensed Insolvency Trustee with their acceptance, not responding at all (which is seen as approval), communicating their rejection or requesting a meeting of creditors.

At the creditors’ meeting, creditors will have the opportunity to decide whether to accept the consumer proposal as is or to make adjustments to it.

Consumer debt proposals: What happens if your offer is approved?

If your proposal gets the green light, you’ll need to abide by what you promised – whether that’s a single payment or regular installments to the Licensed Insolvency Trustee. Plus, you must meet any other conditions that were laid out in the proposal.

In a successful proposal, you can keep your assets (as long as you keep paying what you owe to creditors who have a lien on your assets), and go to the two financial counselling sessions held by the Licensed Bankruptcy Trustee. Of course, you’ve got to pay the Licensed Bankruptcy Trustee on time over the entire period of time your proposal is for.

Failure to do so could result in the revocation of the proposal, the accrual of interest and fees, and even legal action. It’s important to remember that while a consumer proposal can provide much-needed relief, it’s ultimately up to you to stay current with the payments you promised to make.

consumer debt proposals
consumer debt proposals

Consumer debt proposals: What happens should your consumer proposal be declined?

If 50% or more of the creditors vote to reject the consumer proposal, then the Licensed Insolvency Trustee must issue a notice and the consumer proposal dies. In this situation, creditors are free again to pursue collection actions against the debtor.

If 25% or more of the creditors request a meeting, that meeting is referred to as the Meeting of Creditors. At this meeting, an agreement will try to be reached by a majority of the creditors. If the agreement can not be reached, the debtor may need to amend the proposal and resubmit it or look for other ways to solve their financial issues.

If a consumer proposal is declined, it means that the creditors do not agree with the terms of the proposal put forth by the debtor. The main reasons for rejection may be that the debtor is not offering enough money or has proposed an unsuitable repayment schedule.

It is important to note that if you fail to fulfill the requirements of your consumer proposal, it will be deemed null and void. However, it does not free you from your existing debt, and the failure to adequately repay your loans or pay off debts within the terms of the agreement could affect your credit score. Collectors for debts are within their right to renew collection calls and seek legal action for retrieving the debts that they owe. They can sue you and if they get a judgment, they can then get a wage garnishment against you. It is never recommended to default on a consumer proposal.

Consumer debt proposals: If you fulfill the requirements of your consumer proposal

If you fulfill the requirements of your consumer proposal, you will have successfully completed the agreement between yourself and your creditors. This means that you will have made the agreed-upon payments and met all other terms of the proposal. The balance of your unsecured debts that you did not pay off is also eliminated if you fulfill the requirements of your consumer proposal.

One of the benefits of fulfilling a consumer proposal is that you will have lower regular payments monthly, which are based on what you can afford, rather than high monthly payments regardless of your income. Additionally, you will have protection from creditors, as they will not be able to contact you or take money directly from your wages.

After fulfilling a consumer proposal, it will come off your credit report maintained by the Canadian credit bureaus three years after the completion. This report will show that the consumer proposal has been successfully completed and you can rebuild your credit rating and credit score simultaneously.

You will also receive from the Licensed Insolvency Trustee (LIT) acting as the Administrator in your consumer proposal a “Notice of Successful Completion of Consumer Proposal”. This is a very important document, as you will be able to provide it to current or future credit grantors to prove that you successfully completed your consumer proposal and avoided personal bankruptcy.

It is important to note that if you fail to fulfill the requirements of your consumer proposal, it will be deemed null and void. However, it does not free you from your existing debt, and the failure to adequately repay your personal loans, lines of credit or pay off debts within the terms of the agreement could negatively affect your credit score. Creditors are within their right to use collection activity and use legal action for retrieving the debts that you owe. It is never recommended to default on a consumer proposal.

consumer debt proposals
consumer debt proposals

Advice for Consumers: Considerations for Debt Relief and Credit Repair Services

Improving your credit score or credit rating will take time, and requires showing creditors that your habits have improved and that you are paying back your debt on time. Be cautious when seeking help to pay off debt or repair your credit, as some companies may offer misleading solutions. I have been warning about the dangers of such “for-profit” debt settlement companies for years now.

One option for getting help with debt is a debt management plan, which is an informal proposal made by a non-profit community credit counselling agency credit counsellor to your creditors on your behalf. This plan consolidates your debts into one affordable monthly payment and in some cases, you may not have to continue to pay interest on your debt.

However, consumers should be aware that the “for-profit” debt settlement companies may charge high fees, including upfront or advance fees, and may not be able to get creditors to reduce your debt. Additionally, it is important to note that even while using a debt management plan, you are still required to keep making payments on any other debts you owe, which may result in no change to your credit score.

Overall, it is important to be cautious when seeking help to pay off debt or repair your credit and to thoroughly research any company or solution before proceeding. It is also important to consider the potential consequences, fees and overall effectiveness of the solution. A LIT during an initial no-cost consultation will provide many of the services that a “for-profit” debt management company charges for.

Consumer debt proposals: Organizations or firms cannot guarantee the resolution of your financial obligations

Be aware of companies or agencies that claim they can quickly resolve your debt problems by negotiating a deal with the companies you owe money to and letting you only pay back a fraction of your debt. These promises may not be reliable, so it’s best to be wary.

It’s important to remember that if certain creditors don’t agree to your payment plan, you may need to work out a different agreement with them directly. Alternatively, you can consult a LIT about doing a consumer proposal.

It’s also worth keeping in mind that anyone can call themselves a debt consultant, but that doesn’t mean they have the proper training or they’ll be able to help you with your finances.

consumer debt proposals
consumer debt proposals

Consumer debt proposals: No company or agency can give you a fast and easy boost to your credit rating

No Canadian debt consultant, company, or agency can promise a fast solution to your credit score. Improving your credit rating takes time and commitment; you have to show a history of paying your debts punctually.

If you’re looking to boost your credit score, one option to consider is a non-profit credit counselling agency. A credit counsellor can offer a variety of services like one-on-one advice, group sessions, and tips on how to better manage your debt. Just keep in mind that simply talking to a credit counsellor won’t do the trick.

If you’re looking to give your credit score a boost, try paying off some of what you owe. Bringing down your debt-to-credit ratio to under 75% of your credit limit will help. You could also ask your credit card companies or financial institution lenders to raise your credit limit and perhaps even amend your terms of repayment (though the latter will be very difficult) – that’ll help increase your credit score. Ideally, try to use less than a third of your available credit and keep it low, ideally below 30%.

Remember, there’s no shortcut when it comes to improving your credit score. Anyone promising you the fast and easy way is not looking out for your best interests. It takes determination and effort to get your credit back on track. Do your research and make sure you understand any associated fees or consequences before you commit.

