I recently read a decision of the Bankruptcy Registrar of the Supreme Court of Nova Scotia in Bankruptcy and Insolvency that really inspired me. It got me thinking about the sacrifices our men and women in the military make for all Canadians. This particular Court decision, also made me think of sometimes they need our help for debt relief in Canada.
Debt relief in Canada: The case
The case I refer to is Durdle (re), 2018 NSSC 206, released August 31, 2018. The first two paragraphs of the Registrar’s decision, I found especially poignant:
“[1] This Court routinely considers situations in which the Bankrupt is indebted to the people of Canada, through tax or other liabilities to the State. As a matter of general policy, these obligations have a higher moral and sometimes legal priority than to private creditors as they are borne by all of us, as citizens and fellows of Society; and because the public generally must bear the share not paid by someone else. The collective public is an involuntary creditor in the result.
[2] What, then, is the situation when that is reversed – when it is the people of Canada who are indebted to the individual? Should compensation paid out as a consequence be considered divisible among creditors in an insolvency?”
Debt relief in Canada: The facts
Master Corporal Durdle was a career soldier. He spent 24 years in the military, retiring at the age of 45 years old. Master Corporal is now 49 years old and suffers from military service induced post-traumatic stress disorder (PTSD). He remains under professional care. He is in need of debt relief.
On November 13, 2013, Master Corporal Durdle filed an assignment in bankruptcy. This was his second bankruptcy and therefore, he was not entitled to an automatic discharge from bankruptcy. The purpose of the Court hearing was for the Court to consider what form of bankruptcy discharge he should be entitled to. In this second bankruptcy, there were minimal non-exempt assets and unsecured creditors totaling $73,476.76.
In 2014 while an undischarged bankrupt, Master Corporal Durdle received taxable income, including:
$16,778 from a wage loss replacement plan;
A rehiring allowance of $28,107.04, including $19,675 in severance pay;
Pension income of $23,594.10;
Disability income of $49,289; and
$3,624 in employment income.
The decision the Court had to make was, as the guidelines existed in 2014, how much if any of this 2014 taxable income should be considered “surplus income”?
Debt relief in Canada: The Court’s thinking
The Registrar made a point of saying:
“…I wish to be clear that nothing should be taken as putting military debtors on a different footing than a civilian. The rule of law, including that of civil contract, is one of the core values we hold as Canadians, and which is protected by our men and women in uniform. What is, however, on a different footing is the debt we owe those men And women when they are injured or ill in the discharge of those Duties.”
Debt relief in Canada: The Registrar’s analysis
The Registrar went through a very thoughtful analysis of the law. He considered it in connection with the various types of 2014 taxable income:
Wage loss replacement plan – Wrongful termination awards would normally be included in total income, as would pay in lieu of notice. The Registrar, however, went on to comment that in this case, the wage loss replacement plan was not termination pay or pay in lieu of notice but rather, pay because Master Corporal Durdle’s PTSD prevented him to continue serving. The Registrar concluded that this amount should not be considered as income in accordance with Section 68 of the Bankruptcy and Insolvency Act (BIA). Therefore, the Registrar also concluded that this amount should not be included in the calculation of surplus income.
Rehiring allowance – The Registrar applied the same logic for this payment. He decided that it should not be included in the calculation of surplus income. He decided that this payment was a result of Master Corporal Durdle’s PTSD preventing him from continuing to serve in the military.
Pension income – The Registrar could not determine whether this income was solely a benefit due to Master Corporal Durdle’s PTSD or not. However, it did factor into the Registrar’s ruling.
Disability income – The Registrar considered this income in light of previous Court decisions involving lump sum awards. This included under a Workers’ Compensation Plan. The Registrar went on to review the actual Federal statute under which the payment was made to him, the Veterans Well-being Act (S.C. 2005, c. 21). The Registrar concluded that this amount would not be included in the calculation of surplus income.
Employment income – The Registrar concluded that this amount is included in the surplus income calculation.
Debt relief in Canada: The Court’s decision
The Registrar concluded that if he includes the pension income ($23,594.10) and of course the employment income ($3,624) (less statutory deductions), Accordingly, Master Corporal Durdle’s income falls under the Superintendent of Bankruptcy threshold for 2014. Accordingly, Master Corporal Durdle had no surplus income to pay when considering Section 68 of the BIA.
Since this was Master Corporal Durdle’s second bankruptcy, he was not entitled to an absolute discharge. Therefore, the Registrar did not impose any conditions on his discharge, but rather, suspended his discharge for one day.
Debt relief in Canada: Sometimes understanding and kindness is required
The Registrar was obviously moved by Master Corporal Durdle’s service to Canada. He also considered his current plight brought on by service-related PTSD. The Registrar followed the law and also showed his understanding and kindness of this sad situation.
