Tag: Ira Smith Trustee

# VIDEO-DIVORCE DURING BANKRUPTCY CANADA WHICH COMES FIRST?

Post author By Brandon Smith
Post date October 26, 2016

The conundrum

Divorce during bankruptcy Canada is the same as the old conundrum, “which arrived first; the chicken or maybe the egg”, how would one answer, marital breakdown and insolvency: which comes first? Nobody has a definitive answer because excellent arguments can be produced for both. The same is true for “divorce and personal bankruptcy which comes first”?

Every case is decided based on its unique facts. Marital breakdown and insolvency, and bankruptcy and divorce, often go hand in hand. However, a marital breakdown will not always lead to divorce if the marriage can be salvaged. However, personal bankruptcy and divorce are two separate legal processes that can be at odds with each other.

A few indisputable facts

In this divorce during bankruptcy Canada Brandon’s Blog you will find 5 indisputable facts:

The number one reason for marital breakdown and divorce is financial issues. Divorce.com
In a recently available study one out of every seven people who made an insolvency filing in Canada listed separation, divorce or marital breakdown as a contributing factor to their financial problems.
One-third of all people facing insolvency problems are also going through relationship breakdown and divorce in Ontario or {a splitting up. Gail Vaz-Oxlade
Bankruptcy won’t end all divorce financial obligations. e. g. It does indeed not end alimony or child support.
Declaring personal bankruptcy on joint debts, even debts in a divorce will impact the other debtor.

Are you looking to reduce grief?

If creating minimal interruption on the children of the family during a marital breakdown and personal bankruptcy features prime importance to the spouse with the debts (and presumably that will be just like the spouse making the support payments), it makes sense to have at least the support terms of the divorce decided, including the making of the support order and then do an insolvency filing. The marital breakdown and bankruptcy process will not disturb any in good faith arrangements for support, but keep in mind it will affect property not already dealt with by the family law court.

What about joint debts?

One particular area that comes up in divorce during bankruptcy Canada is this common question: “If my ex files how will it affect joint liabilities? “. Family law rules are the one area of a provincial law that is left relatively unblemished by the Bankruptcy and Insolvency Act, which is a federal statute. Nevertheless, the Supreme Court of Canada has confirmed that in Provinces that are an equalization jurisdiction (as opposed to a split of property jurisdiction, in a unanimous decision, the court upheld defining equalization payments as debts that are a claim provable in an insolvency process, meaning they are wiped off a person’s slate by the bankruptcy process.

Divorce during bankruptcy Canada: What should you do if you have both marital breakdown and too much debt?

Marital breakdown and bankruptcy is an extremely complicated process, made even more complicated when put together with divorce and requires a qualified licensed Trustee to work with your family law legal professional to work with your individual situation and give practical alternatives and an action plan. If you have serious debt problems, are considering bankruptcy and divorce, or perhaps wish to know more about marital breakdown and bankruptcy, then contact Ira Smith Trustee & Receiver Inc. as soon as possible. Starting Over, Starting Now, we can help you get your life back again on track, even with marital breakdown and personal bankruptcy looming.

Tags Bankruptcy, bankruptcy and divorce, Bankruptcy and Insolvency Act, bankruptcy process, debt problems, divorce, divorce and personal bankruptcy, divorce during bankruptcy canada, Ira Smith Trustee, marital breakdown, personal bankruptcy, personal bankruptcy and divorce

Brandon Blog Post

I NEED FINANCIAL HELP IMMEDIATELY

Post author By Brandon Smith
Post date October 24, 2016

I need financial help immediately: Introduction

“I need financial help immediately” is something we hear daily. With so many people struggling to make ends meet and living paycheque to paycheque, it’s not a surprise that they’re looking for ways to get ahead. Unfortunately it’s easy to get seduced by financial newsletters or websites that offer nothing more than get rich quick schemes disguised as financial advice. Please keep the old adage in mind when considering investment opportunities – if it’s too good to be true, it probably is.