Consumer debt proposals: Paying off a consumer proposal early

Sure, you can settle your consumer proposal early, but that might not be the best choice for everyone.

If you’ve got the funds, paying off your consumer proposal earlier could help kickstart your credit repair – but don’t expect it to save you money or guarantee a good credit rating. So think carefully before you commit to paying it off early. In the following section, I describe a very troublesome issue which has now attracted the attention of the Office of the Superintendent of Bankruptcy Canada (OSB).

Paying off your consumer proposal early will do wonders for your mental health – and it’s perfectly acceptable! It’s no secret that financial hardship is incredibly stressful, and five years seems like a lifetime. So treating yourself to an early payoff will help you feel a huge weight being lifted off your shoulders.

If you want to shorten how long your consumer proposal lasts, you can change how often you make your proposal payments. Usually, they’re monthly, but if you switch to making extra payments by paying bi-weekly, you can pay off your proposal faster. Once you’re done paying off your consumer proposal, the unsecured debts you’ve been worrying about will be marked as taken care of on your credit report.

consumer debt proposals
consumer debt proposals

Consumer debt proposals: LITs cannot talk you into getting a loan with a high-interest rate to pay off your consumer proposal early

On January 11, 2023, the OSB issued its position paper titled “LITs Promoting and Facilitating Loans to Debtors“. The problem is that some lenders are offering high-interest loans to people who are about to or are going through a consumer proposal. It looks like they’re giving loans to help people pay off their consumer proposals early, but it’s really just taking advantage of people’s tough financial situations.

The OSB has noticed that some LITs are promoting and encouraging people to take out loans without mentioning the potential drawbacks. They do this by talking up the positives and downplaying the negatives, and they may even pressure people into taking out a loan.

The OSB has come to the conclusion that it’s not in line with the Code of Ethics for Trustees or a LIT’s duties under the Bankruptcy and Insolvency Act and General Rules for LITs to promote or facilitate such loans. Furthermore, such actions are not allowed.

There is also evidence that LITs who receive engagements directly from “for-profit” debt consultants, may be entering into inappropriate arrangements with them. No trustees should ever accept a commission, payment, or any other type of reward from a third party for recommending work concerning a professional engagement, nor should they give out any commission, compensation, or another type of benefit to a third party for obtaining a professional engagement.

For the record, my Firm does not have any arrangements with any party regarding the referral of files and we neither accept nor pay a referral fee

Paying off your consumer proposal early isn’t really an issue. In fact, it can be great if you can afford it thanks to a financial windfall or change in circumstances. Everybody benefits in that scenario. But if you don’t have the means to pay off your consumer proposal quickly, don’t worry. Don’t take out an interest-bearing loan to pay off a consumer proposal. The consumer proposal itself should be considered an interest-free loan.

Look, if a debtor is trying to rebuild their credit with a loan after insolvency, there’s nothing wrong with that. They’re making the choice themselves, so it’s all good. In this case, LITs should explain the pros and cons of these loan products to the debtor. And, it’s important that they don’t push any company or product in particular.

The OSB believes that LITs should not be promoting or facilitating loans since it contravenes the Bankruptcy and Insolvency Act and its Rules. This practice has a negative impact on the LIT profession and the insolvency system. The OSB will be keeping an eye on this issue and taking appropriate action.

You Have Outstanding Financial Obligations — Consumer Debt Proposals

I hope you enjoyed our consumer debt proposals Brandon’s Blog.

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

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

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

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

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

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

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

consumer debt proposals
consumer debt proposals

 

 

 

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PROS AND CONS OF BANKRUPTCIES CANADA: A HEALTHY FRESH START OR THE LAST RESORT?

pros and cons of bankruptcies canada
pros and cons of bankruptcies canada

Evaluating the pros and cons of bankruptcies Canada: Introduction

When you are in debt, it can feel like you are stuck in quicksand – the more you struggle, the deeper you sink. If you are considering bankruptcy, you are not alone. According to the Office of the Superintendent of Bankruptcy (OSB), almost 100,000 Canadians filed either a consumer proposal or for bankruptcy in 2021. The numbers for 2022 are rising above the 2021 level.

Before you make a decision, it is crucial to weigh the pros and cons of filing for bankruptcy in Canada. On the positive side, bankruptcy can give you a fresh start. It can discharge your debts and give you a chance to rebuild your finances. On the negative side, bankruptcy can damage your credit score more than one of the bankruptcy alternatives.

If you are struggling with debt, there are other options to consider before bankruptcy. You may be able to negotiate with your creditors and set up a payment plan. You can also improve your financial situation by cutting expenses and increasing your income. If you decide that you do need an insolvency process, a consumer proposal or a Division I Proposal may be better for you.

In this Brandon’s Blog post, I wish to aid you in gaining a better understanding of the pros and cons of bankruptcies Canada. Then you can make a much more educated choice about your financial debt issues.

What are the pros and cons of bankruptcies Canada?

When it comes to making the decision to file for bankruptcy, it is important to understand all of the implications that this will have on your life. In Canada, bankruptcy is a legal process that allows individuals to discharge all of their debts if they are unable to repay them. This process is overseen by the OSB, and there are certain requirements that must be met in order to be eligible for bankruptcy.

While bankruptcy can provide relief from debt, it is not without its drawbacks. Once you have been declared bankrupt, your credit rating will be significantly damaged, which can make it difficult to obtain new lines of credit in the future. Additionally, your assets may be seized in order to repay your creditors.

Before making the decision to file for bankruptcy, it is important to weigh the pros and cons carefully. Speak with a financial professional to get advice that is specific to your situation. Now for a more detailed discussion on the pros and cons of bankruptcies Canada.

pros and cons of bankruptcies canada
pros and cons of bankruptcies canada

The pros of bankruptcies Canada

A fresh start

If you’re sick of being in debt, bankruptcy might be a good option for you. It can be a fresh start, and it’ll get creditors off your back. You can move on with your life without all that stress.

Rebuild your credit

As stated above, bankruptcy will cause some damage to your credit. However, it can stop the continuous damage you may be facing now. You can begin rebuilding your credit rating, rather than having to face extra charges from missed payments as well as receiving those pesky telephone calls from bill collectors.

Get rid of most if not all of your debts

In most cases, all of your obligations will be cleared by your bankruptcy discharge. Normally cleared debts are your unsecured debts like credit card debt, lines of credit, personal loans, payday loans, and income tax debts. A bankruptcy filing will let you not worry about a ton of bills but will force you to focus on balancing your budget.

There are some obligations that bankruptcy cannot clear, like child or spousal support payments, or payments for fines or penalties awarded by a court. You can get your student loans discharged too as long as you’ve been out of school for 7 years or even more.

