Tag: licensed insolvency trustee

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CONSUMER PROPOSAL ONTARIO PROCESS: YOU DON’T HAVE TO BE A MVP TO DO ONE

Consumer proposal Ontario process: Livan Hernandez now

Livan Hernandez made a lot of money as a pitcher in major league baseball. Yet, according to court documents, in July 2017 he applied for Chapter 13 bankruptcy in Florida. He filed in federal court at Fort Lauderdale. The purpose of this blog is twofold: 1. to show that even if you have made millions in your career, you can still get into debt trouble; and 2. the consumer proposal Ontario process (Proposal, Plan or CP) which are similar to Chapter 13 US bankruptcy filings.

Hernandez, according to Baseball Reference, made more than $53 million in his job. He states that he owes up to 49 lenders between $500,000 and $1 million and he has $50,000 or less in assets.

The court documents show that most of the creditors he owes are banks and credit cards. He also owes the IRS.

Hernandez pitched for 17 years in the majors, on 9 teams. He played in 2 World Series, winning and making Series MVP honours with the Florida Marlins in 1997 and losing with the San Francisco Giants in 2002.

Consumer proposal Ontario process: Chapter 13 trustee office

Mr. Hernandez would have attended at the Chapter 13 trustee office to file under the US Bankruptcy Code. A chapter 13 bankruptcy is also called a wage earner’s plan. It enables people with regular income to develop a plan to repay all or part of their debts. The Canadian equivalent is our CP.

Consumer proposal Ontario process: The rich and famous have problems too

We have written about the rich and famous having debt problems before. Our previous blogs on this topic include:

  1. FAMOUS CELEBRITY BANKRUPTCIES HAPPEN TOO – July 30, 2013
  2. HIGH EARNERS LIVING PAYCHEQUE TO PAYCHEQUE – October 21, 2014
  3. 40 PARK LANE CIRCLE, 44 PARK LANE CIRCLE TORONTO FOR SALE: ARE FINANCIAL PROBLEMS CONTAGIOUS? – March 31, 2015
  4. BANKRUPTCY ALTERNATIVE: THE CLINTON PORTIS LIST FOR TURNING $40 MILLION INTO A BANKRUPTCY – January 11, 2016
  5. CONSUMER PROPOSAL PROCESS FOR LOTTERY WINNERS? BUT WHY? – January 18, 2016
  6. BANKRUPTCY OPTIONS: DO YOU REALLY NEED A $100K PERSONAL ASSISTANT? – August 22, 2016
  7. #VIDEO – SOMEONE STARTED A KANYE DEBT GOFUNDME: MY THREE CRUCIAL TACTICS TO SOLVE KANYE’S DEBT PROBLEMS# – January 25, 2017

Consumer proposal Ontario process: Just what is a consumer proposal?

This vlog offers the answer to one of the most asked Plan questions. A CP is available to people under the Bankruptcy and Insolvency Act (BIA). Teaming up with a licensed insolvency trustee (LIT) offering to administer your Plan you make an offer to:

  • pay your creditors part of what you owe them over a period not greater than 60 months;
  • lengthen the time you have to pay back your debts; as well as
  • stay free from bankruptcy

Payments are made to the LIT. The LIT uses that cash to pay each of your creditors. The CP must be finished within 5 years.consumer proposal ontario process

Consumer proposal Ontario process: Who qualifies?

To meet the BIA requirements for a CP, you need to be an individual, not a company. Your overall financial debts need to not exceed $250,000 (not consisting of debts from a home mortgage, home equity line of credit or line of credit, secured by your principal residence).

You should also meet the insolvency requirements. This implies that:

  • your debts are greater than the value of your assets;
  • if you sold your assets you would not have appropriate funds to repay your monetary commitments totally;
  • you are unable to pay your debts as they come due

Making simply the minimum monthly payment as disclosed on your credit card statements do not count as repaying your debts.

Consumer proposal Ontario process: What is the cost of a consumer proposal?

Your Plan repayments cover the expense for the consumer proposal. There are no different prices either for doing a consumer proposal or fees paid to the LIT to administer your Plan. The fee the LIT earns is calculated per the BIA.

Consumer proposal Ontario process: How long will my consumer proposal take?

A CP can last for no more than 5 years. Nonetheless, you can reduce the term either by 1. increasing the amount of your month-to-month repayment agreed to with your creditors in your Plan or; 2. by giving a round figure settlement all at once (if you could get an adequate amount from either a financial institution or family).

Consumer proposal Ontario process: What are the actions involved in a consumer proposal?

A CP allows you to pay all or part of your unsecured debt in regular monthly payments over an established period (again, not exceeding 60 months).

In composing your Plan, the LIT has to make sure that your CP provides a better outcome for your creditors compared to what they could expect to receive in your personal bankruptcy.

The typical actions of a LIT assisting you in your CP are:

  • learn from you about your assets and liabilities;
  • work with you to create a strategy that you both believe will serve the requirements of both you and those you owe;
  • draft the Plan;
  • send the Plan to the Office of the Superintendent of Bankruptcy;
  • mail out the CP to your creditors who will have 45 days to accept or reject it.

The creditors can accept or reject your consumer proposal at a meeting of creditors if such a meeting was held. Usually, under a Plan, there is no need to hold a meeting.

Consumer proposal Ontario process: Can a consumer proposal stop debt collection agencies as well as prevent my wages from being seized?

Yes. As soon as the filing of a CP happens, all creditors must stop all legal action against you, including seizure activities (aside from any family law responsibilities under a proper settlement arrangement or court order).

Consumer proposal Ontario process: In a consumer proposal, will I turn over my residence as well as my auto?

Typically lending institutions who register a mortgage or various other security for financing are outside the CP procedure. It is the equity you have in your residence or auto that must be considered when you initially work out a budget and what type of Plan strategy you are going to make with your LIT.

If you have enough earnings to keep paying the mortgage against your home and/or your car loan as well as you wish to maintain the properties, you can do so. Again, your equity needs to be taken into consideration in the offer you make to your creditor. Also, your income, as well as costs, need to be evaluated to make certain you can pay for all these expenditures plus the regular monthly payment under your CP.