I need financial help immediately: 3 things to watch out for

The Ira Smith Team has fully licensed, federally regulated financial professionals and we don’t have any get rich quick advice for you. However, we do have advice about how to protect yourself from get rich quick financial newsletters. Here are three things to watch for:

Run, don’t walk from headlines like “beat the market”. There is no such thing as a get rich quick scheme that works. Remember Bernie Madoff? He paid unbelievably high returns to his investors and that ended up with Bernie in jail for life and many others in financial ruin. Even savvy investors got seduced.
Watch out for newsletters with confusing terminology. They’re designed to confuse you so you won’t really understand that what they’re selling is all hype and no substance. Financial terminology is so confusing that we’re doing a series of blogs about it. So far we’ve covered Balloon Payments, APY – Annual Percentage Yield and Expense Ratios. Knowledge is power.
Creating a sense of urgency is a classic ploy to suck you in before you’ve had the time to really scope things out. Beware of offers that are only open to the “first 100 that sign up” or “register within the next 48 hours or you’ll miss out”.

I need financial help immediately: What to do if this is you

We know there are many people who feel “I need financial help immediately”. Our most viewed blog ever is from May 2014 that people looking for cash find through a Google search because it is titled: Bad Credit Loans Guaranteed Approval.

We’re certainly not saying that there are no legitimate financial opportunities out there, but you really have to be careful about where and who you take financial advice from. If you’re walking a financial tightrope, a get rich quick scheme is not the answer. Contact a licensed trustee. Ira Smith Trustee & Receiver Inc. will review your file, discuss your options and come up with a solid, financial plan that will put you on the road to debt-free living Starting Over, Starting Now.

Tags APY, balloon payments, expense ratios, financial help, financial newsletters, financial terminology, get rich quick, get rich quick schemes, I need financial help immediately, Ira Smith Trustee, living paycheque to paycheque, need financial help, trustee

Brandon Blog Post

Division One Proposal Ontario Documents: corporate restructuring proposal

Post author By Brandon Smith
Post date October 19, 2016

Corporate restructuring proposal

I want to talk to you today about the required division one proposal Ontario documents and division 1 proposal restructuring proceedings under the Bankruptcy and Insolvency Act (Canada) (BIA). You may have heard about this section of the BIA also called Chapter 11 bankruptcy proceedings. The reason is that the corporate restructuring provisions under the BIA are in Canada under Division I of Part III of the BIA, while the corporate restructuring provisions in the United States is under Chapter 11 of the US Bankruptcy Code. We are going to focus today on the restructuring provisions under Division 1 Proposal proceedings of the BIA.

First steps

The first thing the insolvent debtor must do is hire the services of a licensed insolvency trustee (formerly known as a trustee in bankruptcy). The division 1 proposal proceedings apply to corporate restructuring or the restructuring of debt of an individual with a complex debt situation and a debt level of $250,000 or more. We are going to talk today about corporate restructuring and the Division One Proposal Ontario documents required for this process.

The first step in any corporate restructuring is for the board of directors to understand and resolve that the corporation is insolvent, that it needs to restructure under the Division 1 Proposal section of the BIA and that it needs to retain a licensed insolvency trustee to do that. The corporation working with the trustee then has a choice. It can first file what is called a Notice of Intention To Make A Proposal, which is a notice to its creditors that it will be shortly making a restructuring proposal. Or it can just file the real division one proposal itself with the licensed insolvency trustee.

Documents and process

The licensed insolvency trustee has to be satisfied that: (i) all the relevant information has been obtained; (ii) the company has a good chance of actually implementing this proposal; and (iii) the company’s cash flow is enough that it can run the business successfully and pay its ongoing debts in full through the ongoing restructuring proceedings, then the licensed insolvency trustee continues the restructuring process.

The licensed insolvency trustee will mail to all the known creditors a copy of:

the proposal
a statement of the company’s assets and liabilities
a list of creditors
a proof of claim form
the voting letter

The meeting of creditors is then held and if the proposal is accepted by the required majority then the proposal trustee takes the proposal documentation to Court for approval. Once the proposal is accepted by the creditors and approved by the court there is now a contract between the company and its creditors about how the company is going to restructure and what amount of money is ultimately going to be paid to the creditors through the licensed insolvency trustee.

Implementation

The company then carries its proposal as it continues its operations. It carries out its restructuring business plan and hopefully is successful in turning the corner and generating profits. The company would then be saving a certain amount of its profits in cash and pays the amounts required under the corporate restructuring plan over to the licensed insolvency trustee to create the restructuring fund. The licensed insolvency trustee then makes the distribution to the creditors as called for in the proposal itself. Once all the payments have been made, the company has successfully restructured and carried on its business free from the proposal proceedings.