Stop debt collectors cold

Creditors and their debt collectors making their collection calls can be pretty aggressive when they’re trying to get paid. Bill collectors demand and try to scare you as to what will happen if you do not pay up. Answering your phone or checking your VM becomes terrifying. You might also have a ton of mail from them stacking up in your mailbox, inbox, and so on.

If you’re losing the battle of staying up to date with your bill payments, personal bankruptcy might be a good option for you. Declaring bankruptcy stops all collection efforts, including calls as well as letters from your creditors. This is called the “automatic stay of proceedings”. When you’ve filed an assignment in bankruptcy, the automatic stay goes on and offers you some breathing space.

Get rid of any wage garnishment

If you file for bankruptcy, you don’t need to worry about wage garnishment or legal action anymore. The stay of proceedings also prevents any further attempts at collection, including wage garnishment. Creditors and collectors also won’t be able to take you to court.

Bankruptcy is not forever

So, if you’re thinking about filing for the bankruptcy process, know that it usually takes about nine months to go through the process for a first-time bankrupt who does not have any surplus income payments to make to your Trustee. And, if the Licensed Insolvency Trustee handling your case finds that you have surplus income, you won’t be able to get a discharge for 21 months.

If this is your second bankruptcy, it will take longer. If you don’t have surplus income payments to make, it will take 24 months. If you do need to make surplus income payments, it will take 36 months.

These are the pros when considering the pros and cons of bankruptcies Canada. Now for the cons!

pros and cons of bankruptcies canada
pros and cons of bankruptcies canada

The cons of bankruptcy

There are many cons of filing bankruptcy, including:

Your credit rating

If you file for bankruptcy, it’ll rank you as an R9 on your credit report, which is pretty bad news for your credit score. The damages to your credit rating will not last forever. Your very first personal bankruptcy will be noted on your credit record for 6 years after the day of your bankruptcy discharge. A second bankruptcy will certainly harm your credit score for a lot longer.

At the outset of your bankruptcy journey, you cannot see the light at the end of the tunnel. At least you now have a roadmap to restoring your credit and have a date when your credit will be cleared of any damage. You can start to rebuild your credit even before you are discharged from bankruptcy.

Your assets may be liquidated

This doesn’t mean that you’ll lose everything. Your personal belongings – like clothes, household items, work tools, and even a car under a certain value – usually can’t be taken away from you in bankruptcy. This means that the proceeds from the sale of your other non-exempt assets will be used to repay your creditors.

RRSP contributions in the past 12 months are not exempt

Your retirement savings are protected, but any contributions you made in the past 12 months to your RRSP are not exempt.

Surplus income and the cost of bankruptcy

If you’re making more money than the surplus income threshold, you’ll also have to make surplus income payments to your Licensed Insolvency Trustee. If you don’t have any assets and don’t have to pay the surplus income requirement, you or a relative will have to pay your Trustee’s fee.

Complete financial disclosure

You will need to make full financial disclosure to your Trustee. Your Licensed Insolvency Trustee will use that information to help you complete a Statement of Affairs. This disclosure details your financial position and will even potentially highlight certain financial transactions. Essentially your Trustee and the court will know everything about your finances and your creditors will get a peek too.

When you’re going through bankruptcy, you’ll need to hand over your tax docs and pay stubs to show how much you’re earning. This is how the Trustee decides if you’ve gone over the surplus income threshold.

A lasting record

Once you file for bankruptcy, the paperwork will become part of the public record in Canada. To start your bankruptcy, your Licensed Insolvency Trustee files your bankruptcy documents with the OSB. It then becomes part of the public record.

Most people who file for bankruptcy will only have their Trustee, the OSB, the court, their creditors and the two Canadian credit bureaus know about it.

pros and cons of bankruptcies canada
pros and cons of bankruptcies canada

Bankruptcy alternatives from pros and cons of bankruptcies Canada

Now that you understand the pros and cons of Canadian bankruptcies, you must just consider this option as a last choice. If you can solve your financial problems without experiencing the unfavourable elements of personal bankruptcy, that is the most effective way to go.

During your initial no-cost consultation, the Licensed Insolvency Trustee will help you should explore all the bankruptcy alternatives. I have written before in more detail about each of the bankruptcy alternatives listed below. I have included a link to each of those more detailed blogs. The main alternatives to bankruptcy are:

Debt consolidation

If you’re aiming to leave financial debt behind, debt consolidation could be a good alternative for you. By rolling all your financial obligations into one financing with a lower rate of interest, you will save money from the lower rate of interest on the new consolidation loan and leave your debt behind much faster.

Just make sure that you understand the current interest rates you are being charged, the total of your monthly payments that you currently may or may not be able to afford, the interest rate being offered to you on a debt consolidation loan, what your new monthly payment will be and make sure that you have a realistic budget of your monthly income and monthly expenses that shows that you can afford the new payments on a monthly basis.

Credit counselling

Credit counselling is a process whereby a person in debt meets with a credit counsellor to discuss their options for dealing with their debt. The credit counsellor will assess the person’s financial situation and provide advice on how to best deal with the debt. This may include negotiating with creditors to reduce interest rates or monthly payments and setting up a debt management plan.

As I have written many times before, you should only go to a community-based non-profit credit counselling agency that does not charge any fees. If the credit counsellor you choose wants to charge you fees, get out of there. It is not the best choice for you.

Debt settlement

Debt settlement is a process in which you can negotiate with your creditors to pay less than the full amount you owe. This can be a good option if you are not able to pay your debts in full and you are willing to negotiate with your creditors.

Debt settlement works well if you only have 1 or a few creditors. If you have many creditors, debt settlement is much more difficult in making sure that everyone remains on board with the negotiated settlement and that you will have enough money to pay the lower settled amounts you promised.

Many times with a multitude of creditors, either a consumer proposal or a Division I Proposal is the most effective way to bind everyone in a debt settlement process.

Like in credit counselling, I urge you to stay away from debt settlement companies that charge fees. What they do is charge you unnecessary fees, try to sell you products you don’t need and then when they cannot sell you any more products and their debt settlement techniques do not work, they then walk you to their favourite Licensed Insolvency Trustee for an insolvency process, which might just be a bankruptcy.

I would rather see you use your accountant or lawyer if you do not feel comfortable negotiating yourself. Those professionals will have your best interests at heart in return for their fee. They also won’t try to sell you more products.

Consumer proposals

When it comes to debt of $250,000 or less (other than for secured debts registered against your home), there are a number of options available to help you get back on track. One option is a consumer proposal.