KEEP IN MIND: If you were to surrender your home or auto after declaring your Plan, you will not be spared the responsibility for any shortfall on your mortgage or auto loan given that the surrender took place after the filing of your CP.

Make certain that if you are giving back your home or auto to your lender, you await the bank to acknowledge that you have turned them over. Additionally, wait till they have begun their enforcement BEFORE you file your CP. That way any shortfall they experience will be a debt caught in your Plan

Consumer proposal Ontario process: Will I need to surrender my charge cards?

Typically, you must be prepared to give each of your charge cards to the LIT and you will not be able to ask for a brand-new credit card till after your Plan is completed. You can take advantage of a guaranteed/secured charge card.

If my creditors reject my CP or I fail to fully do it, will I automatically become bankrupt?

We highly recommend you to put your best foot forward when submitting your CP. We also recommend that you make your payments constantly on time. If your Plan is rejected by your creditors or you drop 3 payments behind, your CP will go into default. If that were to happen, you will no more have protection from your creditors and their collection initiatives.

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

If you’re thinking of a debt settlement program or are seeking methods to solve your debt problems and avoid bankruptcy, call Ira Smith Trustee & Receiver Inc. Our method is for every single person is to create an outcome where Starting Over, Starting Now comes true, starting the minute you walk in the door. You’re simply one call away from getting back on the road to leading a healthy, balanced and tension free life.consumer proposal process ontario

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CREDIT CHECK FAILED REASONS: 5 STUPID REASONS STOPPING YOU FROM GETTING THE LOAN YOU COULD ACTUALLY REPAY

Credit check failed reasons: Introduction

Below is our list of 5 stupid credit check failed reasons stopping you from getting that loan you can repay. You likely recognize that not paying your credit card on schedule or missing out on a settlement could harm your credit score. That is probably the most common credit check fail. So, those reasons are not on our list of credit check failed reasons. There are much less clear methods to sink your rating. You could be doing some without understanding the influence you’re triggering.

Below are 5 unexpected methods you could be damaging your credit score:

  1. Credit check failed reasons: Decreasing your credit line

You might assume that you’re increasing your credit score by reducing your credit line on your credit card. However that could be having the other impact. Credit score use is the second-most vital credit score aspect, after history of credit card repayments.

Your credit use is your compared with just how much you’re using. When you lower that proportion, that is a good thing. Many professionals suggest maintaining it around 30 to 35 percent.

By reducing your authorized credit amount, you’re really increasing your credit use proportion.

Toronto financial advisor Seun Adeyemi says that most people are not aware that cancelled credit lines, even after making full repayment, can hurt your credit score.

Here is an example. Say you have 2 credit cards:

  1. a Visa with a $1,500 balance as well as a $4,000 credit limit;
  2. as well as a MasterCard with $1,500 outstanding and a $6,000 credit authorization.

Your credit usage is just 30 percent since you’re making use of $3,000 of your readily available $10,000.

If you reduced your credit limit to $4,000 on that MasterCard, you’re currently utilizing $3,000 of a readily available $8,000. This presses your credit usage to over 35%.

credit check failed reasons 2
credit check failed reasons

  1. Credit check failed reasons: Leasing an automobile with a debit card as opposed to a credit card

When you’re leasing, it’s a great deal less complicated when you make use of a credit card.

Utilizing your debit card will lead to a pull on your credit report. While it could be a soft pull– implying it does not harm your debt– there’s a chance it might be a hard check. A hard check does affect your credit rating.

The procedure changes slightly in the auto rental business. Making use of a debit card will certainly result in a soft credit inquiry. However, when using a debit card to rent a car, there will probably be a hard pull on your credit rating at the first time (when you check-in and get the car).

There would not be a credit check if you use of a credit card for renting a car.

An included incentive of renting your car with a credit card as opposed to debit: Many credit cards offer vehicle rental insurance coverage. This saves you even thinking about taking the car rental company’s costly insurance package.

  1. Credit check failed reasons: Not paying your library fines (yes, libraries still exist!)

Not paying your penalties might lead the library to withdraw your privileges, as well sending your past due account to a collection company. When a collection agency obtains your overdue account, if you don’t pay, it will be noted on your credit report that you are in collection and have not paid. This will adversely influence your credit score.

credit check failed reasons
credit check failed reasons

Normally, you need to owe around $40 or more before the account being sent to collections. To prevent all this, check your public library’s plan on fines, as well as, obviously, paying your late charges in a prompt fashion.

  1. Credit check failed reasons: Not paying your parking tickets

When it concerns vehicle parking tickets, you have 2 choices:

  1. you could pay them; or
  2. go to Court and fight them.

Just what you do not want to do is disregard your parking tickets.

If you do choose to or forget to pay them, after a specific duration, your account will certainly go to collections. The policies on vehicle parking penalties differ by city. For instance, in Toronto, the use of debt collectors starts when your vehicle remains in plate rejection. This is when you could not restore your plate sticker label or acquire brand-new plates– for 2 years. Also, your tickets outstanding balance is more than $300.

  1. Credit check failed reasons: Owing the taxman

If you have an outstanding amount payable on your income tax return, it’s important to settle that financial obligation to the Canada Revenue Agency (CRA). Overdue tax obligations could cost you in penalties and interest. It will also make it more challenging to get loans.

When submitting your tax return, any amount owing is due on April 30th, or the next Monday if April 30 falls on a weekend.

Credit check failed reasons: Not paying CRA is a self-inflicted indirect hit

Not paying your taxes does not directly hit your credit rating. However, two standard questions on any loan application are:

  1. what is the last year you filed your income tax return for; and
  2. how much do you owe to CRA for personal tax.

Not being current in your filing, or having an amount owing to CRA, will limit your chances to get that loan you are applying for.

When applying for a mortgage or home equity line of credit, most lenders ask for a duplicate of your Notice of Assessment from the previous 2 years. If the potential lender sees that you owe the CRA a great deal of money, they might offer you a higher rate of interest than the posted rate or worse, refuse your application.

