Tag: licensed insolvency trustee

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CONSUMER PROPOSAL VS BANKRUPTCY – BANKRUPTCY OR CONSUMER PROPOSAL IN CANADA

Consumer proposal vs bankruptcy faqs

We’ve prepared this online video to answer the consumer proposal vs. bankruptcy FAQs that we are normally questioned. This information will hopefully help you understand better exactly what a Consumer Proposal is and how it will also help you clear the money you owe and AVOID individual bankruptcy.

The most asked consumer proposal vs bankruptcy FAQs

Consider some of the advantages of the consumer proposal vs bankruptcy, such as:

  • You keep all of your assets
  • Actions against you by creditors, such as wage garnishments are going to be stopped
  • Unlike informal unsecured debt settlement, the consumer proposal is a forum where all of your creditors must handle your restructuring
  • You don’t need to declare bankruptcy

Additional reasons are:

  1. The opposed bankruptcy discharge process is not quick. Courts are backed up so your bankruptcy discharge hearing may not happen for many months. So think of 4 months or more being added on to the 21 or 36 months you have already spent in bankruptcy.
  2. The discharge hearing is a Court process. Sometimes, for valid reasons, the Court has to adjourn a hearing. What if it takes another 6 months for your discharge hearing to come back up again? You have now been in bankruptcy perhaps for over 4 years at this stage.
  3. If you could restructure by filing and completing a (consumer) proposal, you are not going to get an absolute discharge from the Court. The Court will most likely give you a conditional discharge. This is a discharge where you have to fulfill a condition being the payment of money to your LIT. The repayment will be in the form of monthly payments over a certain period; perhaps 12 months. You are now in bankruptcy, in this example, for close to 5 years.
  4. In a (consumer) proposal, the maximum time period for making the monthly payments that either the statute or your creditors, be prepared to wait is 60 months. However, there is nothing stopping you from paying it off early if you can. Consider the (consumer) proposal as someone giving you an interest-free loan for up to 60 months, and this loan is just a fraction of the total of your debts, and once you pay off this fraction, all of your debts (other than certain ones such as student loans, child support, and alimony) are all eliminated.
  5. In a (consumer) proposal, the self-reporting you need to do with your LIT is significantly less than in a bankruptcy. In a restructuring, all your LIT really cares about is that you don’t miss a payment.
  6. During your bankruptcy, you will have to report your monthly income and expenses to your Licensed Insolvency Trustee (“LIT“). The LIT is required to perform the surplus income calculation again and if your new income means that your surplus income obligation has increased, then you have to make up the difference by paying more surplus income to your LIT to get your discharge from bankruptcy. In a restructuring, the amount you initially agreed to pay that your creditors accepted, is the same amount you pay. There is no monthly reporting of your income to your LIT and no recalibration to an increased amount if your income rises.

If you win a lottery or receive an inheritance while being an undischarged bankrupt, you have to pay that over to your LIT for the benefit of your creditors. If the amount is more than needed to pay your creditors off in full, with interest, then you receive the difference back. In a (consumer) proposal restructuring, if you receive such an amount, good for you. You get to keep it and if you like, you can use part of it to pay off your (consumer) proposal early.

Excessive debt? Get the help you need now!

We hope you enjoy this video about consumer proposal vs bankruptcy. Click on this link to find out more about Consumer Proposals. You can also have many of the questions about bankruptcy answered by exploring our Bankruptcy FAQs link.

Instead of going deeper into debt and just putting your head inside sand like an ostrich, heed the advice of a licensed insolvency trustee and contact us today. Seek the help from a professional trustee, even if you’re definitely not considering bankruptcy at this stage.