If you have financial difficulties, whether brought on by a medical cause or for any other reason, you need to seek professional advice from a Firm that will show you the understanding and kindness you deserve. The Ira Smith Trustee Team has seen many cases of personal and corporate financial distress. We understand your pain and we know how to alleviate it; with understanding and kindness.
Our strategy for every single business and person is to develop a result where Starting Over, Starting Now comes true, starting the minute you walk through our door. You’re just one call away from taking the necessary actions to get your debt settlement and back on the road to leading a healthy and stress-free life. Contact the Ira Smith Team today.
If you would prefer to listen to the audio version of this average Canadian net worth 2018 blog, please scroll down to the bottom and click on the podcast.
Average Canadian net worth 2018: Introduction
According to the most recent Statistics Canada report published in 2017. The Survey of Financial Security, the median net worth of Canadian families was $295,100. That is the latest federal government official statistic we have in determining the average Canadian net worth 2018.
There’s always been talk about how a financial crisis can adversely affect your health but now a new study published in the Journal of the American Medical Association suggests that wealth shock may actually shorten your life.
Average Canadian net worth 2018: What is wealth shock?
Researchers defined wealth shock as a loss of 75% or more in financial value over two years. The average loss was about $100,000. This catastrophic financial crisis could include a drop in the value of investments or realized losses like home foreclosure. The effect was more marked if the person lost a home as part of the wealth shock, and it was more pronounced for people with fewer assets.
Average Canadian net worth 2018: How does wealth shock affect your life expectancy?
Researchers analyzed 20 years of data from the Health and Retirement Study, which checks in every other year with a group of people in their 50s and 60s and keeps track of who dies.
Wealth shock was tied to a 50% greater risk of dying
Middle-aged Americans who experienced a sudden, large economic blow were more likely to die during the following years than those who didn’t
Women were more likely than men to have a wealth shock
Wealth shock crossed socio-economic lines, affecting people no matter how much money they had to start
Average Canadian net worth 2018: This is really a story about everybody
Although this study was conducted in the U.S., “This is really a story about everybody,” said lead researcher Lindsay Pool of Northwestern University’s medical school. “Stress, delays in health care, substance abuse and suicides may contribute”, she said. North or south of the border, we’re all in equal danger. According to Dr. Alan Garber of Harvard University in an accompanying editorial, the findings suggest a wealth shock is as dangerous as a new diagnosis of heart disease. He also noted that doctors need to recognize how money hardships may affect their patients.
Average Canadian net worth 2018: Don’t wait until you’re a wealth shock statistic
Please don’t wait until you’re a wealth shock statistic. If you’ve experienced wealth shock or are experiencing financial hardship, don’t jeopardize your health. Contact a professional today.
We approach every file with the attitude that corporate or personal financial problems can be solved. That is as long as you take immediate action with the right plan. We’re just a phone call away and we can set you back on a path to financial health.
Congratulations Graduates! You’ve done it! And now, at long last, you’re working. Have you been out shopping for a new car? Maybe having a look at the condo market? My advice to you is to slow down. That is why I am providing my 6 Canadian personal finance moves every new grad should make.
As tempting as it is to be making some real money for the first time, finding ways to spend it isn’t as important as finding ways to save it.
Canadian personal finance: Finances 101 for recent grads in a first job
Establish a budget. “It is important to set a new budget based on your new income and stick to it”, says Jennifer Auld, a District Vice-President of TD, who suggests using one of the many financial apps available to help track your spending. “You can plug in all of your fixed costs and determine what’s left at the end, for you to spend”. “It’s a critical first step in terms of establishing how much you’re able to save each month and what your discretionary earnings look like.”
Save!Save a portion of each paycheque, even if it isn’t a lot of money. It all adds up. You will establish a pattern of saving which will be a big help down the road.
Take advantage of group RRSP plans with matching contributions at work. It’s free money and will help you save more money, faster.
A tax-free savings account is a great option for someone making less than $50,000 a year. Especially people coming right out of school, according to Michael Allen, senior portfolio manager at Wealthsimple.
Don’t make any drastic changes in lifestyle. Jennifer Auld of TD Canada Trust suggests continuing to live on a student budget for a couple of months while you make a plan, including establishing your short and long-term goals. “What that allows you to do is get comfortable with your new reality before you go out and start changing your lifestyle and changing the way you live day-to-day,” said Auld.
Canadian personal finance: What to do if you are deep in debt
If you’re a recent grad, or a not so recent grad, with a high debt load and getting deeper into debt, reach out to the Ira Smith Team. We help people deal with debt on a daily basis and there is a way out. You need a plan for Starting Over, Starting Now. Give us a call today and get on a path of debt free living.