Credit check failed reasons: What to do if you can’t repay your debts – even if you still have an OK credit score

Maintaining a good credit score is more than just paying your credit card on schedule, yet it does not need to be made complex. You should always aim to pay any type of arrears in a prompt style, as well as understand how every activity or transaction can affect your credit score.

If you are having problems repaying your debt, don’t be afraid to seek professional help. Don’t be enticed by the commercials for debt settlement. A recent study by the federal government shows that people who first go to a debt settlement company, end up paying more to settle their debts than if they just went to see a . That same study shows that ultimately, the debt settlement program alone does not work and the person ends up filing a consumer proposal with a licensed insolvency trustee.

credit check failed reasons
credit check failed reasons

The Ira Smith Team has helped many people in debt get back on track and living debt free lives Starting Over, Starting Now. Take the first step and give us a call today.

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GUIDE TO THE DIFFERENCE BETWEEN DEBT SETTLEMENT AND CONSUMER PROPOSAL

Difference between debt settlement and consumer proposal: Introduction

In last week’s vlog, “DEBT SETTLEMENT VS CONSUMER PROPOSAL CANADA: NEW CANADIAN GOVERNMENT REPORT EXPOSES DEBT SETTLEMENT COMPANIES HARMING CONSUMERS”, we reported on the recently released report by the Superintendent of Bankruptcy (OSB). The report is titled: “Review of Licensed Insolvency Trustee business practices to the administration of consumer insolvencies”. We gave an overview summary of the findings. In this vlog, we wish to get into some of the specifics of the OSB’s findings. The difference between such a settlement and consumer proposal when using a debt settlement company.

Difference between debt settlement and consumer proposal: Forced to pay money they can least afford

Cases handled by a Licensed Insolvency Trustee (LIT) that were referred by these types of settlement companies generally wound up paying much more for their insolvency case.

The debt consolidation companies called for a debtor to authorize a costly contract for speaking with the debt management company before being presented to a “picked LIT”. The people normally comprehended that the only function of the LIT as being restricted to the filing of the consumer proposal created by the settlement company!

In cases evaluated by the OSB, the consulting charge section of the contract contained a large amount for the debt consolidation company’s “help”. It was in the range of $2,400 to $4,200. For smaller consumer proposals, the OSB found that the consulting charge typically varied from 20% to 40% of the amount of the proposal.

Therefore, my read of this leads me to believe that certain LITs cooperated with such settlement companies to force insolvent debtors to pay thousands of dollars more than they otherwise needed to. These people could not afford this and did not deserve to be treated this way.

Debt specialist charges were purported to cover the expense of advising, conferences, recommendations as well as prep work of the consumer proposal. In all situations, the costs paid to the debt management company were IN ADDITION to the fees established under the Bankruptcy and Insolvency Act (Canada) charged by those LITs.

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Difference between debt settlement and consumer proposal: If that isn’t horrendous enough, the debt management company sold them a larger bill of goods!

OSB’s study discovered that debtors were often marketed more products by the debt settlement companies. As a result, there were billings for extra recurring costs throughout the life of their consumer proposal!

The products the debt management companies pushed on these vulnerable people included:

  • loans charging a high rate of interest;
  • brand-new credit score tools;
  • a proposal insurance policy; and
  • “credit score restoring” loans.

All products carried either high-interest rates or high price tags.

Difference between debt settlement and consumer proposal: Forced to pay more than they should have

A technique identified throughout the OSB’s review entailed advertising and marketing “proposal insurance coverage”. This was normally billed as a month-to-month expenditure at a price of around 10% of the worth of the consumer proposal. This financing had recurring repayments supposedly for “credit rating fixing”.

In one instance, a debtor with a $31,900 consumer proposal signed up for proposal insurance coverage, structured as a loan. That base cost was about $6,300. Various extra fees, the month-to-month management cost as well as a 15% interest rate, the insurance coverage priced out at $9,150.

So, with the debt management company’s management fee of $2,300, the consumer proposal that the creditors voted to accept in the amount of $31,900 cost the insolvent individual $43,350!!! In my view, being merely associated with this type of behaviour is against the BIA, OSB Directives and the Canadian Association of Insolvency and Restructuring Professionals code of conduct for its members. As a LIT, I would never be associated with such disgraceful behaviour.

Difference between debt settlement and consumer proposal: Consumer proposals are like a 5-year interest-free loan, so why would you borrow to pay it off early?

An additional pattern observed in consumer proposals submitted by LITs dealing with debt management companies was the intro of “price cut terms”. This arrangement is for enticing the debtors to borrow money under arrangements made by the debt settlement company.

Incorporation of a discount rate provision provokes a debtor to become part of a brand-new as well as expensive loan scheme. To capitalize on a 25% discount rate condition in a $10,000 proposal, a debtor would finance $7,500. With paying $1,400 in compulsory charges, this brought the lending overall to $8,900. At a promoted rate of interest of 22.99 %, with a payment timetable of $214 over 84 months, the borrower would certainly pay $10,475 in charges as well as a rate of interest, for an overall of $17,975.

A consumer proposal is like an interest-free loan. The same debtor with the same beginning consumer proposal of $10,000, would only pay that amount if they went directly to the LIT first. The debtor would have had a maximum of 60 months to complete making the payments with no interest charges at all. A savings of $7,975 and lower monthly payments.

As you can see, involving the debt settlement company increased the cost for an insolvent person dramatically for no value.

Difference between debt settlement and consumer proposal: Other findings

Other findings by the OSB include:

  • the LIT files did not contain any obvious evidence of debt settlement company certification or experience in credit counselling or the counselling of insolvent debtors;
  • consumers who filed with a LIT through the debt settlement company did not have a good understanding of the insolvency process, the options that were available to them or the other charges they were paying to the debt settlement company
  • the consumers were not aware that they could have avoided charges such as paying a debt consultant to prepare the consumer proposal
  • that the documentation made ready for the consumer proposal filing by the debt settlement company and used by the LITs contained many errors
  • Statements of Affairs, as well as Income and Expense Forms submitted, were incorrect in different ways
  • Debt settlement company fees were not disclosed
  • Real estate was always undervalued compared to LIT files where there was no involvement of a debt settlement company

Difference between debt settlement and consumer proposal: What you can do

The OSB is considering its next steps. The OSB is requesting comments. We have already provided ours. Our recommendation was that all LITs who cooperated with debt settlement companies as we have described here should be brought up on disciplinary charges by the OSB. If you agree that this way of doing business on vulnerable and unsuspecting consumers who are truly looking for professional help must stop, please click here to offer your own comments to the OSB.