We will evaluate your situation and provide help to arrive at the ideal solution for the problems, whether that solution is a bankruptcy alternative similar to credit counselling, consolidating debts or a customer proposal or individual bankruptcy. With immediate action as well as the right plan the Ira Smith Team can solve the financial problems Starting Over, Starting Now. We’re just a phone call away.

consumer proposal vs bankruptcy

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BUSINESS RESTRUCTURING PROPOSAL: REASONS WHY GOODWILL TORONTO IS NOT ALWAYS ENOUGH

The issue of a business restructuring proposal of Goodwill Toronto has recently been in the news. This video is an interview aired on TV Ontario, The Next Ontario show, with Dr. Sarah Kaplan, Professor of Strategic Management at Rotman School of Management, University of Toronto. The purpose of the interview is to obtain Dr. Kaplan’s views on the Goodwill Toronto closure of 16 Goodwill stores.

Toronto Goodwill thrift stores were operated, not unlike a Salvation Army thrift store, to raise funds to support the aims of the non-profit; in this case job skills and job creation for those who might otherwise be unemployable.

It takes money to restructure

We have all heard the expression “It takes money to make money”. I would like to make a slight twist on that expression by stating that it takes money to have a successful business restructuring proposal. Not only does the company and business have to be able to have sufficient cash flow in order to operate during the restructuring period, but there are also extraordinary one time expenditures related to the restructuring. Examples of such one time expenditures are reasonable one time exit fees to get out of uneconomical contracts, bonus payments to key personnel to ensure that they perform throughout the entire restructuring rather than resign for a new position elsewhere and professional fees.

Our Goodwill Toronto analysis

Our firm was consulted early in January to act as the licensed insolvency trustee in a business restructuring proposal of Goodwill Toronto. We spent half a day meeting with representatives of Goodwill Toronto in order to learn of their plight and to determine what sort of restructuring proposal might be possible.

In our meeting we learned that the main assets of Goodwill Toronto consisted of: (i) cash or liquid investments pledged to a Canadian chartered bank on account of business loans; (ii) accounts receivable with a certain percentage collectability; and (iii) inventory of items for sale, mainly used clothing, spread across 16 stores in leased locations.

We also learned that there were over 400 unionized employees, the majority of which had long term service with Goodwill Toronto. This is significant for three main reasons: (i) a viable restructuring proposal would be required to save the jobs of many, but probably not all of the employees; (ii) if the business restructuring proposal was unsuccessful, Goodwill Toronto would automatically be deemed to have filed an assignment in bankruptcy (a deemed assignment); and (iii) in a bankruptcy, the employees would have a claim under the Wage Earner Protection Program Act (WEPPA).

It takes money to implement a successful business restructuring proposal

So, why is this significant? The reasons it is significant for a restructuring vs. bankruptcy are:

  1. The secured portion of the employees’ WEPPA claim coming ahead of all creditors, including the chartered bank, totalled approximately $900,000.
  2. Next in priority was the claim of the chartered bank.
  3. There were no free assets after the above 2 claims that Goodwill Toronto could use to fund operations or the extraordinary expenses associated with a business restructuring proposal discussed above.

So as you can see, with no free cash flow, no excess realizable assets or a third party who could fund a business restructuring proposal (or in the worst case a bankruptcy proceeding), it would not be possible for a knowledgeable licensed insolvency trustee to agree to act as there was no source of funding available.

This is why the best of intentions and goodwill (toronto) is not always enough!

The Sarah Kaplan interview

Professor Kaplan raises many good points in this interview, including:

  1. We should first think about what the whole business model of the goodwill is.
  2. The goods that they get to sell are aimed at just generating revenues that allow them to perform their actual services like job.
  3. It may be that the retail environment is tougher in some ways if we think about the alternative for people who buy things at goodwill would be to go to discount stores or dollar stores.
  4. As the market is becoming more and more competitive we could imagine that people would not need to shop at Goodwill if they can get a t-shirt for $5 at WalMart.
  5. Goodwill’s in other areas though are doing fine so we may need to look a little bit more deeply into the problem.
  6. The entire board resigned so there could be some other management issues that led to Goodwill Toronto to be running a deficit.
  7. You have to be well managed and being a social enterprise is not an excuse to not be well managed; you need the same skills capabilities and maybe even more skills and more capabilities than in the for-profit world.
  8. The fact that they’ve taken this extraordinary really drastic measure leads me to believe that the difficult retail environment is not the whole story and therefore not the whole story for other social enterprises.