As a bankruptcy trustee in Toronto (now called a licensed insolvency trustee), I took great interest in reading a recent poverty line Canada study. A new research project whose results were announced in July 2018, studied poverty in Canada. It finds higher than 25% of respondents feel they have stress over financial matters. Not just a part-time stress; it is a full time feeling. Instead of just analyzing income levels, the survey considers the daily realities of making ends meet and how that can take a toll on people.
Many are unable to spend on simple things like going to the movie theatre, but also on more serious needs, like warm clothes for winter time and dental care. Some are late paying bills or cannot pay them at all and many say they can’t afford better quality food at the grocery store.
Researchers also found of the people who struggle most, 20% make well above what’s considered low income. However, the study finds that doesn’t always go far particularly in major urban cities. You can be making what many would consider middle-class earnings and still feel stressed. The survey showed many feel on the edge with their ability to have a life with some level of comfort or relaxation.
Bankruptcy trustee in Toronto: 4 major groups
This ARI research identified four groups:
the struggling (16%);
on the edge (11%);
recently comfortable (36%); and
always comfortable (37%).
As expected from these labels, the struggling is dealing with economic difficulties that are adversely influencing their lifestyle. Those on the edge are a stone’s throw behind them.
Bankruptcy trustee in Toronto: The study’s other main findings
The study’s other main findings are:
nearly a third (31%) really feel extremely worried about money regularly– either usually or constantly;
about half (52%) think hardship has actually been rising;
almost ten percent (9%) feel that financial hardship has been decreasing;
thirty percent (30%) are downhearted concerning their individual finances over the near future;
more think their youngsters’ finances will be worse (43%) compared to those who think their children will be financially better (32%);
all 4 state financial anxiety exists, yet there is more for both lower groups; and
the anxiety felt by the always comfortable group is a fret about future troubles as opposed to their present life.
Bankruptcy trustee in Toronto: Canada Without Poverty
Canada Without Poverty charitable organization states that roughly 5 million Canadians, or 1 in 7, live in poverty. However, the ARI study shows that the participants in the study estimate that about one third live in poverty. As you can see, their views were shaped by their own feelings of money anxiety.
Bankruptcy trustee in Toronto: Are you are “on the edge”?
Do you feel you are in the “on the edge” or the “recently comfortable” groups? Are you always feeling financially stressed? Are you worried that you may not be able to absorb an unexpected expense of $1,000 or more? If so, why not get a free financial checkup?
We know your pain and the stress you feel because of your finances. Our Firm has helped many others restructure their debt and return to a financially healthy life. Give us a call today. We can give you peace of mind and set you on a path to debt free living. We are a bankruptcy trustee in Toronto.
To find out more about how a consumer proposal works, you can also use the search function in our Brandon’s Blog site for any of the following phrases:
is consumer proposal worth it
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consumer proposal vs credit counselling
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This will bring up more of our blogs on this topic.
Debt settlement vs consumer proposal Canada: The Katie Price Story
English former beauty model, reality TV star, and businesswoman, Katie Price, was a self-made success that had scooped ₤45 million after years of brilliant business transactions and plain old hard work. Unfortunately, the former glamour model will not have the ability to delight in the fruits of her work. It is said Katie is on the brink of bankruptcy having spent all her fortune.
Debt settlement vs consumer proposal Canada: Working for a pair of “knickers”
Things seem to be so bad the for the reality TV star mom. She once was paid for a social media post with one pair of slacks. Her ₤2 million Sussex estate has fallen under a state of disrepair. The swimming pool is dirty, yards are thick with growth and the tennis courts are abandoned. Katie, 40, has additionally begun marketing her horses and llamas. The ₤77,000 Audi she purchased for separated hubby Kieran Hayler for his 30th birthday celebration is also for sale.
The modelling jobs have dried up and last month she even admitted staging lewd images in Thailand with toyboy Kris Boyson. She was spotted mowing her own lawn amid claims she’s started laying off staff to stay in the black.
Debt settlement vs consumer proposal Canada: How Katie Price spent her money
Taking to Instagram, she also admitted the bailiffs had visited her house to demand £3,000 for an electricity bill. But what has the mother-of-five spent all her money on? On top of that, she’s said to have spent £120,000 on housekeepers, gardeners, and nannies – one of whom Kieran claimed to have had a year-long affair with.
Katie Price was also visited by bailiffs demanding the £3,000 she failed to pay an electrician. Her monthly heating bill apparently comes to £2,000 because she keeps it on 24-7, and her other monthly outgoings include £1,500 for twice-weekly manicures and pedicures, £1,000 on getting her hair done, £800 on massages every other day, £800 on a makeup artist, £400.