A consumer proposal is a formal debt relief and debt-settlement option available in Canada. It is a legally binding agreement between you and your creditors. Under a consumer proposal, you agree to repay a portion of your debts, and your creditors agree to forgive the rest.

A consumer proposal can be an attractive option for many reasons. First, it can help you get out of debt without having to declare bankruptcy. Second, it can help you keep your assets, such as your home or car. Third, it can give you a fresh start by wiping away most, if not all, of your unsecured debts.

If you’re considering a consumer proposal, it is necessary to obtain assistance from a qualified expert. A Licensed Insolvency Trustee, who is also a consumer proposal administrator in Canada, can walk you through the process and answer your questions. This will allow you to see if it’s the right choice for you.

Division I Proposal

If you owe more than $250,000, a Division I Proposal is a great option to settle your debts. It’s not as streamlined as a consumer proposal, but it’s still a great way to get out of debt.

Other than these technical differences, it has the same aim as a consumer proposal: to provide a debt settlement option that will bind all unsecured creditors and get the person back onto their feet free of the stress and burden of their unmanageable debts.

Either a consumer proposal or a Division I Proposal are excellent debt relief options approved by the Canadian government. One of the other benefits of either of these two debt settlement options is that the person will also receive two mandatory financial counselling sessions. Getting this education will help put the person on the right track for the rest of their life.

Understanding the advantages of bankruptcy and also the disadvantages of bankruptcy for companies

When a company faces overwhelming debt, bankruptcy may seem like the only way out. However, there is only one advantage and one disadvantage to bankruptcy for a company.

One advantage of this situation is that the Trustee may be able to sell the assets to a purchaser who will then be able to use those assets to continue the former business of the company in a profitable way. This could potentially save some jobs, at least for the key employees of the old business.

The one disadvantage is that unlike a person, when a company goes bankrupt, the corporate legal entity is now dead.

Before the Directors of a company decide to bankrupt the company, they should determine if certain divisions or parts of the business can be saved and operate profitably if the unprofitable part(s) could be eliminated. If so, a financial restructuring can be done to turn this unprofitable company into a viable and profitable one and save some jobs in the process.

pros and cons of bankruptcies canada
pros and cons of bankruptcies canada

Pros and cons of bankruptcies Canada: Summary

I hope you enjoyed this Brandon’s Blog on the pros and cons of bankruptcies Canada.

People are falling behind with stagnant wages or tiny wage increases while there is runaway inflation and they are falling deeper and deeper into debt. Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Those concerns are obviously on your mind. Coming out of the pandemic, we are now worried about its economic effects of inflation and a potential recession.

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

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

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you. There are many pros and cons of bankruptcies Canada. Whatever process we recommend for you will, we will do so in order to minimize any cons you may experience.

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

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

 

 

pros and cons of bankruptcies canada
pros and cons of bankruptcies Canada pros and cons of bankruptcies canada
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DISCHARGE FROM BANKRUPTCY CANADA: OUR DETAILED STEP-BY-STEP GUIDE

discharge from bankruptcy canada
discharge from bankruptcy canada

What are the implications of discharge from bankruptcy Canada?

If you are experiencing financial troubles and can’t pay your debts, you can file for bankruptcy in Canada. This legal process lets you off the hook for your debts and start fresh. Once you’re discharged from bankruptcy, you’re no longer responsible for those debts (other than for a few exceptions noted below). Filing for bankruptcy is stressful. We understand how difficult and stressful the bankruptcy process can be, so we hope that this will be a helpful resource for you.

Once the Trustee has completed their duties under the Bankruptcy and Insolvency Act (Canada) with respect to the administration of your property and the bankruptcy estate, the next step in the bankruptcy process is they must apply for a discharge. This will occur after the Trustee has applied for your discharge from bankruptcy Canada, even if you did not get an absolute discharge.

This Brandon’s Blog is for people who have made a bankruptcy filing but have not yet been discharged. If your Licensed Insolvency Trustee has been discharged or is otherwise unable to help you with a second discharge application, this blog will provide you with the information you need to get through the process on your own.

Discharge from bankruptcy Canada: What are the implications if you are not discharged from bankruptcy?

If your previous application for discharge was unsuccessful, you remain an undischarged bankrupt and your Trustee is not obliged to make another application on your behalf. However, you should check with your Trustee first as they may or may not be prepared to do so.

We often receive calls from individuals who claim that their Trustee has been discharged, but they have not been. They express confusion as to why their Licensed Insolvency Trustee will not make an application for their discharge from bankruptcy. A quick search reveals that in these cases, the individual received a conditional discharge, but has not yet fulfilled all of their conditions to get a bankruptcy discharge. That is why their conditional discharge has not yet been converted into an absolute discharge.

If you filed an assignment in bankruptcy and are still an undischarged bankrupt, you may be able to apply for discharge from bankruptcy. An insolvency Trustee only needs to make one application on your behalf. Once the Trustee obtains their discharge, they do not need to make your application for discharge on your behalf again.

The Licensed Trustee cannot be discharged until all bankruptcy administration requirements have been met, including making the first discharge application on behalf of the bankrupt person.

discharge from bankruptcy canada
discharge from bankruptcy canada

Discharge from bankruptcy Canada: How do you obtain a bankruptcy discharge in Canada?

Automatic discharge from bankruptcy is typically granted unless there are exceptional circumstances. If there is opposition to the automatic discharge, the discharge application must be brought before the court for a hearing.

If you did not complete all of your bankruptcy duties as the bankrupt person, such as providing income and expense statements, attending required financial counselling sessions, and/or paying surplus income, your Trustee had reasons to oppose your automatic discharge and scheduled a hearing with the court.

The Report of Trustee on Bankrupt’s Application for Discharge sets out the reasons for the insolvency Trustee’s opposition to a bankrupt’s application for discharge. This document is on file with the court.

If a bankrupt does not receive a discharge at the time of the court application, it is usually because they have not yet done what is required. The associate justice/registrar who heard the application at court may have therefore adjourned the application (i.e. stated it was to be heard at a later date, which may or may not have been set).

The court may have adjourned your discharge application or imposed conditions that must be met before you are entitled to a discharge. The disposition sheet from the hearing will state what the court decided in this regard.

Discharge from bankruptcy Canada: What are the steps to clear my bankruptcy?

It’s not unusual for people who didn’t do what they were supposed to at first to try and get back on track and do what’s required to get their discharge. You must comply with your duties during bankruptcy to the best of your ability and be prepared to explain to the court any deficiency in doing so.

For example, to get your discharge, you must be able to provide details and evidence of your income and expenses during bankruptcy. You probably recall that you were required to provide the Trustee with your monthly income and expense reports. If you’re unable to provide the court with those details, the court may want to review your income tax returns for that period. If you want the court to rescind or vary the conditions imposed, you must show that you complied with the conditions to the best of your ability.

