Tag: Ira Smith Trustee

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WHY AREN’T BABY BOOMERS IN CANADA RETIRING?

8baby boomers in canada

Baby Boomers in Canada: Introduction

Baby Boomers in Canada are not retiring like the generations before them. As we discussed in a recent 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

According to a study conducted for Franklin Templeton Investments Canada:

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 need professional help now. Although your situation may feel hopeless, there are solutions to every problem with immediate action and the right plan.

Ira Smith Trustee & Receiver Inc. has helped many people just like you throughout the GTA. We can help you get back on your feet and give you back peace of mind. Give us a call today and Starting Over, Starting Now you can put your struggles behind you.

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CONSUMER PROPOSAL OR BANKRUPTCY: LIST OF MY CREDITORS FOR CONSUMER PROPOSAL

Consumer proposal or bankruptcy: Introduction

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.

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.

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FINANCIAL GOALS FOR MILLENNIALS: STOPPED DUE TO BABY BOOMERS?

financial goals for millennials

Financial goals for millennials: Introduction

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.

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BANKRUPTCY AND INSOLVENCY ACT CANADA: BANKRUPTCY LAW FAQ

Introduction

I am often asked general questions about the Bankruptcy and Insolvency Act Canada. Sometimes it is about the application of a certain section or topic. Other times, it is a simple question such as where can I find a copy that I can look at?

The purpose of this Brandon’s Blog is to list the most often asked questions. Not all of them may be of interest to you. However, for those that have questions about the Bankruptcy and Insolvency Act, hopefully at least one of these questions (and the answer) will be of interest to you.

So here we go.

Is there a book that explains the various topics and sections of the Act?

Yes, there is. The book is an annotated version of the statute. It has the complete Act and its rules and regulations. In addition, the annotations provide explanations on the application of each section as well as a listing of decided cases to support the explanations.

Can I look up the Act and decided cases somewhere online for free?

Yes. The Canadian Legal Information Institute (CanLII) operates a website. It has the legislation online calling it the Bankruptcy and Insolvency Act Canada CanLII. CanLII can also be used to search bankruptcy legal decisions in both English and French.

Where can I find a listing of the many forms that a licensed insolvency trustee uses?

The best place to find all the mandated forms is on the website operated by the Government of Canada, Office of the Superintendent of Bankruptcy. It lists all the forms. They are also downloadable as pdf forms.

People ask me if they can perform a Bankruptcy and Insolvency Act Canada search. What they really mean is can they perform a search to find out if a specific person or company did a personal or corporate filing under the Canadian bankruptcy system. The answer to this question is yes.

The Office of the Superintendent of Bankruptcy operates a database for people to search the bankruptcy and insolvency records in Canada. The database can be accessed for free by a licensed insolvency trustee. Any member of the public can do the same search for the cost of $8 per search. Eventually, the Government of Canada is going to move to a free system, but it is not in place yet.

What are the Bankruptcy and Insolvency Act Canada regulations?

The Bankruptcy and Insolvency Act Canada regulations, otherwise known as the bankruptcy rules, form part of the Act itself. The pure legislation contained in the various sections of the Act is just that; the legislation. However, there are practical considerations which also need clarification. Such clarification is found in the Rules contained in the Bankruptcy and Insolvency Act (Canada). For example, the rules describe steps to abide by a specific section of the Act, or who is responsible for establishing Court fees.

Is their equal treatment for all unsecured creditors?

This is always an interesting question. The answer is also confusing to many lay people. The answer is both no and yes. I will explain. There are two types of unsecured creditors; preferred unsecured and ordinary unsecured. Many people forget this.

All ordinary unsecured creditors ARE treated equally. Their claims rank equally. The licensed insolvency trustee (formerly called bankruptcy trustee) paying a dividend to the ordinary unsecured creditors, they will all receive theirs in proportion share. The calculation is based on their respective ordinary unsecured claims.

The preferred unsecured creditors ARE NOT treated equally. The Bankruptcy and Insolvency Act Canada section 136 sets out the scheme of distribution for the rank of the claims. Payment to preferred creditors ALWAYS happens BEFORE payment to ORDINARY creditors.