And that’s not to mention the apparent £60,000 a year she’s forking out on farm machinery such as a tractor and milking machine. She also spends on a £25,000 annual cosmetic budget.
Last Christmas she confessed ₤2,000 spent on decorations. She feared it may be her terminally ill mother Amy’s last one.
Debt settlement vs consumer proposal Canada: How Katie Price is now earning money
And while back then she generated millions from her scents, publications, reality TV show as well as x-rated shoots, nowadays her only source of work seems to be her program, My Crazy Life Now. She is determined to make back some money. Katie claimed to be intending to revive her beauty version alter ego Jordan. She also plans a release of a variety of sex playthings.
One source was quoted as saying “Katie told me when all else fails sex sells”. “It’s the way she’s taking things – she’s bringing back Jordan to fix her finances. She said that it was a no-brainer to go back to her old image.”
Debt settlement vs consumer proposal Canada: Are you in need of debt settlement?
Our strategy for every single person is to develop a result we’reStarting Over, Starting Now comes true, starting the minute you walk through our door. You’re just one call away from taking the necessary actions to get you your debt settlement and back on the road to leading a healthy and stress-free life.
There are now some new Baby Boomers characteristics. Baby Boomers are now between the ages of 54 and 72. Their new characteristics are now defined by definitely not being a one-size-fits-all group. The broad range in their ages and stages has divided them on whether or not to downsize.
Baby Boomers characteristics: The issues
Baby Boomers are healthier and working longer than previous generations; as a result, they’re not ready to sell their homes and downsize or move into retirement facilities. Others may not want to sell and downsize because of thehot housing market. And there’s a significant generational change that is preventing Baby Boomers from downsizing – their kids haven’t moved out.
Baby Boomers characteristics: Some stats
Statistics Canada reports that just over 33% of young adults, aged 20 to 34, lived with their parents in 2016. In Ontario, the number was higher – 42.1%.
According to a survey by Royal LePage:
59% of Baby Boomers are renovating rather than moving
52% of Baby Boomers say they won’t be downsizing
18% of Baby Boomers said they didn’t expect their children to leave home before the age of 30
9% of Baby Boomers said they didn’t expect their children to leave before 35
44% of Baby Boomers would bewilling to contribute up to 25% of the cost of their child’s home
Baby Boomers characteristics: Baby Boomers not downsizing
Although economists expected Baby Boomers to downsize in large numbers, that just isn’t happening. With the relatively new phenomena of adult children living at home, Baby Boomers are making the decision to renovate instead of move.
Downsizing is increasingly shifting to their 80s when they can no longer care for their homes. Although it’s a generous thought tohelp your children buy a house, Baby Boomers really need to consider whether or not that makes good financial sense for them or can potentiallyjeopardize their retirement. In addition, helping your children purchase a house that they can’t afford may do more harm than good.
Baby Boomers characteristics: Some Baby Boomers need a financial plan
If you’re in a financial quandary because you’ve helped your adult children purchase a house, or if they now find themselves with a house they can’t afford, seekprofessional help immediately.Ira Smith Trustee & Receiver Inc. is a full-service practice serving people just like you throughout the Greater Toronto Area (GTA) who need a plan forStarting Over, Starting Now. Give us acall today. We can give you peace of mind and set you on a path to debt free living.
After fully completing a consumer proposal or receiving a discharge from bankruptcy, it is important to start immediatelyrebuilding credit Canada. The purpose of this Brandon’s Blog is to provide you with our foolproof and painless 3 step plan to eliminate those negative credit checks and fix your credit trouble by rebuilding credit Canada.
Rebuilding credit Canada: Step 1 – Create good habits with a plan for discipline and self-control
After your discharge from bankruptcy or the full completion of a consumer proposal, you must create good habits of discipline and self-control. You won’t have any credit accounts and your goal is to show the credit bureaus that you can use credit responsibly and work your way back from bad credit score.
To do that, you need good new financial habits. You need to start creating a good payment history. A lack of these habits might have been partly responsible for your current situation, so working on changing bad habits, and creating new ones will lay the groundwork for a successful financial future.
Research has shown that on average, it takes more than 2 months before a new behaviour becomes automatic – 66 days in fact. So, while at the beginning, having to be disciplined and exert self-control over spending money mistakes might seem like hard work, stick with it for a couple of months, and very soon it will just become part of your daily routine.
Learn discipline through budgeting. You may be able to find a pretty good yet simple budget calculator spreadsheet. Aside from rebuilding your credit, learning how to create a realistic budget by looking at your essential expenses compared to your current level of everyday purchases. This will allow you to get a good handle on what your income requirements are and then sticking to it is the most important step of rebuilding credit Canada after bankruptcy or consumer proposal.