NOTE: After writing this blog, Goodwill Toronto filed an assignment in bankruptcy.

Is your company in need of a business restructuring proposal?

If your company is trapped with too much debt, you need a professional trustee to help you manage debt and create a viable business restructuring proposal (either under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act – BIA or CCAA) before it reaches a critical stage where bankruptcy is your only option. We have been able to help many companies carry out a successful business restructuring proposal. Successful completion of such a program, will free you from the burden of your company’s financial challenges to go on to be a productive, profitable employer allowing management to focus on business growth and not be plagued by debt problems.

Contact the Ira Smith Team today in order to look at the bankruptcy alternative of a business restructuring proposal. We can help and Starting Over, Starting Now you can be restored to financial health.

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Gambling and Consumer Proposals Ontario: 6 Differences With Bankruptcy

Gambling and Consumer Proposals Ontario: Introduction

Gambling and Consumer Proposals Ontario are treated very differently than in a Bankruptcy in Ontario. One of the most common questions that people in difficult financial situations ask is: what’s the difference between a consumer proposal and bankruptcy?

Personal bankruptcies and consumer proposals are two of the most common solutions available for personal financial issues. While both are designed to help people resolve debt issues and give users the necessary protection from creditors, learning what’s the difference between a consumer proposal and bankruptcy can help people make more informed decisions in the future.

  1. Gambling and Consumer Proposals Ontario: Consumer Proposal debt limitation

With a consumer proposal, it is only possible for you to claim it if your total debt does not exceed $250,000, excluding the debt owing on the mortgage(s) on your home. Additionally, you must be able to repay a part of those debts to apply.

  1. Gambling and Consumer Proposals Ontario: Creditor acceptance

However, your creditors must accept your proposal, as you do not automatically earn it upon signing up for the option. With bankruptcy, however, any person who owes their creditors more than $1,000 in debt is eligible to file without the need for creditor approval.

The ideal candidates for this situation are those who need some type of immediate financial relief and whose income and budget do not allow them to pay off the reduced amount agreed to in a consumer proposal, on a monthly basis, up to a maximum of 60 months.

  1. Gambling and Consumer Proposals Ontario: Fixed consumer proposal monthly payment vs. potential variable surplus income bankruptcy payment

In order to resolve the financial issues, you and your creditors need to agree to a proposed amount with a consumer proposal, hence the name of the program. This is a monthly amount that you need to pay consistently, but it stays the same for as long as the proposal is in effect. With bankruptcy, however, monthly payments may vary based on the amount of money that you make. The more that you regularly earn, the more you need to pay per month.

  1. Gambling and Consumer Proposals Ontario: Surrendering of your assets in a bankruptcy

With a consumer proposal, you do not need to surrender your assets. With bankruptcy, however, with only certain minor exceptions, you will have to surrender your assets to your licensed insolvency trustee. The Trustee sells them and will use the money to pay for the cost of administration. The Trustee might also pay a dividend to your unsecured creditors.

  1. Gambling and Consumer Proposals Ontario: Credit rating

With a consumer proposal, your credit rating will receive an R7. This indicates you have undergone such an agreement. It will remain for up to 3 years after paying off your loans. With bankruptcy, you earn an R9 rating. That is the worst that you can have. It can stay on your report for a period of 7 years.

  1. Gambling and Consumer Proposals Ontario: Debts from an addiction

The Bankruptcy and Insolvency Act and the Superintendent of Bankruptcy, are very concerned about debts that have arisen as a result of addiction. The Licensed Insolvency Trustee must ask questions to decide if any debts have arisen as a result of addiction.