The preferred creditors

However, preferred unsecured creditors are not equal. The Act states that there is a ranking of claims within the preferred group. The list and order of priority of the major types of preferred creditors are as follows:

  • for a deceased bankrupt, the reasonable funeral and testamentary expenses incurred;
  • the costs of the bankruptcy administration:
  • the levy payable by the licensed insolvency trustee under section 147 of the Act;
  • any wages, salaries, commissions, compensation or disbursements owing to employees for the six month period prior to the bankruptcy;
  • municipal taxes assessed or levied against the bankrupt, within the two years before the bankruptcy, that is not secured against the real property;
  • the commercial landlord for arrears of rent for three months immediately before the bankruptcy and accelerated rent for not more than three months following the bankruptcy (if entitled to accelerated rent under the lease);
  • one bill of costs of a lawyer for the creditor who first attached by way of garnishment or filed with the Sheriff an attachment, execution or another process against the property of the bankrupt;
  • indebtedness of the bankrupt under any Act about workers’ compensation, unemployment insurance or under any provision of the Income Tax Act creating an obligation to pay to Her Majesty amounts that have been deducted or withheld;
  • claims resulting from injuries to employees of the bankrupt for which there will be a receipt of money from persons guaranteeing the bankrupt against damages resulting from those injuries; and
  • any other claims of the Crown

The Trustee must pay the claims of the preferred creditors in full, less the statutory levy mentioned above. If there are insufficient funds to pay some or all the preferred creditors, then their claims become ordinary unsecured claims.

In personal bankruptcy, are there any claims not discharged upon the person receiving their absolute discharge from bankruptcy?

Yes. The Bankruptcy and Insolvency Act Canada section 178 lists the claims not discharged in a person’s bankruptcy. Such debts are:

  • a fine, penalty, restitution order or other order similar in nature imposed by a court in respect of an offence, or any debt arising out of a recognizance or bail;
  • any award of damages by a court in civil proceedings in respect of bodily harm intentionally inflicted, sexual assault, or wrongful death as a result of such an act;
  • a debt or liability for alimony or support under a court order or valid written agreement;
  • the debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity;
  • debts or liabilities resulting from obtaining property or services by false pretenses or fraudulent misrepresentation;
  • the entitlement to a dividend a creditor would have received on any provable claim not disclosed to the trustee unless the creditor had notice or knowledge of the bankruptcy and failed to take reasonable action to prove a claim;
  • any debt or obligation of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date the person ceased being a full or part-time student was within seven years before the date of bankruptcy;

All claims against a bankrupt person are discharged when the person obtains their absolute bankruptcy discharge except those indicated above.

Student loans

There is an additional provision in the Bankruptcy and Insolvency Act Canada student loans section. It states that any time after 5 years after the bankrupt person has ceased to be a full or part-time student, they can apply to the Court for relief. The Court can cut the student loan debt if proved that the bankrupt person:

  • has acted in good faith in trying to repay the student loan debt, and
  • the bankrupt person has and will continue to experience financial difficulty and will be unable to pay the debt

What is the history of the Bankruptcy and Insolvency Act in Canada?

The Bankruptcy and Insolvency Act in Canada has a very interesting history. The Bankruptcy and Insolvency Act of Canada has its origins in the Bankruptcy Act of 1919. The Act changed in 1949. In terms of the history of our country, this means the Act is a relatively young piece of legislation. The reason for the enactment is that every modern society has to realize that some of its citizens and businesses will run into financial trouble. A modern and efficient economy has to have the means to help those people and businesses out of their trouble. Everyone deserves a fresh start. To redeploy a company’s assets there must be a formal system to allow this to happen.

The Act changed again in 1992, 1997 as well as 2008-2009. The 1992 reforms concentrated on maximizing value for creditors with reorganization and rehabilitation, boosting the fair distribution to employees and providers of goods and services to the bankrupt company.

The 1997 reforms urged consumer debtor responsibility and boosted the reorganization stipulations as well as the administration of the Act. It introduced new sections dealing with the insolvency of securities firms and dealing with global insolvencies.

The 2009 reforms, had 4 primary aims:

  • to urge the restructuring of viable, but financially hampered companies;
  • to better secure workers’ insurance claims for wages and holiday pay;
  • making the bankruptcy system fairer and lower abuse; and
  • to improve the administration of the Canadian bankruptcy system.

Is the Act federal or provincial legislation?

Federal legislation. The name of the Act gives the answer. Its name is the Bankruptcy and Insolvency Act Canada. Although there are laws in each Province that will come into play during the administration of a bankruptcy or reorganization, the Act is Federal.

Summary

So I hope you have a better understanding of the most asked questions about the Government of Canada Bankruptcy and Insolvency Act. The Act deals with bankruptcy insolvency issues for both bankruptcy law personal and corporate.

If you have any questions about how the Canadian bankruptcy system works or feel that someone you know could benefit from a free first consultation with a professional licensed insolvency trustee, feel free to contact me.

The Ira Smith Team have decades of experience in both personal and corporate insolvency matters. We can handle complex corporate and other business financial restructurings as well as personal financial problems. In both corporate and personal insolvency matters, we first look at how we can reorganize and restructure the person or business to do a rescue.