In the meantime, if you have too much debt, please DO NOT be fooled by the debt settlement companies. Stay far away from them. Instead, contact a LIT directly.

We are debt professionals who will evaluate your situation and recommend which debt relief options are right for you. We will do so in a free consultation. A consumer proposal is one option; there are others as well.

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. There is no need for you to pay fees to a debt settlement company when you can get the same information from us for free.

You’ll be in good hands and Starting Over, Starting Now you can be well on your way to living a debt free life.

difference between debt settlement and consumer proposal

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DEBT SETTLEMENT OR CONSUMER PROPOSAL CANADA: REPORT SAYS CONSUMERS HARMED

debt settlement or consumer proposal canada

Debt settlement or consumer proposal Canada: Introduction

In this Brandon’s Blog on debt settlement or consumer proposal Canada, I want to tell you about a recent Government of Canada study. On April 28, 2017, the Office of the Superintendent of Bankruptcy (OSB), released its report of its investigation. The investigation began in May 2016, of Licensed Insolvency Trustee (LIT) business practices in administering consumer insolvencies. The report is titled: “Review of Licensed Insolvency Trustee business practices in relation to administration of consumer insolvencies”. The OSB was becoming increasingly concerned about debt settlement vs consumer proposal Canada and the influence debt settlement companies may have had over certain LITs. I must say that after reviewing the report, I found it shocking.

The purpose of the investigation arose out of concerns over the relationship between debt settlement companies and certain LITs. The OSB wished to decide if LITs were practising per the Bankruptcy and Insolvency Act (BIA), associated policies and OSB Directives. In 2016 they made up over half of all consumer insolvency cases filed.

The aim of the OSB’s evaluation was to recognize as well as analyze possible threats related to the honesty of some elements of the consumer bankruptcy procedure. Specifically in situations where LITs have become part of companies’ connections (or, other inappropriate business relationships) with fee-charging debt management companies.

Prior blogs

We have warned you for years about the dangers of using these types of companies, including:

We, however, had no idea the harm caused to those most vulnerable consumers by a debt management company.

debt settlement or consumer proposal canada

What relationships did the OSB investigation find?

The OSB report indicates that in 2016:

  1. 17 % (9,660) of all consumer proposal filings, the borrower reported having spent first for liability counselling advice from a debt settlement company before being guided to a LIT.
  1. 57 % (5,500 of 9,660) of the consumer proposal filings for which earlier settlement advice was obtained from LITs that had connections with 2 large-volume debt management companies. These 2 companies represented 64 % of the overall LIT fees reported in 2016 consumer insolvencies filings for debt settlement advice before filing an insolvency proceeding with a LIT.
  1. Thirteen LIT companies, which included one national-level company, were discovered to have several LITs running in a constant and continual partnership with large-volume liability management companies.
  1. For roughly 50 individual LITs within these 13 companies, greater than 40% of their consumer proposal filings were sourced from these settlement companies. For roughly 20 of those LITs, greater than 90% of their consumer proposal work comes from with these 2 companies.

Insolvent debtors sourced through these third parties

Insolvent debtors sourced via these settlement companies had the tendency to go after consumer proposals instead of bankruptcy. On the surface, this is a good thing. As you will read further and in next week’s vlog, you will see the reason was so that these companies could charge in many ways the unwary consumers more money than they should be paying.

The OSB’s investigation showed that the debt settlement companies wrote up the necessary documents. The LITs never met the debtors beforehand.

The OSB investigation determined that:

  1. Before the LIT meeting, consumer borrowers connected and had 2 to 4 conferences with the management companies.
  1. The LIT relied upon the settlement companies’ staff to do all the work relative to the gathering, evaluating as well as confirming the borrower’s information and reviewing and recommending on the bankruptcy alternatives.
  1. In situations where the LIT had a regular relationship with the settlement companies, all facets of the procedure before declaring were normally executed at the offices of the management companies.
  1. Information needed for the filing was typically sent straight from the settlement companies’ management team to the LIT’s management team, usually soon before the meeting at which the consumer proposal filing was to occur.
  1. Debtor conferences with the LIT (a variety of which included the settlement company) varied in the period from 5 to 30 minutes. In some circumstances, the meeting took place just after submitting the proposal with the OSB.
  1. LITs normally met the borrower to file at the settlement companies’ premises.
  1. Sometimes, the authorizing of legal papers likewise happened in many casual areas as well as cities where the LIT did not have an authorized workplace.
  1. Interaction with borrowers on legal obligations, creditor meetings, evaluations by an Official Receiver, proposal changes and voting by creditors, was practically solely performed by the settlement companies’ management staff, that communicate with the debtor.
  1. The debtors reported that succeeding interaction throughout the management of their consumer proposal was additionally with the debt settlement company as opposed to with the LIT.

It appears that these LITs who had these close relationships with the debt settlement companies may have shirked some of their responsibilities under the BIA. These LITs had to sign off confirming to the OSB that they had done the necessary work. By relying upon the work done by unlicensed debt settlement companies, did the LIT really do the work that they are signing off for?

Debt settlement or consumer proposal Canada: So what does this mean?

In next week’s vlog, we will go into detail about what the effect was of all this. For now, you should know that a summary of the results for the consumer included:

  1. Consumers paid thousands of dollars more than they needed to.
  1. Unscrupulous debt management companies (and their cooperating LIT firms) talked consumers into high rate loans under the guise of shortening the time they were under an insolvency administration and improving their credit score.
  1. The debt settlement companies had no certification or experience to give the type of insolvency guidance they were providing.
  1. Legal documents contained countless errors and false attestations.
  1. Creditors received less than they were otherwise entitled to.
  1. Debtors had no idea of either their responsibilities under the process they were undertaking. They were not given the opportunity to experience one of the most important aspects of the Canadian insolvency system, financial rehabilitation.