There are many examples of trying your best to meet the conditions but maybe not perfectly. If the court orders you to pay a certain sum of money to the Trustee by a certain date, you can make the court-ordered additional payment but not by the specified date. If you were required to make surplus income monthly payments but didn’t make them all, that’s one reason there were conditions attached to your discharge. You can apply to the court to change the date and get your discharge.

Another one is that you didn’t finish all your required credit counselling sessions. You could finish them and then provide proof of completion to the court.

discharge from bankruptcy canada
discharge from bankruptcy canada

Completing your own application for discharge from bankruptcy Canada

Making your own application to be discharged from bankruptcy can be a bit daunting, but don’t worry—just follow a few simple steps and you’ll be all set. Here are some tips to help you get your application ready and submitted without the help of a bankruptcy trustee or a bankruptcy lawyer.

To begin, you’ll want to locate your bankruptcy file at the court office. Once you have your file, be sure to look through it thoroughly to find:

  • your bankruptcy court file number;
  • the Report of Trustee on the Bankrupt’s Application for Discharge under section 170 of the BIA;
  • any order issued by the bankruptcy court at the original discharge hearing; and
  • the court’s disposition sheet from any previous discharge hearing identifies what the court previously ordered or decided.

You will need copies of these documents. You can ask the court office to make copies for you. They will charge you a fee for photocopying. You should check the Report of the Trustee, the court’s disposition sheet, and any court order to see what you failed to do and what conditions the court has imposed. Also, it is not a bad idea to find out who attended your last application for discharge.

You should check the Report of the Trustee, the court’s disposition sheet, and any court order(s) in the file to see what you didn’t do and what conditions (if any) the court has imposed. Lastly, you need to schedule a date for your discharge hearing with the bankruptcy court.

You will be required to prepare the following documents and file them with the court:

  • a notice of hearing for a bankrupt person’s application for discharge;
  • your affidavit explaining why you believe you are entitled to the discharge order sought;
  • an affidavit of service; and
  • a draft of the order sought.

The Associate Justice/Registrar in Bankruptcy hearing your application for discharge may make any order he or she sees fit. If the order you are seeking is made, he or she may accept and sign it in court on the day you appear, which may save you a period of time later on.

Requisition – Notice of hearing for bankrupt’s discharge from bankruptcy Canada hearing for discharge

The first step in obtaining a discharge in bankruptcy is to file a Notice of Hearing for Bankrupt’s Application for Discharge with the court. That document would have first been filed by the Trustee when the Application for discharge is first scheduled. If you have a copy of it, it will be a good precedent for you to follow.

A requisition must be filed again by you in order to have the matter brought back before the court.

discharge from bankruptcy canada
discharge from bankruptcy canada

Discharge from bankruptcy Canada:The Affidavit

An affidavit is a formal, written statement that provides key information in your legal case. Any evidence you want the court to consider in your application must be submitted in an affidavit. Your affidavit should describe the events leading up to your bankruptcy, and your current financial situation.

You must swear or affirm your affidavit before a notary public or commissioner of oaths. Make sure that your affidavit only includes evidence that is relevant to your application for discharge.

The court is familiar with a standard form of affidavit for discharge applications. You should familiarize yourself with that normal format. You should also include:

  • additional information about why you did not seek a bankruptcy discharge earlier;
  • is this a 1st-time bankruptcy, 2nd-time bankruptcy or more;
  • why you have not been able to comply with the bankrupt’s duties or the requirements of an earlier court order; and
  • state the reasons you are wanting to be discharged now.

You will need to attach any relevant documents to your affidavit in support of your application, including a statement of your current income, expenses, assets, liabilities and any previous bankruptcy information.

Discharge from bankruptcy Canada:Affidavit of Service

To serve documents, you must provide a written copy to the party to be served. You need to obtain a signature or other confirmation, such as an email, to confirm that the document was properly served. You will need to serve the filed Requisition and all filed Affidavits and documents on:

These parties may attend your hearing and make submissions.

In order to provide proper service within the required time period before your discharge hearing, you must familiarize yourself with the rules. You must also provide proof of service at the hearing, especially if no one else attends. This proof of service can be the signature of everyone served to show the date they were served.

An Affidavit of Service can also be filed with the court. This Affidavit of Service is separate from the Affidavit filed with the court regarding your reasons for entitlement to anabsolute bankruptcy discharge certificate.

discharge from bankruptcy canada
discharge from bankruptcy canada

At the discharge from bankruptcy Canada hearing

When you appear in court for your discharge hearing, you will be able to present your case to either an Associate Justice or Registrar in Bankruptcy. If your application is being opposed, the creditors opposing your discharge need to file a notice of opposition. In this case, the hearing will be in front of a bankruptcy Judge. This is the normal process followed:

  1. You explain why you believe you are entitled to the order you are seeking, for example, an absolute discharge from bankruptcy.
  2. Anyone opposing your application explains his or her position.
  3. The Judge or Registrar may ask questions relating to the affidavits and documents you have filed and make suggestions or give directions.

When presenting your position at the hearing, remember to:

  1. Clearly state what order you are seeking from the Registrar in Bankruptcy or Judge.
  2. Outline the facts supporting your application in a concise manner.
  3. Explain the law on the subject and how it applies to the facts of your case.

Your conduct before and during bankruptcy will be taken into consideration when making a decision on your application for discharge. The Trustee’s report will provide information on your conduct before and during bankruptcy, which will be taken into account. if you did not attend the required financial counselling
sessions, did not file required statements of income and expense, and/or did not make the required surplus income payments to the Trustee for the benefit of your creditors.

The court will consider the relevant factors and make the appropriate order, or it may adjourn the hearing for further information or conditions to be met. Some of the types of orders the court may make are:

  • An order of discharge that is absolute and therefore you are immediately discharged from bankruptcy.
  • A conditional discharge may be granted. Examples of conditions are:
    • if the debtor pays any unpaid surplus income,
    • the debtor pays the outstanding balance for any asset that was agreed to be paid for; or
    • if the debtor pays a sum of money to the Trustee toward their debt obligations, as decided by the court.
  • A discharge that has been suspended.
  • The court may refuse to issue a discharge order if it is not satisfied that you have made full and adequate disclosure, or if there are issues with your conduct.

Discharge from bankruptcy Canada: Order for discharge

The Judge or Registrar in Bankruptcy will grant a discharge order at the end of the hearing. The type of discharge will be one of the kinds indicated above. If you prepared a draft order and the Registrar in Bankruptcy or Judge finds it acceptable, they will sign it and you can then have it filed with the court. However, if your application was opposed, keep in mind that one of the opposing parties may choose to appeal the discharge order.