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TRADE AND DEVELOPMENT: BEING A PATRIOTIC CANADIAN CAN SAVE YOU MONEY

trade and developmentTrade and development: Introduction

We live in a time of interesting politics when it comes to trade and development. Unfortunately, due to the trade war between the U.S. and Canada, many products are now considerably more expensive. Since household debt is at record highs and many Canadians are already living paycheque to paycheque, the price hikes on popular products can cause a significant impact on your finances. The best way to keep your spending in check is to show your patriotism and buy Canadian.

Trade and development: The Canadian list

According to the Retail Council of Canada, this is a list of popular products that will cost you more if not sourced locally or from a country other than the U.S.:

  • Yogurt
  • Roasted coffee – not decaffeinated
  • Maple sugar and maple syrup
  • Licorice candy and toffee
  • Sugar confectionery
  • Chocolate in blocks, slabs or bars
  • Pizza and quiche
  • Cucumbers and gherkins
  • Strawberry jam
  • Orange juice, not frozen
  • Soya sauce
  • Tomato ketchup and other tomato sauces
  • Mayonnaise and salad dressing
  • Mixed condiments and mixed seasonings
  • Soups and broths
  • Waters, including mineral aerated waters containing added sugar or flavour
  • Whiskies
  • Manicure or pedicure preparations
  • Hair lacquers
  • Pre-shave, shaving or after-shave preparations
  • Preparations for perfuming or deodorizing rooms
  • Organic surface-active products and preparations for washing the skin
  • Automatic dishwasher detergents
  • Candles
  • Plastic sacks and bags
  • Tableware and kitchenware
  • Plywood, consisting solely of sheets of wood other than bamboo
  • Paper and paperboard
  • Toilet paper
  • Handkerchiefs, cleansing or facial tissues and towels
  • Tablecloths and serviettes
  • Printed or illustrated postcards
  • Printed greeting cards, with or without envelopes
  • Cast iron grills
  • Combined refrigerator-freezers
  • Dishwashing machines
  • Lawnmowers
  • Inflatable boats
  • Sailboats
  • Motorboats
  • Mattresses
  • Sleeping bags
  • Pillows, cushions and similar furnishings of cotton
  • Playing cards
  • Ballpoint pens
  • Felt-tipped and other porous-tipped pens and markers

Trade and development: Be a nationalist and save money

Many of these products are manufactured in Canada so perhaps this is a good opportunity to make mindful purchases, whether or not there is a trade war on. E.g. Quebec produces 72% of the world’s maple syrup, so why would we ever buy it from the States? President’s Choice has an extensive list of products that are manufactured in Canada. As a nation, we have a long tradition of making Whiskey, so if that’s your pleasure, try a Canadian brand. With a little research, you could become quite the expert in buying Canadian and save a lot of money in the process.

Trade and development: What to do if you have too much debt

If the spike in prices because of the tariffs could put a strain on you financially, then the time for professional help is now. Unfortunately, we can’t remove the tariffs, but can help you deal with debt. At Ira Smith Trustee & Receiver Inc. we believe that financial problems can be solved with immediate action and the right financial plan. You can put your financial problems behind you and live a debt free life Starting Over, Starting Now. We’re just a phone call away.

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TORONTO REAL ESTATE: REAL ESTATE NEWS ON BUYER’S REMORSE

assignment in bankruptcyToToronto real estate: Introduction

This Brandon’s Blog is about Toronto real estate and what happens when the purchaser experiences buyer’s remorse. “When the residential real estate market is a rising market, most people – perhaps with the exception of first-time buyers, are happy homeowners and investors. When the market turns and drops, it is not for the faint of heart.” This is how Justice M.L. Edwards begins his Reasons for Decision in Gamoff v. Hu, 2018 ONSC 2172 (CanLII).

The realities of this situation show how one family came to be involved in a bidding process. Determined to get their dream house, they exhausted their ability to fund the acquisition of that residence. We will describe this case which is similar to several people my Firm has helped overcome their financial problems after being found liable for similar amounts the defendants, in this case, were found responsible for.

Toronto real estate: The Toronto real estate market news facts

Douglas and Sheila Gamoff (the “Gamoffs” or the “plaintiffs”) were the owners of a residential property. The home was in Stouffville, Ontario (the “Home”), part of the GTA. The plaintiffs listed the Home for sale on the multiple listing service on March 29, 2017. Within a fairly short amount of time (March 29, 2017, to April 2, 2017), there were 18 offers.

The defendants, Yixing Hu and David Lea, saw the Home with their real estate agent on April 1, 2017. They state that they told their real estate agent that they had an interest in acquiring the Home. They also didn’t want to be involved in a bidding price battle.

The defendants originally submitted their written offer on April 1, 2017, with an offer of $2,050,000. On April 2, 2017, the defendants were told by their real estate agent that there were several deals for the residential property. Their realtor also told them that their offer of $2,050,000 was not accepted. In spite of having informed their real estate agent that they did not intend to end up being in a bidding war, they inevitably submitted a new offer for $2,250,000. The vendors accepted the revised offer.