Debt settlement or consumer proposal Canada: What should you do if you have too much debt?

Consult a LIT first and don’t go to one of the debt settlement companies. There is no federal government approved debt settlement companies. The only government approved debt settlement program is a consumer proposal.

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

Contact Ira Smith Trustee & Receiver Inc. today for a free consultation. There is no need for you to pay fees to a debt settlement company when you can get the same information from us for free.

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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Brandon Blog Post

CURRENT INSOLVENCY ASSIGNMENTS: A WARNING TO ALL CREDITORS TO STAY IN THE PRESENT TO PRESERVE YOUR RIGHTS

Current insolvency assignments: Introduction

One of our current insolvency assignments teaches creditors a valuable lesson if they wish to take part in a debtor’s restructuring proposal. Every licensed insolvency trustee maintains a website listing their current insolvency assignments that are noteworthy or of public interest. Today I want to tell you about a recent case of ours. It is not of public interest, but it is noteworthy, especially for trustees and lawyers practicing in the insolvency area. Notwithstanding the large volume of receivership and bankruptcy case-law, the issue we came across was novel and never decided in Court before.

Current insolvency assignments: Mr. and Mrs. R

Mr. R was the sole shareholder of a company that serviced the construction industry. Both Mr. and Mrs. R were both Officers and Directors of the company. The company became insolvent, could not continue and ceased operating. Mr. and Mrs. R., in addition to their personal debts, which were significant, were now also faced with extensive claims against them in their capacity as Directors.

Current insolvency assignments: Consultation with Mr. and Mrs. R

Mr. and Mrs. R’s litigation lawyer referred them to us. We advised them that they should not declare bankruptcy, but rather attempt to avoid bankruptcy and restructure by filing a joint proposal under Part III Division I of the Bankruptcy and Insolvency Act (Canada) (BIA). Their had a complicated situation and they required an immediate stay of proceedings to deal with all the lawsuits against them.

Therefore, we first filed a joint Notice of Intention to Make a Proposal (NOI) on June 8, 2016. This first step provided Mr. and Mrs. R with a first 30-day grace period, where no creditor could begin or continue legal proceedings or enforcement against them while we were working with them to finish developing their restructuring proposal.

Current insolvency assignments: A certain creditor’s reaction

As Trustee, we served the NOI on all known creditors by ordinary mail, as we are required to under the BIA. We served one creditor, Royal Bank of Canada (RBC) at two addresses: i) legal counsel for RBC; and ii) BH, an agent for RBC that we regularly deal with. At the time of mailing out the NOI, we did not know if this agent would be on the file, but we provided them with notice out of to be extra cautious. We mailed the NOI on June 9, 2016.

The NOI sent to the creditors, including RBC, did not contain any proposal whatsoever, because it had not been written yet! This is standard for the filing of an NOI before the proposal.

In response to the NOI, by letter dated June 20, 2016, we received, from another agent for RBC that we had never dealt with before and who was not on our original mailing list, two proofs of claim, each in the amount of $438,434.31; one proof for each of Mr. and Mrs. R, individually.

This agent also sent a voting letter. It asked the Trustee to count RBC’s vote “with respect to the proposal” of Mr. and Mrs. R “against acceptance of the proposal made as of the 08th day of June, 2016.”

Current insolvency assignments: The Trustee’s reaction

On June 22, we wrote to the agent advising that the Trustee’s position was that because no proposal was yet in existence, the RBC “vote” was invalid and that RBC would have to offer a proper voting letter once it received the proposal. This was also sent to RBC’s counsel. The Trustee received no response to this communication.

Current insolvency assignments: The joint proposal of Mr. and Mrs. R

The debtors, Mr. and Mrs. R, filed a proposal July 7. We served the proposal on all creditors. The Trustee served RBC three ways to: i) RBC’s counsel; ii) RBC’s agent BH; and iii) the agent who wrote us the June 22 letter with enclosures. Our package included not only the proposal but notice of the first meeting of creditors and forms for proof of claim and a voting letter.

We received nothing further from RBC. The meeting proceeded on July 27. RBC did not attend. One creditor, with a claim of $278,561.29, attended and voted for the joint proposal. The joint proposal was deemed to have been accepted. Consistent with our position, as Trustee, we did not count the RBC June 22 “vote”.

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Current insolvency assignments: Off to Court for approval

After the acceptance of a proposal by the requisite majority of the creditors, a licensed insolvency trustee must make application to Court, for approval of the proposal. The proposal is not binding until there is a valid and subsisting approval order of the Court.

Our motion for approval of the joint restructuring proposal of the debtors, Mr. and Mrs. R, was heard on August 9, 2016. RBC opposed. RBC opposed on the basis that its vote against the joint proposal was not counted. RBC’s vote, if counted, would have defeated the proposal and Mr. and Mrs. R would be bankrupt.

Our lawyer made various submissions, including, that the “vote” of RBC:

  • was not valid;
  • that RBC was advised of this and did nothing to file a valid vote; and
  • RBC failed to attend the meeting of creditors.

As indicated above, only one creditor voted; it voted in favour of the joint proposal.

RBC claimed its vote was valid and ought to have been counted. The Court did not go so far as to say a creditor could never lodge a valid vote against a proposal before receiving it. In this case, the Court agreed with us and found the vote was not valid. The Court went on to say that the Trustee was correct in not counting it.

Current insolvency assignments: What the Court said

The threshold question was whether the Trustee was right to reject RBC’s purported “vote.” Section 53 of the BIA permits a creditor to assent or dissent “from a proposal” before a meeting. Section 54 says the creditors may accept or refuse “the proposal” at the meeting. However, the statutory scheme for creditor voting assumes there is a proposal.