Once so determined, in a bankruptcy, the licensed insolvency trustee must oppose the bankrupt’s discharge. In order to hope to get an absolute discharge from the Court, the bankrupt will have to go into a rehabilitation program. They will need to prove they have completed a recognized program and continue to seek help. The person will also need to show they are no longer spending money on such addiction.

These are all good things for the total rehabilitation of the individual. It differs from the treatment under a consumer proposal. The licensed insolvency trustee will still want to make sure that the individual is seeking help for their addiction. If you complete your consumer proposal payments there will never be a bankruptcy. Your consumer proposal is successfully completed. You also avoid the onerous issues of discharge from bankruptcy. The treatment of gambling and consumer proposals Ontario as compared to bankruptcy is huge for the individual.

Gambling and Consumer Proposals Ontario
Gambling and Consumer Proposals Ontario

Gambling and Consumer Proposals Ontario: Are you suffering from too much debt?

If you are an individual or company who needs to free themselves from the stress and strain of too much debt, and especially if you have been told your situation is hopeless because of an addiction, Ira Smith Trustee & Receiver Inc. can prepare and carry out the plan made just for you, to free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

If you’re experiencing serious debt issues for any reason, contact a professional trustee for a free, no-obligation consultation. The Ira Smith Team does not try to write new insolvency laws or tax laws. Rather, we will evaluate your situation within the existing statutes, and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Starting Over, Starting Now you can be debt-free with the help of a professional, licensed insolvency trustee. Contact us today.

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40 PARK LANE CIRCLE, 44 PARK LANE CIRCLE TORONTO FOR SALE: ARE FINANCIAL PROBLEMS CONTAGIOUS?

40 Park Lane Circle, 44 Park Lane Circle Toronto

40 Park Lane Circle, 44 Park Lane Circle Toronto for sale, 44 Park Lane Circle, 40 Park Lane Circle, debt, budget, collection agencies, trustee, financial plan, starting over starting now
40 Park Lane Circle, 44 Park Lane Circle

40 Park Lane Circle, 44 Park Lane Circle Toronto for sale: it seems that life in Toronto’s very exclusive Bridal Path is not always what it appears to be. We tend to categorize the people who own these properties as “the rich and famous” while in reality some of them are “not so rich and infamous”. Two Bridal Path properties have garnered quite a bit of attention #40 Park Lane Circle which used to be owned by Mahvash Lechcier-Kimel and #44 Park Lane Circle which used to be owned by Norma Walton and Ronauld Walton.

Are financial problems contagious?

Are financial problems contagious between 40 Park Lane Circle, 44 Park Lane Circle Toronto for sale or just the entire street? Of course not; but when you get caught up in a high flying Bridal Path lifestyle and have to support a massive property like either one of these, or any other property that the average person would describe as a mansion, it’s very easy to accumulate enormous amounts of debt, leaving you to house rich and cash poor. And, if the spending is not controlled and the debts keep piling up it can be easy to lose everything.

Everyone needs a realistic and proper budget

A realistic and proper budget should be an important part of your life. It will keep you from overextending yourself while trying to keep up with your next-door neighbours. Without a proper budget, it’s very easy to get caught up in a cycle of overspending – bigger houses, faster cars, and exotic vacations. The lure of luxury is intoxicating, especially in the low-interest-rate environment we currently live in; but what happens when you wake up and find letters from creditors in the mail demanding payment? How many of those demand letters do you think found their way to the mailboxes of these two luxury Bridle Path?

Call us for a no-cost consultation

So whether you are in over your head with debt due to the ownership of a massive property or for other reasons, such as you’re living a lifestyle that you can’t afford and are being hounded by creditors and collection agencies, now’s the time to contact a professional trustee today. The Ira Smith team can set you back on a path to financial health with immediate action and a solid financial plan. Starting Over, Starting Now you can live a debt-free life.

Call a Trustee Now!