The deal had no conditions. The agreement of purchase and sale read that the purchasers provided a deposit in the amount of $30,000 upon acceptance of the offer. It further read that a second down payment tranche of $90,000 would be made on April 6, 2017. The date for the second deposit payment was then amended to April 10, 2017. The closing day for the acquisition of the Home was August 30, 2017.

Toronto real estate: It did not take long for buyer’s remorse to arise

On the same day, the defendants called their real estate agent. They suggested to him that they thought that they had actually paid way too much for the Home. Their issue here was no doubt created by the fact that they had just found out that, a mix of their mortgage loan funding and the value of their house yet to be sold, would not be enough for them to get the essential funding to close on their purchase.

David Lea emailed his real estate agent stating to him that he and Ms. Hu had actually slipped up aiming to acquire the Home. Mr. Lea went on to say in this email that he is begging, please contact the vendor’s agent with a new firm offer.

As I previously stated, the agreement of purchase and sale did not have any conditions in it to allow them to end the agreement and get back their first tranche deposit. The agreement certainly was not conditional either on their obtaining satisfactory mortgage financing or the sale of their existing home. That is enough stress to cause anyone to panic which no doubt led to their buyer’s remorse.

Toronto real estate: The purchaser’s default

On April 10, 2017, the purchaser failed to pay the 2nd payment needed by the change to the agreement of purchase and sale. On the following day, the defendants visited the property. They informed the plaintiffs face to face that they did not actually have the funding needed to complete the purchase.

Toronto real estate: The vendors’ mitigation

The Gamoffs first consulted with their lawyer. Then on May 1, 2017, they listed the Home for sale again on the multiple listing service for $2,250,000. From May 1 to May 16, 2017, the plaintiffs got no offers on the Home.

The Gamoffs lowered the listing price of the Home to $1,998,000 on May 17, 2017. This was because of a recommendation from their real estate agent. In between May 17, 2017, and June 6, 2017, they obtained no deals on the Home.

On July 28, 2017, the Gamoffs, based on the further advice of their realtor, lowered the price of the Home again to $1,798,000.

In between June 6 and July 26, 2017, the Gamoffs got no offers on the Home. On July 31, 2017, they got an offer to purchase the Home for $1,700,000. After some back and forth, on August 9, 2017, the Gamoffs accepted a brand new agreement of purchase and sale. It was with an arm’s length buyer for $1,770,000. That deal closed on October 3, 2017.

Toronto real estate: The Court’s decision

The plaintiffs sought a summary judgment for the difference between the defendants’ offer of $2,250,000 and what the Home eventually sold for, $1,770,000. The defendants opposed this on several grounds, including, that there was an issue that required a full trial.

Based on the evidence, the judge disagreed. He awarded the plaintiffs the difference between the defendants’ offer of $2,250,000 and what the Home eventually sold for. The judge also awarded costs to the plaintiffs. The judgment was for $470,000 plus costs. Add that to the $30,000 down payment the defendants lost, this aborted deal cost them half a million bucks!

Toronto real estate: Our own case studies

My Firm has been involved in several matters helping people who have had judgments like the one described above made against them from failed real estate deals. We have been involved as a result of failed real estate deal judgments in:

  1. a bankruptcy caused by the plaintiffs (the vendors) who could not yet collect on their judgment filing a Bankruptcy Application with the Court and obtaining a Bankruptcy Order be made against the defendants;
  2. a consumer proposal for a defendant which was successfully completed;
  3. the successful proposal of the defendant who had a large amount awarded against him by the judgment; and
  4. an assignment in bankruptcy filed by the defendant who did not have the ability to attempt a proposal to get relief from the judgment against them.

In each case, the only way that the defendants could get relief, voluntarily or involuntarily, was through an insolvency process. In the one case caused by the Bankruptcy Order, it was the plaintiff who took action. The plaintiff was able to get a payment for all the unsecured creditors. The insolvency process requires that the distribution is shared among all creditors. That result was better than the plaintiff not being able to collect on its judgment without the insolvency process.

In that specific case, it was a combination of the Trustee’s powers and the plaintiff’s judgment and specific knowledge, that joined to produce the recovery for all creditors. The Trustee’s powers were required to get enough leverage resulting in the recovery.

Toronto real estate: A tough lesson to learn


The effect of this Court’s decision will definitely have a significant result on the defendants. The judge said that he had every compassion for them.

With the adjustments in the realty market in the Greater Toronto Area, I have every reason to believe that there will be extra instances where buyers discover that they have not protected themselves and will not be able to complete their real estate transaction.

Buyers would certainly be well advised to think about making their deals to acquire real estate subject to satisfactory funding, as well as for the sale of their existing residence if they have one. The cost of entering a bidding war and getting the property unconditionally could turn out to be a very expensive one just like in this case.