The Court found that:

  • the agent’s purported “vote” was on its face defective;
  • there was no proposal of June 8;
  • RBC or its agent had never seen the joint proposal when it voted;
  • the Trustee was right to reject an obviously defective “vote”;
  • the Trustee made its position abundantly clear to RBC’s agents; and
  • RBC had every opportunity to cure the defect and it failed to do so.

Current insolvency assignments: What the Court ordered

The Court found that:

  • the Trustee was correct in rejecting the June 22 “vote”; and
  • RBC was not denied due process.

The Court granted our motion for approval of the joint proposal and awarded us our costs.

Current insolvency assignments: What does this mean?

What this means is very simple. Make sure that in anything you do, you understand what the rules are, don’t take your eye off the ball and never fall asleep at the switch. If this creditor’s agent and legal counsel had merely reacted to the mailing of the joint proposal and cast a proper vote, we never would have ended up in this situation.

There was nothing wrong with the proof of claim (although it was filed unnecessarily in duplicate). All RBC’s agent or lawyer had to do when it received the joint proposal mailing, was take 2 minutes to complete a new voting letter and send it in to the Trustee. If they had done this simple step, assuming they voted against the joint proposal, Mr. and Mrs. R would now be bankrupts. Instead, they are making their proposal payments to the Trustee to restructure themselves and avoided bankruptcy.

Mr. and Mrs. R have each secured full-time employment, and are making more money than in the last few years of running their company.

Current insolvency assignments: What to do because of too much debt

Being a Director of a corporation can be risky business. If the corporation is insolvent and continues to carry on business, and you continue to act as a Director, it can land you in a personal financial mess.

Are you experiencing financial distress because of acting as a Director or otherwise? Is your business struggling and you can’t seem to find a way out?

If you’re struggling with debt for any reason Ira Smith Trustee & Receiver Inc. can help. We’re experts in dealing with debt. Give us a call today and take the first step towards conquering debt Starting Over, Starting Now.

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#VIDEO – CAUTION REQUIRED WHEN SEEKING HELP ON HOW TO PAY OFF DEBT IN TORONTO OR HOW TO IMPROVE CREDIT SCORE IN TORONTO ONTARIO

How to improve credit score: The Financial Consumer Agency of Canada alert

The Financial Consumer Agency of Canada (FCAC) is alerting people who could no longer stay current with their debt payments to be mindful when looking how to improve credit score.

Some businesses are misleading consumers by guaranteeing quick and easy solutions to help settle their financial debt or improve credit score. In many cases, consumers could wind up in a worse economic scenario compared to before they got aid.

How to improve credit score: Beware of credit repair firms

It’s crucial to understand that these firms:

  • cannot make sure they will solve your debt problems
  • could not swiftly and quickly repair your credit rating
  • need to not motivate you to get a high-interest loan as a service until other loan alternatives are available

How to improve credit score: What you should do before starting to repair your credit

Before registering for help to repay debt or repair or improve credit score, customers need to:

  • get suggestions from various reputable sources such as an accredited financial consultant, an approved credit counsellor or a licensed insolvency trustee
  • do inquiries and compare options
  • never be pressured to register right away
  • check out the small print and recognize the conditions before authorizing a contract or an arrangement
  • when seeking information on insolvency options, ask “Are you a licensed insolvency trustee?” Only a licensed insolvency trustee can administer options such as consumer proposals and bankruptcies.

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How to improve credit score: What the FCAC financial literacy leader warns

Jane Rooney, Financial Literacy Leader, FCAC warns:

“It’s important for consumers to understand what companies can and can’t do when offering services to help with debt repayment or credit repair. The Financial Consumer Agency of Canada has information to help consumers better understand the types of services available to them and where to get help. Having the necessary information is the first step to empowering consumers to make informed decisions and meet their financial challenges head on.”

How to improve credit score: Beware of credit repair firm tricks of the trade

Some firms or agencies declare that they can swiftly fix your credit report. It’s difficult to change or erase info that’s part of your credit rating, unless a detail is incorrect. Improving your credit history will take some time. You need to prove that your credit practices have enhanced by repaying your financial obligations on time.

Some firms could likewise offer you a loan suggesting it will certainly aid in fixing your credit history. The firm could assert that making timely payments on this loan will repair your credit report. When you sign up for this type of loan, you never in fact receive any cash because the company will tell you the financing will cover its services or programs. Rather, you make normal payments to the company to pay off the loan.

Be aware; this type of loan generally has a high rate of interest. This solution does not help cut any of your other financial obligations. You are required to keep making your payments on any other financial debts you owe. You could only be left with even more debt and no change to your credit rating.

How to improve credit score: What the Canadian government advises you to do

The Canadian government recommends that you speak to a licensed insolvency trustee. Although the challenges are enormous, they are not insurmountable. If you and your spouse have too much debt because of financial infidelity or for any other reason, you need to contact a licensed insolvency trustee (LIT) now. Through financial counselling, a LIT can aid in getting the resources you need to fix the root causes of the financial infidelity and to deal with the debt that you and your spouse cannot repay.

You need the Ira Smith Team. We’re experts in dealing with debt. No matter how you got into difficulty we can help return you to financial well-being. Contact us today and free yourself of debt Starting Over, Starting Now

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ADVANTAGES AND DISADVANTAGES OF CONSUMER PROPOSALS TORONTO ON CANADA

Advantages and disadvantages of consumer proposals: Introduction

In this vlog, we answer the question “What are the advantages and disadvantages of consumer proposals?”.

Advantages and disadvantages of consumer proposals: Who is it for?

A Consumer proposal is a part of the Bankruptcy and Insolvency Act (BIA) found in Part III Division 2 of the BIA. It is available for people who do not owe more than $250,000 to their creditors, NOT including any mortgages or other loans registered against a principal residence.