What if your company has too much debt – division one proposal?

If your company has more debt than it can afford to pay contact a professional trustee immediately. We’re experts in debt management and corporate restructuring and with immediate action and the right plan we can help you get your company’s finances back on track Starting Over, Starting Now. Give Ira Smith Trustee & Receiver Inc. a call today.

Tags Bankruptcy and Insolvency Act, BIA, chapter 11, corporate restructuring, division 1 proposal, division one proposal, division one proposal ontario documents, Ira Smith Trustee, licensed insolvency trustee, proposal, restructuring business plan

Brandon Blog Post

AUTO INSURANCE IN ONTARIO CHANGE PUSHES FAMILY CLOSER TO BANKRUPTCY

Post author By Brandon Smith
Post date October 17, 2016

12 hours made

Who would have believed that a mere 12 hours could cost a family over $1.9M and put them on the verge of bankruptcy? Sadly this is exactly what happened to a family because of the auto insurance in Ontario rule change that came into force 12 hours on the same day before Adam Bari’s motorcycle was T-boned. Although Mr. Bari was not at fault, it did not help his cause.

What is this new auto insurance rule that has this family on the verge of bankruptcy?

When I tried to contact Go Skippy, they explained that this new auto insurance rule change affects the evaluation of injuries. It’s a miracle that Mr. Bari survived. He was in a coma for one month and survived with major injuries including significant brain trauma, multiple broken bones in his right arm, leg and hand, as well as internal organ damage. Although absolutely unbelievable, Mr. Bari’s injuries are no longer considered severe enough under new auto insurance in Ontario guidelines to be deemed catastrophic.

It all boils down to defining catastrophic. Under the old guidelines, the Glasgow Coma Scale (GCS) was used to evaluate functionality. If a car crash victim had a GCS rating of nine or less, they were automatically considered catastrophically impaired and were eligible for increased benefits. At first, Mr. Bari scored a three on the scale which is considered to be the most severe result with the patient being completely unresponsive. Later on, his score rose to an eight, still leaving him catastrophically impaired. New auto insurance in Ontario rules no longer use the scale, though it remains a common evaluator for trauma teams.

What does this mean financially for the Bari family?

According to the personal injury lawyer representing the family, if the accident had happened 12 hours earlier before the new guidelines came into effect, the family would have received $2M in compensation. Instead, they received a pathetic $86K, which can’t even begin to cover the astronomical medical bills the family is facing. Mr. Bari may never recover sufficiently to return to work. His wife is working greatly reduced hours to care for him and there are twins to support. He’s going to require specialized equipment at home, extensive rehabilitation, a personal support worker, therapy and medication.

What recourse does the Bari family have?

They have retained a personal injury lawyer and are planning to sue the driver of the vehicle that hit Mr. Bari to help recover damages for health care expenses. Careless driving charges have also been laid against the driver. Unfortunately, nothing can be done about the new auto insurance rule change that has shamefully put the Bari family on the verge of bankruptcy.

Auto insurance in Ontario: What should you do if you are hit with an emergency that ruins your family budget and finances?

Hopefully, you will never find yourself in the same place as the Bari family but should you feel that you’re on the verge of bankruptcy contact Ira Smith Trustee & Receiver Inc. Sadly we can’t change the auto insurance guidelines but we can help you deal with serious financial issues. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Contact us today so that Starting Over, Starting Now we can put you back on track to financial well-being.

Image Courtesy: CheapFullCoverageAutoInsurance.com

Tags auto insurance, auto insurance in ontario, auto insurance rule, auto insurance rule change, Bankruptcy, Ira Smith Trustee, new auto insurance guidelines, Ontario insurance guidelines, trustee

Brandon Blog Post

CONSUMER PROPOSALS ONTARIO: THE SOLUTION TO YOUR TORONTO DEBT PROBLEMS

Post author By Brandon Smith
Post date October 12, 2016

Consumer proposals Ontario: Make a federal case out of it!