If you have not prepared your order before the hearing, you should do so after the hearing and submit the order in duplicate to the court. The court office will then send the order to the Registrar in Bankruptcy or Judge who heard your application for signing. Once you receive your copy of the signed order, your discharge will be official.

When you receive a copy of the signed order, you must provide a copy to the Office of the Superintendent of Bankruptcy. They will in turn notify the credit bureaus and Canada Revenue Agency of your discharge.

When you have received your absolute discharge, you are no longer legally responsible for repaying debts that you incurred before your assignment in bankruptcy. You will get rid of debt with some exceptions set out in Section 178 of the Bankruptcy and Insolvency Act. They are:

  • payment of child support or alimony;
  • student loans, if you have not been a full-time or part-time student for less than 7 years;
  • a fine or penalty imposed by the court; or
  • debt resulting from fraud.

    discharge from bankruptcy canada
    discharge from bankruptcy canada

Discharge from bankruptcy Canada: Are you tired of being in debt?

Bankruptcy law and the bankruptcy process can be complex, so it may be worth retaining a bankruptcy lawyer to help you apply for your discharge. Ultimately, it is up to you, but hopefully, this guide to discharge from bankruptcy Canada will lay out the steps you need to take if you wish to apply for a discharge yourself.

I hope that you found this discharge from bankruptcy Canada Brandon’s Blog informative. If you’re sick and tired of carrying the burden of debt and ready to live a much better life, we can assist. We know exactly how it really feels to be in debt as well as feel like you’re never going to get ahead. We have actually helped lots of people and businesses that were in your position reach financial stability, so we understand it’s feasible for you to prosper in your objective of ending up being debt-free. Nevertheless, it will certainly require some work on your part. We’ll be right here to assist you with every action necessary.

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 many personal unsecured debts, Credit card debt, income tax debt liability, unsecured loans or personal obligations from the running of your company or from being a business owner. These are all types of debt we can help you eliminate. We are aware of your financial difficulties and understand your concerns. Filing bankruptcy is the last option we explore only after we have exhausted all other options to avoid bankruptcy, such as financial restructuring through a debt repayment plan.

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 give you the best management advice to get you out of your outstanding debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We are sympathetic to the financial difficulties you are experiencing and would like to help alleviate your concerns. We want to lighten your load by coming up with a debt settlement plan crafted just for you.

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

Call or email us. We would be happy to give you a no-cost initial consultation. We can find you the perfect solution to tailor a new debt restructuring procedure specifically for you, based on your unique economic situation and needs. We provide a full range of services to people and companies. If any of this sounds familiar to you and you’re serious about finding a solution, let us know. We will get you back to living a happy life, whether or not there is an economic recession in Canada.

Call us now for a no-cost initial consultation. We are licensed professionals.

discharge from bankruptcy canada
discharge from bankruptcy canada
Categories
Brandon Blog Post

WHAT DOES A LICENSED INSOLVENCY TRUSTEE DO TO HELP IN YOUR MANAGING DEBT FOR A PROFOUND QUALITY OF LIFE?

what does a licensed insolvency trustee do

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 does a licensed insolvency trustee do?: What is a licensed insolvency trustee?

Frequently I am asked what does a licensed insolvency trustee do? How is it different from a bankruptcy trustee? The answer is it isn’t different. The term bankruptcy trustee is dated.

The new title is Licensed Insolvency Trustee. The Office of the Superintendent of Bankruptcy (OSB) changed it in 2015. Among the reasons for the name change were the submissions made by the Canadian Association of Insolvency and Restructuring Professionals. As the name suggests, a licensed insolvency trustee can offer a wider array of financial solutions.

This Brandon’s Blog is intended to describe what does a licensed insolvency trustee do and to provide useful information for you to help you better understand the debt relief advice that a Trustee provides to people, entrepreneurs, and their companies experiencing financial trouble.

What does a licensed insolvency trustee do?: Licensed insolvency trustees are professionals who are federally regulated

There are many terms in the insolvency field that the average person isn’t familiar with, which is why it’s important to understand what the licensed insolvency trustee does. Trustees are licensed and supervised by the federal government through the OSB to act as personal and corporate insolvency administrators. This means they act to protect the interests of all involved parties while assisting debtors, acting as a debt counselor, a restructuring advisor, and if required, overseeing the bankruptcy process.

Licensed insolvency trustees are professionals with a background in finance, law, accounting, and insolvency. They assist businesses and individuals who are struggling financially. Typically, licensed insolvency trustees meet with clients to discuss their financial situation and offer advice and recommendations to help get the client out of a financial bind.

what does a licensed insolvency trustee do
what does a licensed insolvency trustee do

What does a licensed insolvency trustee do?: The credit counselor or a debt management program as an alternative

Financial guidance is offered by licensed insolvency trustees, credit counselors, and debt management programs. These services differ greatly from each other.

A licensed insolvency trustee can simply offer you financial advice and help you plan on how to repay your debts if that is all you need. A trustee is also the only person who can file a bankruptcy or consumer proposal for you. A Trustee will provide you with an initial no-cost confidential consultation to see if there are alternatives to bankruptcy for you. Credit counselors, credit counselling companies, and debt management businesses can give you financial advice and information. They can help you make a budget and make plans to repay your debt.

What does a licensed insolvency trustee do when you have debt but do not need to resort to one of the insolvency processes? During the free initial consultation, if a consumer proposal or bankruptcy is not right for you, the Trustee will refer you to see a community organization-based credit counselor who will be able to help you and also will not charge you a fee.

What does a licensed insolvency trustee do?: The Consumer Proposal Process

Consumer proposals to creditors are made by debtors and are legally binding agreements. You group all your debts into a consumer proposal to creditors. This is a debt solution to avoid bankruptcy. Your creditors agree to accept a reduced amount as full payment. The consumer proposal is a legal alternative to bankruptcy. Only a licensed insolvency trustee can administer it.

The only consumer insolvency restructuring proceeding regulated by the Canadian government is referred to as a consumer proposal (which is the only one of the consumer insolvency government-regulated insolvency proceedings that allow debt consolidation, debt settlement, or debt adjustment). In the end, your creditors write off the remainder of your debt, and you are released from those legal obligations.

If you owe $250,000 or less (not including any personal mortgages) and are insolvent, then you can qualify for a consumer proposal. Month-to-month payments over no more than 60 months need to be made to the Trustee. You pay just a part (generally 25%) of your total financial obligations gradually to the Trustee and when ended up, the rest of the balance owing to your unsecured creditors is written off.

what does a licensed insolvency trustee do
what does a licensed insolvency trustee do

What does a licensed insolvency trustee do?: The bankruptcy process

Canadian bankruptcy is a process whereby a person or company can declare itself bankrupt. The bankruptcy process starts in the provincial or territorial office of the OSB where the debtor is located.