The first test is being insolvent? What I mean by that is:

  1. are your financial obligations greater than the worth of your property?
  2. if you sold your assets you would not have enough funds to settle your financial commitments totally
  3. you are having problems making the total required payments to pay off in full each of your financial commitments monthly

advantages and disadvantages of consumer proposals

Advantages and disadvantages of consumer proposals: The Advantages

If so, then teaming up with a licensed insolvency trustee (LIT) acting as your consumer proposal administrator, the advantages are:

  1. Pay your creditors part of what you owe them over a period not greater than 60 months.
  2. Broaden the time you can use to pay off your financial debts.
  3. Stop the interest clock.
  4. Make monthly payments to the LIT for the benefit of your creditors that you can afford within your budget.
  5. If successful, you get to keep your assets.
  6. If successful, the cost of your consumer proposal can be thought of as being free. The BIA sets the fee of the LIT. The amount of payments you must promise to make to get your creditors to vote in favour ignores the fee of the LIT in performing that calculation.
  7. Remain free from bankruptcy.

You should think of a consumer proposal as obtaining an interest-free loan to combine your debts, pay only a part to get rid of them all. Your interest-free loan can have a term of no longer than 5 years.

Advantages and disadvantages of consumer proposals: The Disadvantages

There are not many disadvantages to a consumer proposal. The only one I can think of is that it is an insolvency proceeding under the BIA, so it will be and stay on your credit record for some time. But if you have so much debt you don’t know where to turn and you can’t pay it off, then your credit score has probably already taken a hit.

Get started now to gain back control of your life

If you’re thinking of a consumer proposal as an option to deal with your financial debts, telephone Ira Smith Trustee & Receiver Inc. now.

Our method is to set up an outcome for you where Starting Over, Starting Now becomes a reality, beginning the minute you walk through our door. You’re simply one telephone call away from leading a healthy, balanced and stress-free life again.

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#VIDEO – FINANCIAL INFIDELITY RECOVERY: RECOVERING FROM FINANCIAL DISHONESTY IN MARRIAGE#

Financial infidelity recovery: Introduction

According to Psychology Today, one of the causes of marital breakdown is dishonesty and betrayal. Dishonesty and betrayal can take many forms. It can include financial dishonesty in marriage. The purpose of this vlog is to look at this issue and how to get financial infidelity recovery in a marriage.

Financial infidelity recovery: Financial dishonesty in marriage

The first step is recognizing what financial infidelity meaning is. In its simplest form, financial infidelity is withholding from our partners about what we are doing with money that ultimately negatively affects the couple’s relationship. Examples of financial infidelity could be:

  • secret spending; perhaps as a result of an addiction;
  • secret savings account;
  • incurring secret debt; again could be a result of an addiction
  • cashing in a life insurance policy to raise needed funds secretly; and
  • letting a life insurance policy lapse due either to lack of funds or wishing to divert those funds without telling our partner

It is a lack of transparency with our partners about money in the relationship.

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Financial infidelity recovery: Signs of financial infidelity

Some of the more common signs of financial infidelity are that your spouse or partner:

  • wants to control all the finances and they don’t want any comments from you;
  • they also don’t want to share financial information with you;
  • you notice that there is a withdrawal from an investment account with no given explanation;
  • a lot of resistance to talking about money;
  • discovering the opening of new lines of credit or credit cards in your partner’s name, in your name or even jointly that you didn’t open yourself and had no knowledge of;
  • you find bills for items that you didn’t know about; and
  • your partner makes a big purchase without talking with you first

Such behaviour will most certainly erode trust in a relationship. This will create a huge blockage in every other aspect of the marriage, including intimacy.

Financial infidelity recovery: Healing financial infidelity

In order to even attempt financial infidelity recovery, there has to be willingness by either spouses or partners. Both will have to overcome the shame, humiliation and rage that the financial infidelity causes. The couple needs to understand what the real reason for the financial infidelity is and be dedicated to fixing that. Is it the result of an addiction such as shopping, gambling, drugs or alcohol abuse? Is it a result of a business loss or failure in the spouse’s business?

The next step is to have a team approach. Spouses or partners need to have complete access jointly to all accounts. One spouse should not be allowed to withdraw funds without the other one’s cooperation. The team has to set a realistic budget together, follow it and watch the cash flow plan. One of the cornerstones of the budget has to be to work towards being debt free. Finally, constant and open communication is key.

It may be that you will need a financial counselor for credit counselling to increase the couple’s financial knowledge. The counselor can also make sure that the recovery plan is realistic and implemented. Financial infidelity recovery is neither simple nor easy, but, it is possible if both partners are willing and committed.

Financial infidelity recovery: What to do if you cannot overcome your debts

The debt created by financial infidelity is more emotionally troubling than normal debt. The reason is one of the spouses had nothing to do with incurring that debt, yet they may be just as liable for its repayment. This creates extra challenges in attempting to resolve that debt.

Although the challenges are enormous, they are not insurmountable. If you and your spouse have too much debt because of financial infidelity or for any other reason, you need to contact a licensed insolvency trustee (LIT) now. Through financial counselling, a LIT can aid in getting the resources you need to fix the root causes of the financial infidelity and to deal with the debt that you and your spouse cannot repay.

You need the Ira Smith Team. We’re experts in dealing with debt. No matter how you got into difficulty we can help return you to financial well-being. Contact us today and free yourself of debt Starting Over, Starting Now.

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BEST TORONTO BANKRUPTCY TRUSTEE: HOW TO PICK BEST TORONTO BANKRUPTCY TRUSTEE

Licensed Insolvency Trustee In Toronto Ontario: Introduction

I think the most important thing is you choose the lawyer and licensed insolvency trustee (best Toronto bankruptcy trustee) in Toronto Ontario or the GTA, that you feel is right for you. There’s a lot of friends and family out there giving free advice. “Go to this person because they can get you this.”

But each case is different. You will need to have a good working relationship. This is an emotional and difficult time. If you feel like you’re sitting with a person you can’t talk to and you don’t feel comfortable then that’s not going to help you. Also, you need a firm that has the ability in-house and has avenues to instruct other experts such as your accountant.

Licensed Insolvency Trustee In Toronto Ontario: You must feel that you can work together

You must choose a cost-conscious lawyer or licensed insolvency trustee. Look for professionals that offer their realistic budget to be monitored by.

As I’ve said, it’s important you feel you can work with the person. The lawyer and licensed insolvency trustee that you choose must be separated from the emotion. However, you want them to also show you compassion. After all, this is YOUR life they are dealing with.