Consumer proposals Ontario are governed by federal legislation; the Bankruptcy and Insolvency Act (Canada) (BIA). The proposal provisions used by companies and creatively used for people with extremely large debts is commonly referred to be “restructuring” or “reorganization”. In the United States, it is what is commonly called “Chapter 13 proceedings”.

Consumer proposals Ontario: Debt solutions for the smaller debtor

However, there was no similar provision available to small individual debtors in the BIA. Parliament wished to find a way to offer these smaller consumer debtors to have a restructuring alternative. So, after consultation with the stakeholders in the Canadian insolvency world, in the 1990s, the consumer proposal process legislation was enacted. It benefits people who owe $250,000 or less (not including mortgages against your principal residence).

Consumer proposals Ontario: Avoiding personal bankruptcy in Canada

Now, the consumer proposal process provisions for consumer debtors are used more than the consumer bankruptcy provisions of the BIA. So Canadians are now avoiding personal bankruptcy more while still obtaining the help and counselling of a Licensed Insolvency Trustee.

The main use of the (consumer) proposal provisions of the BIA is to allow you as a debtor to keep your assets if you can afford to in your budget, it is a great way for how to avoid bankruptcy in Canada, and give a better alternative to your creditors than a bankruptcy would. In this way, you are allowed to be relieved of your debts, for an amount less than the total face value of all of your debts.

It is best used when you have extra income and can afford to pay back some debts if the рауmеnt plan is structured properly, but not enough income to pay back all of your debts, especially with penalties and interest! The consumer proposal legislation allows you to pay back less than you owe, but what you can afford. Interest and penalties stop and in most cases, you are able to settle your debt for less than 50 cents on the dollar.

You can structure your repayment plan in monthly payments for up to 60 months. Again, no interest or penalties. So, it is very much like an interest-free loan for less than half of your debt to settle all of your debts.

Consumer proposals Ontario: What should I do if I have too much debt?

So if you’rе ѕtіll dеtеrmіnеd to рау your debts in full but you can’t see a way to ассоmрlіѕh that goal, this may be just the ѕесrеt you need to know! If you’re a Canadian with financial concerns seek the counsel of a professional trustee.

We can help you deal with how to solve your financial problems while you still have options available to you so that Starting Over, Starting Now you can be on your way to enjoying financial health. Make an appointment with us for a free, no obligation with the Ira Smith Team today. You’ll be happy you did.

consumer proposals ontario

Tags avoiding personal bankruptcy, chapter 13 proceedings, consumer proposal process, consumer proposals, consumer proposals ontario, how to avoid bankruptcy in Canada, Ira Smith Trustee, licensed insolvency trustee

Brandon Blog Post

FULLY FUND YOUR RETIREMENT: ARE YOU ASKING YOUR HOUSE TO DO IT FOR YOU?

Post author By Brandon Smith
Post date October 3, 2016

Fully fund your retirement

Fully fund your retirement: Introduction

To fully fund your retirement, you need to start early. Canadians are just not facing that reality. According to HSBC Bank Canada almost half of working-age people in Canada are not currently saving for retirement. And, they’re twice as likely to consider selling their homes to fully fund their retirement compared to those who have been diligent about their retirement savings plans. Perhaps you are one of the smart and lucky ones who have including seeking the advice of one of the many retirement planning experts.

Fully fund your retirement: Are you counting on your house to?

A recent HSBC survey found that:

20% of pre-retirees in Canada plan to downsize or sell their primary and secondary residence to fund their retirement.
Only 5% of current retirees will sell their house to fund their retirement.
At age 25-29, a group with low home ownership levels, only 12% expect their property will fund their retirement.
In their 40s, 20% expect their property will fund their retirement.
In their 50s, 26% expect their property will fund their retirement.
In their 60s, 31% expect their property will fund their retirement.

Fully fund your retirement: Needs are changing

There is certainly a dramatic shift in people’s views on pension funds, retirement funds needed, retirement strategy and certainly speaks to the lack of retirement planning, saving and the fully funded pension plan.

It seems that as Canadians approach retirement age, selling their house is the only retirement finance option available to them. The problem with this scenario is that it assumes that the house is sold and very sensibly the couple or individual will downsize their lifestyle and put their budget on a diet so that they can live off the proceeds of the sale of the house.