You’ll be looking closely at your money and personal income anyway, so use this time to get a real grasp on your entire financial situation. Take a look at credit cards and related statements. By only making the minimum monthly payment you are being charged interest. Look carefully at what the rate on purchases is that you are really paying.
Understand where your money comes from, and, more importantly, where you spend every penny. You’re going to need to make friends with spreadsheets and familiarize yourself with all your bank and bill statements. Create categories of all your expenses (e.g. rent, electrical bills, car insurance, groceries etc.) Using your past bank statements, look at your current spending plan in each category. You’ll probably be surprised at how much money you spend in some!
Set limits for how much you will spend per month in each category. This will likely mean making some sacrifices to ensure your budget balances (the total amount being spent does not exceed the total amount coming in). However, be realistic – don’t tell yourself you’re going to stop doing things you enjoy together. Instead, cut down on how often you do them. E.g. the budget spending plan for a meal out could be once a month rather than a couple of times a week.
Get in the habit of planning and recording every single expense, no matter how small. Keep receipts and go over where your money has gone every month. Plan rewards for different milestones along the way. It’s important to have things to look forward to and motivate you along the way.
Budgeting takes discipline and sacrifice but stays focused on the goal. You’re doing this to ensure you don’t fall back into the same bad habits as before. You are going to have to change some things – and what better time than while you’re starting over? You’re already doing the work, now the trick is to make this disciplined.
Practice self-control in your spending (and saving!) The golden rule of spending? Learn to live within your means – it sounds simple, but it can very hard to do. However, those who live within their means do not get into trouble with debt, and that’s what you’re working towards for the future! You’ve created a budget, you know exactly what you can spend in each category, now you need to execute on that. By following your
While in bankruptcy or a consumer proposal, any excess money you earn is going to go to your debtors. That may make it seem impossible to save. However, saving money should always be in your plan.
As soon as you are discharged from bankruptcy or your consumer proposal, start saving money every month. Work a specific amount (we recommend 10%) into your budget so that you learn to live within that new budget spending plan. Setting up automatic payments and transfers into your savings account on payday will ensure your money goes where it needs to before you even have time to think about spending it.
So where should this money go? First, establish an emergency fund so that you can avoid facing bankruptcy again in the future. A good emergency fund should cover at least 3 months of living expenses. Once your emergency fund is built, continue to save by contributing to your RRSP or TFSA as much as you possibly can while still meeting your month-to-month expenses.
Forming good habits of discipline and self-control is key to your permanent financial rehabilitation. Once you do so, you’ll find that building your credit will be relatively easy!
Rebuilding credit Canada: Step 2 – Work to rebuild your credit after bankruptcy or consumer proposal
It is true that a record of your insolvency filing will stay on credit reports. This is so for both a consumer proposal (3 years!) or a bankruptcy (7!). However, you can actually start rebuilding credit Canada right away.
There’s an old saying that goes “The best time to plant a tree was 20 years ago. The second-best time is now.” We recommend that you don’t wait 20 years, or even 3.
Here’s what you need to know to start building credit and improving your credit reports today:
Secured Credit Card – A secured credit card looks and functions just like a regular unsecured credit card, with your lender reporting to the credit bureaus on a regular basis. The only difference is that you put up an initial deposit as a security deposit in the form of cash. The minimum deposit or the maximum deposit you can afford to make acts as collateral upfront makes it a secured credit card. The amount of cash you put up as a deposit dictates your credit limits.
rebuilding credit canada
This protects the lender from the possibility of you defaulting on what you owe because your security fund will be used to cover any outstanding amounts. When you use this type of card, as far as the vendor is concerned, it acts just like an unsecured credit card. Every month when you pay off the balance by making your payments on time, it is reported to the credit bureaus. Then each credit bureau can update their records showing you are paying it off on time. That is how it can rebuild credit Canada.
A Secured Line of Credit – Much like a secured card, a secured line of credit is a revolving credit that is secured by the money or other security, you offer up in the beginning. As you use your line of credit and you make your payments on time, you will establish a picture of good money reminders habits which will both boost your credit score. These lines of credit are available through most banks. Again, creditworthiness and collateral, if required, set the credit limits.
Create Your Own Credit Building Programs – Credit building programs are one of the most effective methods for rebuilding credit after bankruptcy or consumer proposal. Programs like borrowing a small amount to invest in your RRSP. Then repay the loan in full before the next RRSP year.
This is beneficial in 3 ways: You don’t have to come up with the funds, you are investing in your future and by repaying the loan, you are showing you can handle credit properly which improves your credit score. This should also be combined with a secured card or line of credit, do double up on your credit score building program. Paying your bills on time also improves your credit score.
You want to follow your budget carefully. Avoiding late payments, making the full payment each month on your monthly credit card balance, not just the minimum payment, and don’t have a missed utility payment. Having timely payments and no late payments on your Canadian credit history, will take a poor credit score and start improving your credit rating by creating a new positive credit history.