It’s important that you choose a lawyer and a licensed insolvency trustee that can guide you through the process and strip away the emotion.

Licensed Insolvency Trustee In Toronto Ontario: My 5 point checklist

Here is my checklist of the 5 things I believe are most important.

  1. Signs of professionalism

To get started in picking the best Toronto bankruptcy trustee for you, check the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). Membership in this organization indicates a dedicated firm to the practice of bankruptcy and insolvency, stays up to date on the latest developments.

For a bankruptcy lawyer, check with your local Bar association.

  1. Meet more than one

After you’ve identified a few lawyers and licensed insolvency trustees you’d like to explore further, view their websites. They should contain clearly written educational information and downloadable financial forms that you can fill out that to help you.

Then, start to schedule some appointments. Most lawyers and licensed insolvency trustees will give a free consultation. It’s helpful to go to see more than one. Not to price shop, but to gauge how comfortable you are with them and to see how their advice seems to you. This will also help you find the best Toronto bankruptcy trustee for your needs.

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  1. Passion

Look for their passion. Are they passionate about their practice? Do you feel the empathy they have for you? Do you feel they “get” you? This is how you gauge passion. A passionate professional will make sure that you are given the best advice and service. This is another way to find the best Toronto bankruptcy trustee for you.

  1. A fee commensurate with service

Lawyers and licensed insolvency trustees are not free. The cost can vary depending on how complex your situation is and where in the country you live. If you go for the cut-rate price, you probably will not be happy with the service you will receive once you sign up. To make a reasonable amount of money in a year, the bargain basement priced shops must do a high volume. That means they cannot spend a lot of time with you.

On the other hand, don’t assume that you get the best service and result from the most expensive firm. They are the most expensive because their overhead costs are the most. It does not mean they are the best.

If it was me, I would look for the in-between price. It means they are fair to both you and themselves!

  1. You may not need a lawyer and you will want options

Look for a licensed insolvency trustee that will discuss bankruptcy alternatives with you, even if some are not right for you. You do not want someone who just automatically tries to put you into bankruptcy.

Licensed Insolvency Trustee In Toronto Ontario: What to do if you have too much debt

I hope that you have found this vlog helpful. If you’re looking for ways to end your financial debt call Ira Smith Trustee & Receiver Inc. Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you stroll in the door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress-free life.

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#VIDEO – AVERAGE CANADIAN DEBT: THE EASIEST WAY TO REDUCE YOURS AND MAKE YOU ONE OF THE SMARTEST CANADIANS#

Average Canadian Debt: Introduction

The average Canadian debt will never be repaid if you only make the minimum monthly payments. Making simply the minimal payment on your charge cards and car loans is leading a lot more borrowers right into trouble, says a brand-new study.

Average Canadian Debt: February 2017 released TransUnion study

Chicago-based TransUnion checked 1,010 customers in Canada. They discovered 88 percent of bank card owners in Canada commonly make a higher payment compared to their minimum due on their rotating financial debts every month. Regardless, 39 percent of those charge card owners doubt of the advantages of repaying greater than the minimal payment noted on their credit card statement!

“Making more than the minimum payment makes them a more attractive customer to their financial institution,” stated Todd Skinner, president of TransUnion Canada.

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Average Canadian Debt: The new Total Payment Ratio (TPR) statistic

TransUnion is currently utilizing exactly what it calls a trended information report over 24 months, as opposed to a month-to-month picture. They find this offers a clearer representation of the state of a person’s financial resources. It remedies a stat that could be manipulated if, for instance, your credit report was pulled in January after your financial debts increased through the holiday period.

The credit rating company has actually likewise developed exactly what it calls a TPR statistic. It decides the connection between the repayment measure as well as the defaults throughout the many debts. The TPR calculation separates a customer’s complete month-to-month credit repayments by the complete minimum due on every one of the customer’s credit items. The greater the TPR the much less likely a customer falls back on repayments.

Average Canadian Debt: How to calculate a TPR

A person making $400 in repayments on 3 cards when the accumulated minimum due was $200 would have a TPR of 2.0. A person with $1,200 in repayments with an accumulated minimum due of $200 would have a TPR of 6.0.

In its research, TransUnion discovered among Canadians with a TPR of less than 5 on their charge card there was a 1.77 high threat of vehicle finance default. This is specified as not paying back for 90 days or even more. When the TPR rose to greater than 15.0, the high threat of default went down to 1.4 percent.

Average Canadian Debt: What a TPR score tells us about you

“This may sound intuitive — consumers who are able to pay more usually have more liquidity and are less likely to miss payments. But it is assigning a number to this intuition that is important,” stated Ezra Becker, vice-president as well as head of TransUnion’s worldwide research. The research study validated that as TPR boosted, delinquencies decreased for charge card and vehicle funding.

Average Canadian Debt: You will never get out of debt only making the minimum monthly payment

Making the minimal repayment on a credit card leaves you little possibility of in fact ever getting out of financial debt. I understand that many times, people have actually been making minimal repayments on credit cards, by obtaining money from one card to pay a different one.

Credit card statements in Canada currently consist of a line that shows for how long it will take to repay your bank card expense in months. It assumes that you are making just the minimal repayment each month as well as not increasing the amount owing. There are no regulations as to exactly how they place it on the statement. It’s typically in the small print that many people overlook.

Average Canadian Debt: What should you do if you have too much debt

Get in touch with a licensed insolvency trustee. We’re government licensed and supervised. Our costs are government controlled and we’re subject to a stringent code of principles. We must also take necessary professional development courses yearly.

A qualified licensed insolvency trustee (bankruptcy trustee) MUST initially check every one of your alternatives with you in order for you to prevent bankruptcy. The trustee must as well find the very best bankruptcy choice option for you. Lots of times the trustee could effectively carry out a financial debt restructuring for you as an option to avoid bankruptcy.

Get in touch with Ira Smith Trustee & Receiver Inc. Allow us aid your recovery to financial health and wellness. Let us give you back tranquility of mind, body and soul, Starting Over, Starting Now. Call us today.

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