The reality is that if they haven’t:

clearly calculated the retirement funds needed for the lifestyle they wish to have;
saved for retirement (including considering the impact of tax on retirement funds); and
have not already downsized their lifestyle in preparation for retirement

they may blow through the proceeds of the house and be worse off than they were before.

Fully fund your retirement: What to do if your financial concerns prevent you from doing so

If you’re a pre-retiree with financial concerns seek the counsel of a professional trustee before retirement. We can help you deal with how to solve your financial problems while you still have options available to you so that Starting Over, Starting Now you can be on your way to enjoying financial health in retirement. Make an appointment with us for a free, no obligation with the Ira Smith Team today. You’ll be happy you did.

Tags budget, downsize lifestyle, fully fund your retirement, fully funded pension plan, fund their retirement, Ira Smith Trustee, pension funds, retirement finance, retirement funds needed, retirement planning, retirement strategy, saving for retirement, tax on retirement funds, trustee

Brandon Blog Post

INSOLVENT ESTATES CANADA 3 QUESTIONS WE ALWAYS ARE ASKED

Post author By Brandon Smith
Post date September 28, 2016

INSOLVENT ESTATES CANADA

Insolvent estates Canada: Introduction

We previously discussed the aspect of death and insolvency in two blog posts:

When it comes to insolvent estates Canada, among the various questions asked of us, these three questions are always asked:

What are the duties of an executor/personal representative when the estate has more liabilities than assets?
Can the executor(s) pay bills before the creditors actually file a claim?
Do executors or beneficiaries have to pay creditors out of their own pocket if the estate is insolvent?

We prepared the above video to answer these 3 questions. Below is a more detailed discussion of the last 2 questions.

Insolvent estates Canada: The loss of life of a debtor occurs; who’s responsible for the money owed?

Although some creditors may try to collect from the spouse or other relatives, money owed doesn’t transfer because of marriage or death. If the debt is “joint”, the survivor has taken on the obligation directly and is liable on the account.

Debts are normally paid out of the assets of the property of the deceased before distributions to heirs (before paying heirs, the deceased’s debts must be paid). If the estate is insolvent (the assets of the estate are not enough to pay the amounts owed), then the order of charge is commonly prescribed by way of provincial rules.

If warranted, the executors could apply to Court for an order letting them assign the deceased’s estate into bankruptcy. In that situation, then the Bankruptcy and Insolvency Act (Canada) (“BIA”), the federal legislation, will prescribe the order of payment.

If insurance was bought to pay off a specific debt such as a bank issued mortgage or loan, then upon the death of the individual the insurance company will repay the bank and the debt will not exist in the deceased’s estate.

What are your alternatives and your responsibilities, as an executor upon the death of a debtor?

If the estate is insolvent, before or after paying the testamentary costs, you have alternatives:

Pay the money owed out of your personal resources.
Allow the estate to go bankrupt.

Emotionally you may wish to pay the money owed because you believe in your heart that it is the proper thing to do and you don’t wish to dishonour the memory of your loved one with a string of bad debts and bankruptcy. But before you decide, you need to know that there is no liability for an executor or heir to take on the debts of the deceased.

Even though there may be a stigma connected to bankruptcy, the reality is that you are not responsible for the money owed, so why should you assume this burden and in all likelihood put your family in financial jeopardy?

Bankrupting the estate makes economic sense. An executor can sidestep the minefield of issues involved in administering the deceased’s insolvent estate by bankrupting it.

What should executors and heirs be aware of?

If you and/or another family member is the executor, be aware:

The executors have a legal responsibility for all acts completed, and for all acts not accomplished that they should have.
Notwithstanding everyone’s best efforts, they may unknowingly be inviting proceedings from lenders or heirs for difficult issues. This happens when family members, who are well-intentioned but not skilled at monetary, insolvency or legal issues, are executors because she or he is named, however actually has no know-how in this region.
By putting the property into bankruptcy, which requires the previous approval of the bankruptcy court, the executors are relieving themselves of personal legal responsibility because the estate will now be administered under the BIA and all creditors by the Licensed Insolvency Trustee.
The executor will relieve him or herself of coping with collection calls.
As long as there are sufficient funds in the estate to pay the funeral costs, that can be paid out first in the case of a bankruptcy of the deceased’s estate because of S.136. (1)(a) of the BIA states:

Priority of claims

“136 (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

(a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;”

It is the first debt with a preferred status that can be paid.