An improved credit rating and improving credit reports will overturn the negative effects of your bad credit history, get your credit score ranges to improve, get you the credit score increase you deserve and catch the attention of the credit card company and improve your chances of access to credit products.
These new types of credit becoming available to you, and perhaps even existing credit card issuers giving you a credit limit increase, all go towards your rebuilding credit Canada. But you still need to stick to your spending plan. Just because you are getting access to credit again, does not mean you can abandon your proper budgeting. You don’t want to go back to the old habits that produced the poor credit history.
Whatever kind of credit loans you are looking to take out to help rebuild your credit, make sure you understand things properly. Read the credit applications carefully to see what you are really signing up for. If approved, read the credit agreement carefully so you will fully understand all the terms of the rebuilding credit Canada loan product.
As your credit reports improve, you will find new companies offering you new credit accounts and credit card providers either increasing your credit card limit or sending you applications for new credit cards lines. Again a word of caution. Don’t get carried away with all sort of credit products in your daily life. Keep it simple and stick to your budget. You really may only need one regular credit card from amongst the wide range of Canadian credit cards becoming available to you.
rebuilding credit canada
Rebuilding credit Canada: Step 3 – Maintain your spending plan good habits for the rest of your life
Rebuilding credit Canada is not a one-time event. Think of rebuilding your credit after bankruptcy like losing weight. In the beginning, dragging yourself to the gym and making kale smoothies is hard work. However, as you start to see the weight drop, it becomes easier and easier.
What happens when you reach your goal weight? Do you stop going to the gym and start eating pizza for breakfast? No! You just carry on as you are now – because it’s become a habit, and if you slip back into old habits, you’re quickly going to see all of your hard work come undone.
Regularly checking your full credit reports from both credit reporting agencies will help you see how your good habits are paying off. Kinda like weighing yourself to make sure you’re still where you want to be. If you start seeing negative results, take stock of what’s happening in your life that could be causing it and make changes to quickly get back on track. You want to keep seeing improvement in your credit reports.
Ultimately, whether you’re declaring bankruptcy or entering into a consumer proposal, it will be emotionally difficult. There is a light at the end of the tunnel though. Many people don’t realize that you can start building credit while going through both a bankruptcy or consumer proposal so that at the time of discharge, you’re already a few steps ahead. Follow these steps and you’ll find that rebuilding your credit after bankruptcy isn’t that difficult.
Rebuilding credit Canada: Do you know anyone who needs to get back on the road to financial recovery?
If you have too much debt, are unhappy with your debt situation and need someone to talk to about how a consumer proposal or even personal bankruptcy can fix your credit issues and improve your financial life, call the Ira Smith Team. We are professional credit counsellors and can help you learn good spending habits. Through consumer proposal payment arrangements you can make steady payments on prescribed payment dates. This will allow you to avoid bankruptcy by paying only a fraction of your total debt yet eliminate all of your debt. It will also get you credit repair.
We will listen to your issues and provide you with our thoughts and recommendations for free. That’s right; a no-cost initial consultation. We will look at your debt utilization and make recommendations to you on how to fix it. So why not? All you have to lose is your stress while rebuilding credit Canada. Why not fix things now so that your credit checks improve.
We will advise you whether or not we think you are a candidate for either a consumer proposal or bankruptcy. If we feel you can solve your financial problems without an insolvency process, we will tell you straight. The Ira Smith Team understands the stress you are under and the pain it is causing you and your loved ones.
We can eliminate your pain. I guarantee that you will start feeling better right away after our free initial consultation. Taking action after that will put you on the right path, Starting Over Starting Now
Baby Boomers in Canada are not retiring like the generations before them. As we discussed in arecent blog, there are many good reasons to keep working beyond age 65. Although Baby Boomers are the generation that has already reached aged retirement age or are fast approaching it (Baby Boomers are born from 1946 – 1965), many of them are not financially able to retire.
Baby Boomers in Canada: Franklin Templeton Investments Canada study
75% of pre-retiree Baby Boomers surveyed said they felt anxious or stressed about their retirement savings or investments
40% said they expected to rely on a government pension as their primary or secondary source of income
50% who had already retired said their government pension was their primary or secondary source of income
Baby Boomers in Canada: Canada Pension Plan (CPP)
There is good news for Baby Boomers relying on government pensions. According to the Government of Canada, up until 2019, the CPP retirement pension replaces one-quarter of your average work earnings. This average is based on your work earnings, up to a maximum earnings limit each year. Other sources of income—such as the Old Age Security program, workplace pensions, and private savings—make up the rest of your retirement income.