Toronto real estate: What to do if you have too much debt

If you have too much debt because of a judgment against you, either because you have made the real estate in Toronto news from a failed real estate deal or for any other reason, there is no shame in looking for a professional to help you out of your financial jam. A licensed insolvency trustee (formerly called a trustee in bankruptcy) will look at your circumstances and assist you to get to the very best option for your issues. The Ira Smith Team will give you a free consultation.

Ira Smith Trustee & Receiver Inc. is right here to help. We’re government supervised and adhere to a rigorous code of ethics. Our experienced team provides a high-quality service which will create a unique and an affordable solution made just for you. I feel your pain and know how to end it.

Don’t wait until we read about you in the real estate in Toronto news Canada. Call us today to end your stress and experience our pleasant, non-judgmental technique to solve your financial problems and get you back on the right track to stress-free living, Starting Over, Starting Now.toronto real estate

 

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330 UNIVERSITY AVENUE: CORPORATE BANKRUPTCY COURT TORONTO SECRETS EXPOSED FROM THE CANADA LIFE BUILDING

330 university avenue

330 University Avenue: Introduction

On the west side of University Avenue and immediately north of Queen Street, lies 330 University Avenue, in Toronto’s core. This University Ave. building is known as the Canada Life Building. Work on the building began in 1929 for the brand-new head office of the Canada Life Assurance Company and it opened up in 1931. It was the 4th structure to act as the head office of Canada Life. Most noteworthy is that this company was Canada’s earliest, as well as the biggest insurance provider.

330 University Avenue: Brief building history

The development of this fifteen-floor Beaux Arts structure was by Sproatt & Rolph. It stands at 285 feet (87 m), 321 feet (97.8 m) including its famous weather beacon. This building was the very first of scheduled buildings along University Avenue, however, the Great Depression stopped those plans. When it finished, it was among the highest structures in Toronto. It stays one of the biggest office complexes in Toronto with windows that tenants can open. In 1997, Toronto City Council designated the building a heritage property.

330 University Avenue: The most noticeable part of the building

The weather beacon was added in 1951. Its colour codes sum up the weather report at a look. Environment Canada out of Toronto Pearson International Airport revises the weather details 4 times each day.

The top light indicates:
Consistent green = clear
Stable red = overcast
Blinking red = rainfall
Blinking = snow

The white lights along the tower show:

Lights rising = warmer
Lights running down = colder
Solid = consistent temperature level/ No adjustment

During the day, the weather tower shows the weather for that day. The evening signals show the weather for the next day.

330 University Avenue: 330 university avenue 8th floor

But enough of the history lesson. Maybe you didn’t come to this vlog to learn about the building’s history; I will now change the focus. On the 8th floor are the courtrooms. These Courts are presided over by Judges of the Superior Court of Justice Toronto Region. All corporate insolvency matters, certainly not just corporate bankruptcy matters, are part of what is known as the Commercial List.

Personal bankruptcy in Toronto Ontario is normally first heard in a different Court up the street at 393 University Avenue before a Registrar in Bankruptcy. The Registrar is a Master of the Court hearing bankruptcy matters. Most importantly, a Commerical List Judge in 330 University Avenue, Toronto Ontario M5G 1R8 must hear any appeal of a Registrar’s decision. This is for the reason that is what the rules state.

330 University Avenue: The corporate insolvency matters overview

The Court at 330 University deals mainly with corporate insolvency matters. Examples are:

  1. Corporate receivership – appointment of a receiver, motions by the receiver or a stakeholder requesting approval for specific relief, approval motions for sale of assets or fee and costs of the receivership administration, and above all, the receiver’s discharge application.
  2. Corporate restructuring – all motions for bankruptcy protection and restructuring of a company under the Companies’ Creditors Arrangement Act (CCAA), motions by the Court-appointed monitor or a stakeholder requesting approvals, approval motions for the Restructuring Plan of Arrangement including voting rights of all stakeholders, approval of the implementation of the Plan of Arrangement, approval of the fee and costs of the CCAA administration, monitor’s discharge application.
  3. Personal and Corporate bankruptcy matters – as indicated above, these would mostly be either an appeal from Registrar in Bankruptcy’s decision or an opposed matter that the Registrar was not allowed to hear under the bankruptcy rules.

330 University Avenue: Do I need a lawyer to appear at 330 University Avenue?

Corporations are not a human being, so they cannot show up in Court and speak. Therefore, a company requires a person to act on its behalf. Although a shareholder or officer and director authorized to speak on behalf of the company can represent the company in Court, it is not advisable.

I say this because the legal matters heard are most complex. As a result, an experienced insolvency lawyer is necessary to properly represent the position of either the company or a stakeholder.