What should I do if I am an executor and I find that the liabilities are greater than the assets?

If you are an executor of a will and you find out that the estate is insolvent, after speaking with the estate lawyer, contact Ira Smith Trustee & Receiver Inc. as soon as possible. We will evaluate the situation and give you sound financial advice on how best protect yourself as executor and the heirs, so that you will be able to go ahead Starting Over, Starting Now.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags Bankruptcy, Bankruptcy and Insolvency Act, BIA, creditor, Debt, executor, heir, insolvent estates canada, Ira Smith Trustee, licensed insolvency trustee, priority

Brandon Blog Post

GREY DIVORCE CANADA CREATES THE 4 BIGGEST PROBLEMS YOU NEED TO SOLVE

Post author By Brandon Smith
Post date September 26, 2016

Grey divorce Canada on the rise

Grey divorce or silver separation, whatever you choose to call it, is a sad fact of life in our society today there is a boom in the ending of the marriage of retired or near retired couples. According to Statistics Canada, the grey divorce Canada statistics shows that the rate of breakups has been steadily growing among those 55 and over and it’s expected to increase as more people age. Therefore, it is on the rising trend will not be expected to stop anytime soon.

There is no marriage Canada border

This is not just a Canadian issue; it’s some worldwide phenomena. In the United States, the divorce rate among baby boomers has doubled. The statistics in the U.K. and Europe mirror those in the U.S. In Japan couples married 30 years or more have seen their rate of a marriage ending quadruple in the last 20 years.

What is the seniors’ divorce?

We have written on the subject before in:

Divorce problems

Sadly, grey divorce Canada isn’t just an emotional issue; it’s financial, and the ramifications of the marriage ending can be devastating. Do you know all about your finances – assets, liabilities, insurance, pensions, retirement savings plans, real estate holdings, expenses, and cash flow? Are you financially ready to be single in retirement? Or will you have to put off retirement? Do you have any idea what you’d require to maintain your current lifestyle and if you’ll be able to maintain it?

Does it affect retirement

Unfortunately, many older Canadians in the throes of a marriage ending are not ready financially and may start accumulating high-interest debt to cover expenses. Your senior years are not the best time to be caught in a debt trap. We’re not suggesting that you stay in an unhappy marriage because of financial considerations, but you can get yourself on solid financial footing before the marriage ends. At the best of times marital problems are not fun; why put yourself in added stress and adding to your marriage problems by not thinking things through properly financially first?

A possible procedure

Don’t let your grey divorce Canada financial issues put you into a state of financial ruin. Reach out to Ira Smith Trustee & Receiver Inc. We’re experts in debt. Meet with us for a free, no-obligation consultation. We’ll evaluate your situation and come up with a solid financial plan so that you can have peace of mind and move forward with your life Starting Over, Starting Now.

Tags grey divorce, grey divorce boom, grey divorce canada, grey divorce canada border, grey divorce canada procedure, grey divorce canada statistics, grey divorce in canada, grey divorce on the rise, grey divorce problems, grey divorce retirement, Ira Smith Trustee, silver separation, what is grey divorce

Brandon Blog Post

#VIDEO-HISTORY OF BANKRUPTCY NEVER GETS ANCIENT#

Post author By Brandon Smith
Post date September 21, 2016

HISTORY OF BANKRUPTCY NEVER GETS ANCIENT

History of bankruptcy: Introduction

A subject that rarely gets written about is the history of bankruptcy. Understanding the history of the Canadian bankruptcy system and how it has evolved, gives a helpful look into how it works and help Canadians and Canadian society.

History of bankruptcy: Helping the debtor

The Bankruptcy and Insolvency Act (BIA) provides a way for the orderly liquidation of a bankrupt’s assets and distribute that value to the creditors. In this way, the BIA assists the insolvent debtor who needs a way to be forgiven for his or her financial sins, relieved of their burden and be returned to society as a productive contributor. The BIA assists creditors in providing the system of turning the assets into cash to be distributed to them, and not keeping those assets either out of their reach or just laying in an unproductive state. The BIA also is a system of checks and balances, so that it provides both Canadians and foreigners that there is a vibrant and safe Canadian economy.