In Canada, personal bankruptcy entails a number of stages. The debtor must be insolvent, meaning that they cannot repay their debts with the assets that they own or the income they earn. With the help of the Trustee, they must file statements of affairs and a statement of current income and expenses. There are other obligations on an undischarged bankrupt but that is not the purpose of this blog.

Upon receiving their discharge from bankruptcy, that is the moment that the debtor’s debts are forgiven or discharged.

What does a licensed insolvency trustee do?: The assignment of assets

When people file assignments in bankruptcy, what does a licensed insolvency trustee do with the assets? Any assets not charged by a secured creditor are available for the Trustee to take possession of. Those assets are usually things like real estate, cash, and vehicles. When assets are seized in bankruptcy the proceedings usually lead to them being sold and the proceeds are shared with creditors.

This is the main difference between a consumer proposal and bankruptcy. In a consumer proposal, there is no assignment of assets to the Trustee like in a bankruptcy. The debtor in a consumer proposal keeps their assets and makes monthly payments. It is the total of the monthly payments that the Trustee distributes to the creditors in a consumer proposal. In a bankruptcy, it is the proceeds of the asset sales.

what does a licensed insolvency trustee do
what does a licensed insolvency trustee do

What does a licensed insolvency trustee do?: Opting for a consumer proposal

Many people I deal with have significant debt problems. However, a consumer proposal may not be the best option for everyone. Opting for a consumer proposal means not only do you qualify under Canadian insolvency legislation to use one. It also means that it is a better alternative for you than personal bankruptcy. It means that you are able to restructure and not need bankruptcy services from a licensed insolvency trustee.

A consumer proposal is a way to get out of debt without declaring bankruptcy. If you are having trouble paying back credit card bills, medical bills, rent payments, and you don’t want to declare bankruptcy, a consumer proposal might be right for you.

Before opting for a consumer proposal, you must meet the following requirements:

  1. Total liabilities of $250,000 or less.
  2. Monthly payments can be made to your creditors, but not 100% of the total amount due.
  3. You cannot repay all of your debts with the money you have.
  4. If you work and are able to budget, you can pay your budgeted monthly expenses and have money left over for regular monthly payments to the Trustee. Under a debt management plan, your creditors will agree to write off a portion of your debt if you pay a fraction of what you owe.
  5. You may also be lucky enough to have a relative willing to put up a lump sum of money that represents a fraction of what you owe so that your unsecured creditors will accept it instead of all that you owe. This means that you can be in and out of your consumer proposal fairly quickly if you are in this fortunate position.

To summarize, consumer proposals are best suited to people with a sufficient disposable income. Consumer proposals offer the best way of restructuring, eliminating your unsecured debts, and avoiding bankruptcy.

There are restructuring provisions in the Bankruptcy and Insolvency Act (Canada) for people who owe more than they can discharge in a consumer proposal or in business insolvency. Despite some differences in the rules, the overall theme of restructuring remains the same.

What does a licensed insolvency trustee do?: Going the bankruptcy route

Given the above, what can a person do to eliminate their unsecured debt if they cannot qualify for filing a consumer proposal as an alternative to bankruptcy? Going the bankruptcy route will probably make the most sense.

Bankruptcy is when a person cannot pay their bills. They file Canadian personal bankruptcy to get a fresh start. Filing a consumer bankruptcy must be your last resort after exhausting all other options to avoid bankruptcy. Bankruptcy means debts are written off when the person receives their absolute discharge from bankruptcy. The bankruptcy law in Canada protects people from dishonest, unfair, or abusive practices by creditors.

However, in return for getting the relief of eliminating debts through bankruptcy, an undischarged bankrupt also has certain responsibilities.

These include:

  1. Making full disclosure to the Trustee.
  2. With the assistance of the Trustee, preparing the sworn Statement of Affairs and Statement of Income and Expenses.
  3. Delivering all assets and properties to the Trustee to be sold (other than for certain provincial exemptions).
  4. Attending the First Meeting of Creditors if one needs to be held.
  5. Attending two financial counselling sessions with the Trustee or a member of the Trustee’s staff. Attendance at credit counseling sessions is also the case in a consumer proposal.
  6. Providing monthly statements of income and expenses while an undischarged bankrupt.
  7. Generally providing any assistance requested by the Trustee.

In providing debt-relief options, the Canadian bankruptcy system is designed to provide fairness to both debtors and creditors while allowing the person to financially rehabilitate themselves.

what does a licensed insolvency trustee do
what does a licensed insolvency trustee do

What does a licensed insolvency trustee do?: Final thoughts

What does a licensed insolvency trustee do? Licensed insolvency trustees are insolvency practitioners. They are debt professionals who deal with and provide services to individuals and businesses with debt problems that are experiencing financial issues that can only be resolved through an insolvency process. Licensed insolvency trustees are professionals, offering affordable solutions to financial struggles.

I hope you found this what does a licensed insolvency trustee do Brandon’s Blog about helpful. Sometimes things are too far gone and more drastic and immediate triage action is required.

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.

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 a 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.

what does a licensed insolvency trustee do
what does a licensed insolvency trustee do
Categories
Brandon Blog Post

BANKRUPTCY DISCHARGE: MY CHEAT-SHEET OF THE TOP 8 THINGS THE BANKRUPTCY COURT CONSIDERS

Bankruptcy discharge introduction

A bankruptcy discharge is when the bankrupt is released under Canadian bankruptcy law from his or her debts as part of the bankruptcy process. Some people think that it is the act of filing bankruptcy that releases the bankrupt from liability. This is not the case. It is the discharge from bankruptcy process that “discharges” the bankrupt’s debts.

We explain in this vlog the procedure when a bankrupt’s outright discharge is opposed. We discuss the top 8 things that the Bankruptcy Court will consider in determining just what outcome the bankrupt could expect.

The primary benefit of the bankruptcy process for the insolvent person

The bankruptcy discharge is among the primary benefits of relief under the Bankruptcy and Insolvency Act (Canada) (BIA). The discharge is vital to the bankruptcy process. Debtors, after bankruptcy, can wipe the slate clean and start over, which is a central principle under the BIA statute.