The licensed insolvency trustee (formerly known as trustee in bankruptcy) who is acting as the receiver, monitor or trustee, similarly will have a competent insolvency or bankruptcy lawyer acting on its behalf. Motion filings always include very detailed reports.

Complex text, financial calculations and detailed exhibits will form part of the filed material. Most laypeople would need both an independent licensed insolvency trustee as a financial advisor, as well as an experienced corporate insolvency lawyer on their team. Therefore, the costs can mount quickly.

330 University Avenue: Is your company going to be in Court either for a restructuring or as a stakeholder?

Is your company dealing with severe economic problems and you aren’t sure what to do? There’s no embarrassment in looking for specialist, financial advice. As a licensed insolvency trustee, the Ira Smith Team can check your company’s circumstances and assist you to get to the most effective solution to solve your company’s financial issues. Several of our successful case studies can be found on our website.

Ira Smith Trustee & Receiver Inc. is here to assist. The government licenses and supervises us. Hence, to keep our license in good standing, we must adhere to a stringent code of ethics. We are well-known to the Judges at 330 University Avenue and all the Toronto insolvency lawyers.

I know the pain and discomfort you are in because of your corporate financial problems. You will certainly discover that we use a pleasant, non-judgmental technique in understanding you, your goals and in restructuring your company.

Give me a phone call today and allow me to address your economic issues Starting Over, Starting Now.330 university avenue

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BANKRUPTCY IN ONTARIO CANADA & CONSUMER PROPOSAL ONTARIO

Bankruptcy in Ontario Canada: Introduction

Bankruptcy is sometimes necessary for the financially troubled individual or company. In Canada in 2017, there were 125,807 insolvency filings; 60,669 bankruptcies and 65,138 proposals. Bankruptcy in Ontario Canada accounted for 15,968 of the 2017 filings. The majority of these across Canada filings were people, not companies.

Bankruptcy in Ontario Canada: Not entirely unexpected

Any debtor with severe monetary troubles must think about bankruptcy. Bankruptcy isn’t always the right response though. In my practice, we first run through the various options available to avoid bankruptcy.

It is proper only when you have too many financial obligations that you cannot realistically repay, in whole or in part, from your future earnings or from selling your assets. This is the meaning of the financial state of insolvency.

If you make $100,000 a year and your financial obligations are only $20,000 (assuming you have no assets), why go bankrupt? Temporary financial sacrifice on your part could pay off your debts in full. This is definitely more suitable for bankruptcy.

What about a proposal?

Although each case is unique, generally speaking, if your unsecured financial debts are less than 60 percent of your net yearly pay, stay clear of bankruptcy. You could use a self-help remedy to pay off your debts in full. Alternatively, you could look to the proposal or consumer proposal mechanisms under the Bankruptcy and Insolvency Act (Canada).

Under the proposal provisions of the BIA, a person or company could take up to 5 years to pay off part of the debt. A successful proposal forgives the balance of your debt (subject to certain ones indicated below). Many creditors will wait if you show good faith and make organized repayments that provide your creditors with a better result.

A filing may protect some assets

I advise every person and company in need of restructuring that timing is crucial. It is human nature for debtors to regularly wait far too long. By waiting too long, they shed possible advantages from an earlier restructuring filing. The longer a person or company waits, the fewer options they have. Also, if you wait too long, the less creative I can be to protect your assets.

5 general tips

  1. Collect your tax refunds prior to your filing. When you file for bankruptcy, any tax refund owing to you prior to the date of bankruptcy belong to your bankruptcy estate. Your licensed insolvency trustee (Trustee) collects the payments.
  2. The insolvency process is meant to treat all creditors fairly and all ordinary unsecured creditors equally. Seek the advice of a Trustee prior to making payments to specific unsecured creditors prior to filing. Your good intentions may prove to have created transactions that the Trustee can attack. The Trustee will then seek recovery from those parties.
  3. Consider how the causes of your insolvency will look to your creditors. Uncontrolled lifestyle spending looks a lot different from ongoing costs due to a mental or physical illness or an addiction. The causes of your insolvency sometimes dictate whether a proposal or bankruptcy filing is preferable.
  4. Have you contributed to an RRSP in the 12 months before filing for bankruptcy? That amount will have to be paid over to your Trustee under bankruptcy or accounted for in what type of proposal can be successful.
  5. If you have student loans, was the last time you were either a full or part-time student more than 7 years prior to your filing? If no, you won’t be able to end the student loan debt. However, it may be enough to relieve yourself of your other unsecured debts to have enough funds every month to start repaying the student loans.