History of bankruptcy: Helping the creditors

The BIA also ensures that there is a fair and logical system in place to deal with the assets of the debtor and the claims of creditors. By invoking it, it avoids a race among creditors to attempt to get the right to seize assets in an uncontrolled way. Creditors are paid according to their place in the hierarchy of claims as described in the BIA as follows:

Trust claimants who are outside of the bankruptcy scheme
Secured creditors, who are also outside the bankruptcy scheme as long as they hold good and valid security
Unsecured creditors:
- Preferred
- Ordinary

History of Bankruptcy: bankruptcy alternatives

The BIA also provides debtors to opt for avoiding bankruptcy by making a Proposal. In the case of corporations, a Proposal; for people, either a Proposal or Consumer Proposal, depending on the level of their debt. Proposals are the bankruptcy alternative that allows companies or people to financially rehabilitate themselves and avoid bankruptcy, while offering the creditors more than they would receive in a bankruptcy. In this way, the BIA is both a liquidation and a rehabilitation statute, benefiting both debtors and creditors.

History of bankruptcy: The BIA

The present bankruptcy statute came into force on July 1, 1950. The title of the statute was amended from the Bankruptcy Act to the Bankruptcy and Insolvency Act in 1992, to show the statute had matured into a full financial rehabilitation statute, that could be used to carry out a bankruptcy alternative. Further amendments were made in 1997 to deal with a number of practical issues that became problematic for Canadian society applying the BIA, including:

Claims for student loans
Priority status for claims for spousal and child support
Payment from a bankrupt’s earnings
Environmental claims
Liability protection for Directors
Securities firm insolvency
International insolvency

In 2005 there were another round of comprehensive amendments to the BIA mainly dealing with the new legislation of the Wage Earner Protection Program Act (WEPPA), designed to protect employees for their unpaid amounts when their employer goes either bankrupt or into receivership.

History of bankruptcy: Rehabilitation

It is a fundamental purpose of the BIA to offer the financial rehabilitation of insolvent persons. The BIA permits an honest but unfortunate debtor, be it a corporation or an individual, to secure financial restructuring through the Proposal provisions, or a discharge from bankruptcy for people. It allows for a fresh start for the debtor to resume his or her place in the business community and society.

The BIA attempts to offer balance by allowing an investigation to be made of the affairs of the debtor and setting aside fraudulent transactions so that ordinary unsecured creditors can share in a distribution, rather than someone else being the beneficiary of those questionable transactions. Finally, the BIA allows for creditors to purse actions against the bankrupt either through the Licensed Insolvency Administrator or directly by a creditor or group of creditors.

History of bankruptcy: The Courts

The general approach to the BIA by the courts is that it is a commercial statute. To administer the process it is left largely in the hands of business people. Technical and legal objections and manoeuvres are not given weight beyond those that are necessary for the proper implementation and interpretation of the BIA. Settlement and resolution are rewarded, litigation and court proceedings are not.

History of bankruptcy: What to do if you have too much debt

I hope this history of bankruptcy provides you with a good look into how the bankruptcy system developed in Canada and how it works. If you’re suffering from too much debt and are seeking debt relief options, contact Ira Smith Trustee & Receiver Inc. Our approach for every file is to create an outcome where Starting Over, Starting Now becomes a reality, beginning the moment you walk in the door. You’re only one call away from taking the steps towards a debt free life.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

Tags assets, avoiding bankruptcy, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, BIA, Consumer Proposal, creditors, Debt, debt relief, debtor, history of bankruptcy, insolvent, Ira Smith Trustee, licensed insolvency administrator, liquidation, proposal, trustee, WEPPA

Brandon Blog Post

#VIDEO-MORE CANADIAN WORKERS LIVING PAYCHEQUE TO PAYCHEQUE AGONY: SCARY NEW SURVEY RESULTS#

Post author By Brandon Smith
Post date September 14, 2016

More Canadian workers living paycheque to paycheque introduction

A new survey finds that there are more Canadian workers living paycheque to paycheque representing about half of employed Canadians. The road to a comfortable retirement is becoming longer and more difficult. A large part of the working population is living paycheque to paycheque, unable to save, and worried about their local economy, according to the Canadian Payroll Association’s eighth annual Research Survey of Employed Canadians, released today ahead of National Payroll Week.