Beginning in 2019, the CPP will begin to grow to replace one-third of your average work earnings. The maximum limit used to determine your average work earnings will also gradually increase by 14% by 2025.
As a result, pension amounts will increase by more than 33%. Your pension will increase based on how much and for how long you contribute to the enhanced CPP. You will get the full increase if you contribute to the enhanced CPP for 40 years.
The enhancement also applies to the CPP post-retirement benefit. If you are receiving the CPP (or QPP) retirement pension and you continue to work and make CPP contributions in 2019 or later, your post-retirement benefits will be larger.
Baby Boomers in Canada: Many just want to work
In addition to the financial benefits, many Canadians prefer to keep working beyond the retirement age. Work provides a sense of accomplishment, a social environment, keeps the mind sharp and the body active.
Baby Boomers in Canada: Are you a Baby Boomer who’s still paying off debt?
However, if you’re one of the Baby Boomers who’s still deep in debt, you needprofessional help now. Although your situation may feel hopeless, there are solutions to every problem with immediate action and the right plan.
We always perform an initial free consultation with people thinking about filing either a consumer proposal or bankruptcy. People ask me, what if I can’t create a list of all my creditors?
Consumer proposal or bankruptcy: A refresher
If you are a regular reader of my Brandon’s Blog, then you know the difference between a consumer proposal vs bankruptcy. For those of you who need a brief refresher, both the consumer proposal and bankruptcy are different processes under the Bankruptcy and Insolvency Act (Canada) (BIA). To file either one, the person must be insolvent. That means that they cannot meet their liabilities as they become due and if they liquidated all their assets, it would not produce enough cash to pay of all the debts.
Consumer proposal – This is a restructuring process to avoid bankruptcy for any person who owes $250,000 or less, not including any mortgage or line of credit debts secured by a mortgage registered against their home. The purpose of a consumer proposal is to AVOID bankruptcy.
Division I proposal – This is a restructuring process for people who owe too much money to fit under the consumer proposal rules. A company can also reorganize under this section of the BIA.
Bankruptcy – If a person cannot successfully carry out a restructuring proposal but requires relief from their crushing debts, then they would file for bankruptcy. In this process, subject to certain provincial exemptions, you would hand over your assets to the licensed insolvency trustee (Trustee). The Trustee would then sell the assets for cash, call for your creditors to file a proof of claim with the Trustee and then distribute the money according to the rules of the BIA.
Consumer proposal or bankruptcy: A common question
Regardless of whether the person is thinking about a consumer proposal, Division I proposal or bankruptcy, a common question is: (i) what if I don’t know who all my creditors are; or (ii) what if I leave off some creditors from my sworn statement of affairs; or (iii) do I have to list all of my creditors?
Some of our clients come to us, tell us that they don’t even know who their creditors are. Sometimes it’s been such a long time that they don’t even receive the bills or notices anymore and their memories aren’t good enough. So here is an easy hack so that you can put together a list of most, if not all, of your creditors.
Consumer proposal or bankruptcy: The easy hack
We will add CRA to your statement of affairs. If you don’t know how much you owe them, we will put them in showing either “$1” or “Unknown” as a placeholder
Every person must file an income tax return. Most people know whether they are current or not in their tax filings. So Canada Revenue Agency (CRA) should always be listed.
CRA cannot file an accurate proof of claim if you have not been current in your income tax filings. So we tell everyone to file all outstanding tax returns and provide us with a copy before filing either a consumer proposal or bankruptcy.
Pull your credit report
You may obtain your credit report from either Equifax or TransUnion. Your credit report will list all those who you owe money to and who wanted to update their files with your new credit score. We will add those creditors to your statement of affairs also.
Check your mail and save the bills
No doubt your creditors will keep mailing your statements. Even if all it says is balance forward unpaid, or is from a collection agency or lawyer, it will list their address, their name and the amount they say you owe. We will put that information on your statement of affairs.
Have your lawyer do an execution search
Your lawyer can easily do an execution search. This search will show who holds a judgement against you and some basic details. We will add those details to your statement of affairs.
Consumer proposal or bankruptcy: The test is due diligence, not perfection
The test is, did you use your best efforts to identify all of your creditors on your sworn statement of affairs. It is very rare that any of our clients know exactly how much they owe. It is normal for the amounts according to the sworn statement of affairs to be different from the proofs of claim filed. That is OK.
Sophisticated large creditors pay the Superintendent of Bankruptcy to get a download of insolvency filings on a regular basis. They match the names of those who have filed against their client database. If a client shows up that they did not have listed as having filed, they contact the Trustee. Once they contact us, we send them a creditor’s package. They will then be able to further check their records and if owed money, can file a proof of claim.