Some debts can’t be discharged

Bankruptcy will not end every debt. There are certain debts that cannot be discharged through bankruptcy. Examples are:

  • student loans as described above
  • child support and alimony under either a court order or written separation agreement
  • fines or restitution ordered by a Court
  • debts arising out of fraud, embezzlement or misappropriation while acting in a fiduciary capacity
  • amounts owing to secured creditors registered against your assets, such as a mortgage or car loan. Any amount still owing after the asset is sold, if any, is an unsecured claim which is discharged in a bankruptcy

Bankruptcy must be your last option

Bankruptcy could be your ideal choice if the amount of your debt and the amount you can realistically repay will not settle it. If you have few possessions to lose in bankruptcy, then a bankruptcy filing may be your best choice. By meeting with a Trustee early to discuss your options, you will get a good understanding of what may be possible.

I always advise every person or company never file for bankruptcy without first striving to solve a case without bankruptcy. Bankruptcy must be your last option, not your very first – avoid bankruptcy if you can.

Think about all readily available options prior to determining that bankruptcy is genuinely the best decision for you and your situation. If you find you are in too deep and can’t dig out fast enough, then you do need professional help.

Seek the advice of a professional trustee

Many people and companies facing serious financial issues don’t know where to go for professional help or are too embarrassed. There’s no shame in seeking professional, financial help. Licensed insolvency trustees evaluate your situation and help you to arrive at the best possible solution for your problems.

Ira Smith Trustee & Receiver Inc. is here to help. We’re federally regulated and subject to a strict code of ethics. We offer a depth of expertise and provide a high quality and cost-effective service. I understand your pain and we can end it. You will find that we use a friendly, non-judgmental method.

Give us a call today and let us help you solve your financial problems Starting Over, Starting Now.bankruptcy in ontario canada

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REPAYMENT OF STUDENT LOANS CANADA: STUDENTS’ #1 WORRY-STUDENT LOANS DEBT

repayment of student loans canada

August 30, 2018 – NEW BONUS VIDEO AT THE BOTTOM OF THIS BLOG

Introduction

Although I can’t now fathom a world without the Internet, there are some reasons to wax nostalgic about the good old days. Most notably, many families lived nicely on one income and people retired from their jobs with a defined pension plan. They did not have to worry about repayment of student loans Canada. It was commonplace for students to put themselves through college working summers and weekends during the school year.

There is a new reality

Those days are gone! Two incomes are now an absolute necessity for most families and defined pensions have all but disappeared. To pay for university, even with working summers and weekends, students are saddled with enormous loans. In the 2015-16 school year, 497,000 students enrolled in the Canada Student Loans Program.

Students #1 worry

Dan Allan, Director of the Student Budget Consultation Program, states:

“While students are concerned about unemployment after school, their biggest worry is about their university debt and the cost of education being a huge hurdle going forward”

Why is there so much student loans debt?

  • Government funding dropped from over 77% in 1992 to less than 55% in 2012. To make up the difference, post-secondary institutions turned to students. Tuition fees began to rise – 115% between 1980 and 1995 (Glenn Burley, Canadian Centre for Policy Alternatives)
  • By 2016-17, the average Canadian university tuition was about 40% higher than it had been in 2006. (Fred Lum/Globe and Mail)
  • Tuition fees increased by 3.1% per cent for undergraduate programs in the 2017-18 academic years (Statistics Canada)
  • The average tuition cost for a Canadian university — before the cost of books, travel and supplies — is $6,500 per year (Statistics Canada)
  • The average amount owing for both bachelor and master’s graduates is $26,000 and $41,100 for doctorate graduates (Statistics Canada)

What happens when students can’t repay their student loans?

According to Dan Allan, the current Liberal government wrote off $200 million dollars in outstanding student loans on which it will never be able to collect. This is the third time in the past four years that the government has had to write off outstanding loans for reasons that include bankruptcy. There is a six-year legal limit on collection and debtors who can no longer be found. This results in direct student loans loan forgiveness.

How can young people get ahead when student loans are holding them back? As a society, we must increase our investment in education. Instead of the government writing off hundreds of millions of dollars in uncollectable student loan debt, wouldn’t that money be better spent on funding education?

Repayment of student loans Canada: What to do if you have too much debt

You can certainly contact Canada student loans to find out about their program for those having trouble repaying their student loan debt. If you’re a graduate with student loan debt that you can’t repay, and you were not able to work out an arrangement with Canada student loans then you are in a student loans debt crisis. If you are struggling with student loan debt, or debt for any other reason, you need professional help and you need it now. We understand your pain points and we know how to relieve you of the stress and pain.

The Ira Smith Trustee Team can help you manage your debt and set you on a path to debt free living Starting Over, Starting Now. We’re only a phone call away.

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MORTGAGE LENDING CRITERIA SELF EMPLOYED: BIGGEST MYTH MAY BE RIGHT

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Mortgage lending criteria self employed: Introduction

Mortgagees rely upon the provincial land registry system to decide what obligations are secured against real property and in what order of priority. When it comes to mortgage lending criteria self employed, a recent Court decision has proven that when it comes to a self employed person’s mortgage, if there is a deemed trust claim by Canada Revenue Agency (CRA), you cannot solely rely upon the registry system.