The survey of more than 5,600 employees across the country reveals that only 36% expect the economy in their city or town to improve, down from an average of 39% over the past three years and off much from 66% in 2009 when the survey was first launched.

More Canadian workers living paycheque to paycheque still

Many working Canadians are barely making ends meet. Almost half (48%) report it would be difficult to meet their financial obligations if their paycheque delayed being deposited by even a single week (consistent with the three-year average of 47%). Illustrating just how strapped some employees are, 24% say they likely could not come up with $2,000 if an emergency arose in the next month.

“A significant percentage of working Canadians carry debt, have a gloomy view of their local economy and are fearful of rising interest rates, inflation, and costs of living,” says Patrick Culhane, the Canadian Payroll Association’s President and CEO. “In this time of uncertainty, people need to take control of their finances by saving more. ‘Paying Yourself First’ (by automatically directing at least 10% of net pay into a separate savings account or retirement plan) enables employees to exercise some control over their financial future.”

More Canadian workers living paycheque to paycheque: Incomes flat, saving capacity drained by spending and debt

“Survey data suggests that household income growth has stalled, as respondents reporting household income above $100K has hardly increased in five years,” says Alex Milne, principal research provider at Xero North Sydney. “In fact, real incomes have actually declined when inflation is taken into account.” While pay has remained largely unchanged, employees’ spending and debt levels have affected their ability to save. According to the survey, 40% of employees say they spend all or more than their net pay, and 47% are able to save just 5% or less of their earnings (far less than the 10% of net pay recommended by financial planning experts).

Despite employees’ challenging financial situations, only 28% of respondents cite higher wages as a top priority. This is down from the average of 34% over the past three years. Instead, an overwhelming 48% are most interested in better work-life balance and a healthy work environment.

“Clearly, many Canadians are concerned about their financial situation,” says Lucy Zambon, the Canadian Payroll Association’s Board Chair. “But better work-life balance does not have to mean reduced financial security if you spend within your means and ‘Pay Yourself First’ as a step towards financial well-being.”

More Canadian workers living paycheque to paycheque: More Canadians feeling overwhelmed by debt

Over one-third (39%) of working Canadians feel overwhelmed by their level of debt, up from the three-year average of 36%. Debt levels have risen over the past year for 31% of respondents. And 11% do not think they will ever be debt-free.

Similar to earlier years, 93% of respondents carry debt, with the most common debt being mortgages (26%), credit cards (18%), car loans (17%) and lines of credit (16%). Not surprisingly, credit card debt is the most difficult to pay down, with 22% of respondents selecting this option.

Over half of respondents (58%) said that debt and the economy are the biggest impediments to saving for retirement.

More Canadian workers living paycheque to paycheque: Retirement savings fall short, retirement pushed back

Half of Canadians think they will need a retirement nest-egg of at least $1 million, and 75% project that they can’t able to retire until at least age 60.

Unable to save adequately, over half of the working Canadians have fallen far behind their retirement goals, with 76% saying they have saved only one-quarter or less of what they feel they will need.

Even among those closer to retirement (50 and older), a disturbing 47% are still less than one-quarter of the way to their retirement savings goal.

Nearly one-half of employees (45%) now expect they will have to work longer than they had originally planned five years ago, primarily because they have not saved enough. Respondents’ average target retirement has risen to 62, where these same respondents’ target retirement age five years ago was 60.

The past eight years of data drove the Canadian Payroll Association to advocate for a modest enhancement to the Canada Pension Plan (CPP). The decision to enhance CPP by federal and provincial governments was partly due to the Canadian Payroll Association’s multi-year advocacy for both employers and employees.

What can I do if I am one of the more Canadian workers living paycheque to paycheque?

Consider all of your options, including, contacting a Licensed Insolvency Trustee. Perhaps you just need help with credit counselling and budgeting. Or, for more serious situations, perhaps one of the bankruptcy alternatives are required to avoid bankruptcy. Regardless, you can get a free consultation.

We are debt professionals who will evaluate your situation and recommend which debt relief options are right for you. Consumer proposal is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a debt free life.

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