We had a client who said they mistakenly left off a few creditors in their proposal filing. Those creditors found out. All those creditors had judgements against the person who filed the restructuring proposal. These creditors were very mad at being left off the list, although they did not suffer any damages.
It made it much tougher for the person and us to get a deal struck with all the creditors. At the end of the day, a deal was struck and the person is currently performing and is currently making their payments under the restructuring proposal. The anger of these creditors rubbed off on creditors who would have otherwise been happy with a lesser proposal. So in the end, leaving these creditors off the initial sworn statement of affairs just cost them more money!
Consumer proposal or bankruptcy: Corporate filings
In terms of a corporation filing either a restructuring proposal or bankruptcy, we normally don’t incur the same issues. A company will have an accounting department and/or an accounting system. They will be able to produce a list of creditors. The amounts shown may not be current, but the list of names and addresses will be reasonably accurate.
However, the easy hack I described above also works for a company.
Consumer proposal or bankruptcy: More free stuff
I hope that you have found my free easy hack useful to answer the question of how to create a list of all my creditors. You can use it if you wish to do proper budgeting, which everyone should do. You don’t have to wait until you are insolvent!! With proper budgeting, you can avoid insolvency and therefore bankruptcy.
If you have too much debt and need someone to talk to about consumer proposal vs bankruptcy, call the Ira Smith Team. We will listen to your issues and provide you with our thoughts and recommendations for free. That’s right; a free initial consultation. So why not? All you have to lose is your stress. We will advise you whether or not we think you are a candidate for either a consumer proposal or bankruptcy. If we feel you can solve your financial problems without an insolvency process, we will tell you straight.
The Ira Smith Team understands the stress you are under and the pain it is causing you and your loved ones. We can eliminate your pain. I guarantee that you will start feeling better right away after our free initial consultation. Taking action after that will put you on the right path, Starting Over Starting Now.
Today’s Brandon’s Blog discusses the notion that financial goals for millennials are being hurt by baby boomers. Not only are we living longer; we’re living better. The expression “65 is the new 55” seems to quite accurately describe the changes in our workforce.
Financial goals for millennials: Baby boomers are working longer
Thanks to no mandatory retirement in Ontario, Baby Boomers can work well past 65. According to 2016 census figures, 20% of Canadians are working, either full or part-time, paid or unpaid, past 65. The number of post-retirement workers has doubled since 1995. Unfortunately for millennials who are blaming their financial woes on the Baby Boomers, working longer makes good financial sense.
Financial goals for millennials: The academic’s view
Craig Riddell, a UBC professor of economics, says, “One of the principal causes is increased longevity, and people are staying healthy longer. Another important factor is the decline in pension coverage, especially in the private sector of the economy, and a gradual switch from defined benefit plans to defined contribution plans.
There is no incentive to retire early with the Canada Pension Plan (CPP) if you like working. CPP no longer has a specific retirement age, such as 65. Instead, there is a retirement “window” between the ages of 60 and 70. The later you retire, the larger your monthly payment. If you are going to live an average lifetime, you will get the same amount in total. You don’t pay a penalty by retiring later. If you retire at 60, you get the lowest payment”.
Financial goals for millennials: The benefits to working past 65
Although millennials are against the trend, there are many benefits to working past 65. Karen Zeleznik, a financial planner at Libro Credit Union reports that:
Canada Pension Plan benefits jump by 42% if you delay taking them until age 70, even more, if you keep contributing
Old Age Security payments work on the same principle, but some or all is clawed back for those with high incomes
Many private-sector plans also offer fatter pensions if retirement is put off past 65
Tax bills increased by a higher tax bracket from “double-dipping” can be reduced with spousal income splitting
In the end, it comes down to one thing: How long are you going to live?
It’s a question of taxation, lifestyle and life expectation. If you live to be 90, sure, delay it, because you will get more for a longer time. It’s just math
Financial goals for millennials: Working past 65 is a great advantage
Working past 65 is a great advantage for Baby Boomers who have not saved enough money to retire comfortably. As long as they keep working they can enjoy a lifestyle that they’re accustomed to and enjoy. And many, plain and simply, enjoy working.
Although millennials like to blame Baby Boomers for their financial woes, the high cost of living and the astronomical cost of housing are the real culprits, not the lack of jobs. The job market can be challenging whether or not the Baby Boomers are working longer. And the reality is that millennials will likely have to work longer as well, due to the increased life expectancy and disappearance of defined pension plans.
Financial goals for millennials: Are you struggling financially?
If you’re a millennial who’s struggling financially, you need to take action before things become dire. Consult a professional trustee for help with your financial problems. The Ira Smith Team can help you get back on your feet financially and start saving for your retirement so that perhaps you won’t need to work past 65. Give us a call today and Starting Over, Starting Now, you can put your financial woes behind you.