Not all debts may be released

A bankruptcy discharge offers the discharge of many unsecured debts. Credit card debts, personal income tax debt, unsecured personal loans and under certain conditions, some student loan debt are all dischargeable debts. Financial debts, which will not be discharged include:

  • support payments to a previous spouse or to children;
  • fines or financial charges imposed by the Court;
  • debts emerging from fraudulent behaviour;
  • student loans if fewer than seven years have passed considering that the bankrupt quit being a full or part-time student.

    ontario bankruptcy court discharge certificate
    bankruptcy discharge

It can be opposed

An insolvent’s bankruptcy discharge application may be opposed by one or more unsecured creditors or the Licensed Insolvency Trustee (formerly called a bankruptcy trustee) (LIT). A creditor opposition is created when the creditor files the required notice of opposition, setting out the reasons for opposing.

This happens if the insolvent has not met all of his/her responsibilities under the BIA. Making full disclosure, attending the required two financial counselling sessions and making all necessary surplus income payments are all duties of the bankrupt that must be fulfilled if a discharge is to be considered.

It can also happen if the individual bankrupt has actually committed a bankruptcy offence. Those are acts listed in section 173 (1) of the BIA. In this case, there needs to be a bankruptcy discharge hearing in Court and the Court will after that evaluate the LIT or creditor opposition as well as give its decision on the discharge from personal bankruptcy.

There are four types of discharges possible

There are 4 types of discharges:

  1. Absolute discharge— The bankrupt is launched from the legal obligation to pay off financial obligations that existed on the day of bankruptcy, except for certain types of debt identified above.
  1. Conditional discharge— The bankrupt must fulfill certain conditions, additional payments into the bankruptcy estate, to get an absolute discharge. Once all conditions have been fulfilled, an absolute discharge will certainly be granted.
  1. Suspended discharge— An absolute discharge that will be granted at later on a specific date determined by the Court.
  1. Refused discharge— The Court has the right to decline a discharge.

If there is no opposition to the discharge from bankruptcy of the bankrupt by a creditor or the LIT, then the LIT is able to provide an automatic discharge by issuing the appropriate certificate. There is no need for attendance in Court.

after bankruptcy discharge canada
bankruptcy discharge

The opposition process

When a debtor’s bankruptcy discharge application is opposed by either an unsecured creditor or the LIT, the Trustee needs to secure a Court day. This will be for a Court hearing on the insolvent’s application for discharge. The LIT must then tell all creditors who have filed a proof of claim of the opposition. Details are also provided about the date, time as well as place of the Court hearing.

The Trustee needs to also file a report with the Court on the conduct of the bankrupt both prior to as well as after applying for bankruptcy. The report will as well give a summary of the financial results of the bankruptcy administration. If a creditor has opposed the bankrupt’s discharge, then that creditor likewise needed to send a notice of opposition.

Does the bankrupt need a lawyer on an opposed discharge?

When going to Court for his/her discharge application hearing, a bankrupt would be well advised to come with a skilled bankruptcy lawyer to represent his or her interests. Sometimes the discharge hearing is less formal than various other types of Court hearings.

However, the Court follows all the proper regulations of civil procedure. It is sometimes tough for nonprofessionals to put their best foot forward without an attorney’s aid.

There have been many Court cases on applications for discharge. A Court decision released recently from the Queen’s Bench of Saskatchewan supplies an exceptional walk-through of the points the Court will take into consideration. For those interested, the reference is Hertz Bankruptcy (Re), 2017 SKQB 224 (CanLII).

bankruptcy discharge 3
bankruptcy discharge

The top 8 things the Bankruptcy Court will consider

The concerns the Court thought about, in determining what type of bankruptcy discharge certificate to issue, which is the same in all bankruptcy discharge hearings, were:

  1. Do the conditions of the bankruptcy filing and the bankrupt’s conduct sustain an order discharging the Bankrupt’s unsecured debts?
  2. The Court’s problem is to make sure that within a choice the policy purposes of the BIA are fulfilled. The bankruptcy, including the insolvent’s discharge, should act as a deterrence for the person not to duplicate the very same behaviour.
  3. If the circumstances of the bankruptcy support an order discharging the bankrupt, what terms of discharge are proper under the distinct circumstances of the bankruptcy?
  4. What were the conditions of the insolvent when the debts were sustained?
  5. What efforts did the insolvent make to pay the creditors?
  6. Did the bankrupt pay in respect of certain other debts but not all of them and particularly not the debt of the opposing creditor?
  7. Exactly what are the insolvent’s monetary opportunities for the future?
  8. Is there any other conduct or reality that needs to be factored into with the regard to discharge?

The Court will take lots of variables into account. The conduct, previous income, education and age of the bankrupt are all important factors. The Court will certainly likewise trust the Trustee’s report to Court on the bankrupt’s application for discharge. The Trustee’s report assists in determining facts about the conduct of the insolvent and his or her future prospects.

bankruptcy discharge

Is the bankrupt young or old?

Prevention is always a consideration. It is however very important to remember that Courts tend to be extra conventional when dealing with older bankrupts. A more youthful bankrupt with years of income-making opportunities could be needed to make an extra significant repayment. Less respect is given to the instant ability to pay.

An older bankrupt with some surplus income but fewer working years might be needed to pay less surplus income obligations into the bankruptcy estate.

Bankruptcy discharge: Is my bankruptcy case over when I get a discharge?

You should by this point in my Brandon Blog realize that when you receive an absolute discharge from your bankruptcy, at that point, you are discharged from your unsecured debts.

A discharge shows that you have finished with your bankruptcy legal process and your personal liability for unsecured debts has ceased. It’s not a separate thing from bankruptcy; it happens either automatically or by an Order of the Court, as I have described above.

At that point, the LIT still has some duties to fulfill. They include:

  • if there is going to be a dividend paid to the creditors, making sure that all proofs of claim have been reviewed and allowed for dividend purposes;
  • resolve any uncertainties the LIT may have concerning certain filed bankruptcy claims, including the issuance of Notices of Disallowance if any;
  • preparing the bankruptcy administration Final Statement of Receipts and Disbursements;
  • getting approval from the Office of the Superintendent of Bankruptcy to the Final Statement
  • getting the Final Statement, including the LIT’s fee and disbursements, approved by the Court;
  • issuing the dividend bankruptcy payments, if any
  • getting the discharge of the LIT

It is then that your bankruptcy case is closed.

Bankruptcy discharge: Do you have too much debt and want to avoid bankruptcy?

Do you have too many debt obligations and debt payments and have no idea how to deal with them? Act before you find yourself in the throes of an emergency financial situation. Ira Smith Trustee & Receiver Inc. has assisted many Canadian businesses and people throughout the Greater Toronto Area (GTA) in dealing with debts that need a plan for Starting Over, Starting Now. Don’t postpone. Give us a call today. Financial problems can be solved while avoiding bankruptcy with timely activity as well as our excellent strategy tailored just for you.

bankruptcy discharge

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