Mortgage lending criteria self employed: The Court case

The Court case I am referring to is Canada v. Toronto-Dominion Bank, 2018 FC 538 (CanLII) which was heard in Federal Court. In this matter, the Crown on behalf of Her Majesty looked to recover funds Toronto-Dominion Bank (TD) obtained from one of its clients who repaid a loan secured by a home mortgage upon the sale of his house. The client was a self employed person.

The Crown claimed that there was an outstanding deemed trust claim for collected but unremitted GST. The Crown further claimed that the proceeds from the sale of the home collected by TD was subject to the CRA deemed trust claim, was property of Her Majesty and that TD had to pay it over. TD did not take the position that it had a registered first charge and can keep the funds. It argued that as a “bona fide purchaser for value” it is not subject to the deemed trust claim and does not have to pay over the money.

Mortgage lending criteria self employed: The undisputed facts

The borrower carried on a landscaping business as a sole proprietor. In 2007 and 2008, he collected and did not remit GST totaling $67,854. TD held both a registered mortgage and a home equity line of credit (HELOC) against the borrower’s home. The home was sold in 2011. The borrower repaid the mortgage and HELOC in full from the sale of the home.

Almost two years later in April 2013, CRA made demand on TD for repayment of $97,327, revised in 2015 by amended demand for $67,854. TD refused to pay.

Mortgage lending criteria self employed: What the Court said

The Federal Court reviewed the legislation. The Court decided that the funds paid to TD were proceeds of sale of his property. Therefore, it is covered by the deemed trust CRA claim. So the Court found that the requirements of Section 222 of the Excise Tax Act were met.

The Court agreed with the Crown’s position that the deemed trust Canada claim covered the debtor’s house. This is in spite of there was no registration on title and that the Bank had proper valid registrations. The Court further agreed that according to Section 222(3) of the Income Tax Act, the Bank has an obligation to pay over the proceeds it received which were impressed with the deemed trust.

The Judge disagreed with TD’s position. TD stated that the payment of proceeds only applied if a secured creditor enforces its security. This was not the case in this situation. The Court further disagreed with TD’s position that it was a bona fide purchaser for value. The Court agreed that money could be considered property available in such a defence. However, it stated that a secured creditor facing a deemed trust claim could not use that defence. TD also offered certain public policy issues in its defence, but the Court was not swayed.

TD is liable to pay over the amount of $67,854, interest and costs.

Mortgage lending criteria self employed: So what is the biggest myth?

The biggest myth is as follows. To find out what claims against the real property, you only have to perform a title search.

This is an important decision for mortgage lending criteria self employed people. Now TD is in the position of having to make demand on and possibly sue in 2018 its borrower who ostensibly repaid the loan in full in 2011! It would be suing as an unsecured creditor.

What this means for mortgagees is that they can no longer just accept funds from a self employed person who wishes to pay off a loan, be it a mortgage or other type of loan, from the sale of property. It also cannot merely accept funds to pay off a loan from a self employed individual’s business bank account.

Mortgage lending criteria self employed: So what is the fix?

Rather, the lender also must now get a true copy of a statement from CRA showing that there are no amounts owing by the self employed person on account of either HST or source deductions as the employer of others.

Lenders would also be well advised to add language to their loan term sheet, loan documents and any other documents issued when a loan is repaid. The new language would be an attestation by the self employed borrower that there are no amounts owing to any government authority that would be considered or deemed to be a trust claim.

Further, the language would have to make it clear that in the event there were any such amounts owing, even if the loan was fully repaid, the lender had the right to demand and sue the borrower for any amounts proven to be a deemed trust claim that the lender was required to pay over to the government at some later date.

No doubt this case will be relied upon by Her Majesty when the Callidus Capital Corporation v. Her Majesty the Queen case is heard by the Supreme Court of Canada in November 2018

Mortgage lending criteria self employed: Does your business need HST and source deductions you collected to stay afloat?

Does your business need HST and source deductions you collected to stay afloat? Can your business not afford to pay over to the government deemed trust claim amounts collected? If so, then your business is in trouble and requires restructuring immediately. You need the advice of a professional trustee now!

The Ira Smith Team have decades of experience in complex corporate and other business financial restructurings. We first look at how we can reorganize and restructure your business to rescue it. You are worried because your business is facing significant financial challenges. The stress placed upon you because of your business’s financial challenges are enormous. We understand your pain points, and we know how to relieve them for you.

If you or your company cannot survive without a restructuring, contact Ira Smith Trustee & Receiver Inc. NOW for a free consultation. You are just one phone call away from getting back on the road to financial health and reducing your stress levels, Starting Over, Starting Now.mortgage lending criteria self employed

 

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