Categories
Brandon Blog Post

STATUTE OF LIMITATIONS IN ONTARIO: THE UNCERTAINTY BEHIND ONTARIO’S LIMITATION PERIOD IN BANKRUPTCY NOW ABSOLUTELY SETTLED

statute of limitations in ontario
statute of limitations in ontario

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version, please scroll to the very bottom and click play on the podcast.

Statute of limitations in Ontario: The uncertainty behind Ontario’s limitation period for debt collection

Many individuals have a problem determining the statute of limitations in Ontario for financial debt collection under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. This confusion is all-natural because the time duration is computed based upon the moment when a creditor knew, or ought to have actually recognized that it had a claim to get legal advice on and initiate legal action for recovery.

The unpredictability emerges because the point you need to begin determining from is not necessarily a certain date you can indicate on the calendar. Rather, it may need to be presumed from the realities in any specific situation.

Why does the limitation period matter? It matters because if a creditor does not initiate legal action within the allowed period of time in Ontario within 2 years of knowing, or having out to have known, that it had a claim to litigate, the claim is then statute-barred. What this means is that the claim can no longer be pursued as a valid debt.

In this Brandon Blog, I describe what seems to be the final word now on the statute of limitations in Ontario and proving your claim in bankruptcy.

Statute of limitations in Ontario: Time limits, collections and bankruptcy

If you think it was confusing for only the average Ontario citizen, think again. It was also confusing for lawyers and licensed insolvency trustees. In my March 15, 2021, Brandon Blog titled “STATUTE OF LIMITATIONS: IS STATUTE BARRED DEBT A BASIC PROPER BANKRUPTCY CLAIM IN ONTARIO?“, I described the decision of Master Mills (as she then was) who has since been elevated to the position of a Judge.

Her decision released on March 8, 2021, in. the legal proceeding of In re: John Trevor Eyton, 2021 ONSC 1719 (CanLII), has changed the way we look at creditors who file a proof of claim in either a consumer proposal, restructuring proposal or a bankruptcy. Just to refresh your memory, she decided that if a claim was past the two-year limit under the statute of limitations in Ontario, then the creditor could not even file a proof of claim in bankruptcy on that debt.

In that blog, I also described what the statute means for debt collectors. I also said that the Eyton decision was going to be appealed. Well, it was and we now have the ruling from a Judge of the Ontario Superior Court of Justice (In Bankruptcy and Insolvency).

statute of limitations in ontario
statute of limitations in ontario

Statute of limitations in Ontario and bankruptcy

The appeal raises a rarely-considered and narrow issue: is a claim which is statute-barred under the statute of limitations in Ontario able to be included by a creditor in filing a Form 31 proof of claim in the bankruptcy of the debtor?

On May 19, 2021, Justice S.F. Dunphy released his decision regarding the appeal of the Eyton decision. I won’t repeat the original decision here because I discussed it in detail in my above-noted blog.

Suffice to say that the basis of this litigation is that the Trustee disallowed the creditor’s filed proof of claim because the last payment made on the debt was in April 2016. The creditor did not take legal action against the debtor.

This made the claim now more than two years old before the date of bankruptcy. Therefore the Trustee said since the claim is statute-barred, it cannot be a debt to be proved in this bankruptcy.

Statute of limitations inForm 79 Ontario: When it is too late to sue?

As previously mentioned, the creditor appealed the Trustee’s decision to Master Mills and lost. Now the creditor was appealing the Master’s decision to the Judge.

The issue to be decided was when:

  • it is far too late to take legal action to try to collect on the debt;
  • the debtor has actually submitted either for a restructuring proposal or for bankruptcy under the Bankruptcy and Insolvency Act (Canada) (BIA);
  • the debtor has actually included the amount of that creditor’s claim in the sworn Statement of Affairs; and
  • under the statute of limitations in Ontario, the financial debt is statute-barred yet is not extinguished,

can the creditor file a claim for that financial obligation in the insolvency proceeding?

statute of limitations in ontario
statute of limitations in ontario

Statute of limitations in Ontario and the Effect of Form 79 Statement of Affairs

The creditor’s first point in the appeal was that its debt was listed in the debtor’s sworn Statement of Affairs. Since the debtor recognized the debt, and the debt is not extinguished, then a proof of claim for the amount should be admitted by the Trustee.

The Judge did not think much of this argument. He stated that just because an amount is listed as a liability on the Statement of Affairs, each creditor is still required to prove their claim. The distinction is that a debtor may think that the debt is a provable claim, but a creditor still has to prove their claim. Stated another way, every claim is a potential claim until proven in accordance with the BIA.

In most restructuring proposals or bankruptcy administrations, the debtor’s listing of claims for at least the unsecured debt will never exactly match the final list of proven claims. That is just the way it is.

Can statutes of limitation barred claims be proved in bankruptcy?

As the BIA is federal law, then all provincial limitations laws in Canada are in play. Not just the two-year limitation period in the statute of limitations in Ontario. The creditor’s legal counsel advanced the following arguments regarding civil claims in bankruptcy:

  • The BIA does not define provable claims with any reference or qualification relating to any provincial applicable limitation periods.
  • The Supreme Court of Canada in Schreyer v. Schreyer, 2011 SCC 35 (CanLII), [2011] 2 SCR 605 decided that the meaning of the term provable claims in the BIA is that if the debt exists and can be liquidated and if the underlying obligation exists as of the date of bankruptcy and if no provincial exemption rule applies, the claim will be deemed to be provable.
  • The two-year limitation period in the statute of limitations in Ontario is procedural in nature because it does not extinguish the debt, it just says that a proceeding, such as the issuance of a statement of claim, cannot begin.
  • In one of the Ontario cases I mentioned in my earlier blog (Re: Temple), the Judge, in that case, found that a claim that was older than the basic limitation period in Ontario could be used as a debt owing for the purpose of launching a Bankruptcy Application seeking a Bankruptcy Order being made against a debtor.

The Judge was not persuaded by any of these arguments. He shot them down one by one. I can summarize all of his comments as follows. The purpose of the BIA is to have an equitable distribution of the bankrupt’s assets amongst the creditors, in the priority laid out in the BIA. The claims of all unsecured creditors are to be treated equally and each unsecured creditor is to receive their pro-rata share.

If a creditor who cannot enforce its claim in respect of payment can receive the same share as a creditor who still can enforce its claim for payment, then the claims of all unsecured creditors are not being treated equally.

So Judge Dunphy of the Ontario Superior Court of Justice (In Bankruptcy and Insolvency) dismissed the appeal. I have been told by the lawyer for the creditor who appealed the Master’s decision to the Judge that he does not feel he has a chance to win an appeal to the Court of Appeal for Ontario. So the law on claims barred by the statute of limitations in Ontario in an insolvency proceeding is now settled. Such a claim is not a claim provable and probably cannot even be used as the basis of a claim in a Bankruptcy Application.

statute of limitations in ontario
statute of limitations in ontario

What does this mean for proceedings and intended proceedings in Ontario?

As far as what this means for debt collectors trying to collect a claim in respect of any statute barred debt and for a debt collection agency, whether they are trying to collect on personal debts such as a credit card debt or on commercial debts, look at my previous blog where I discuss what it means for a debt collection agency.

As far as what it means for an insolvency process, there are several takeaways for me on this. First, whenever a creditor files a completed Form 31 proof of claim, there needs to be a schedule attached to the form that clearly shows how the debt is calculated. If there is not going to be any distribution to the unsecured creditors then there is no need to vet every claim to the nth degree.

However, where there will be a distribution to the unsecured creditors, then the Trustee is going to have to take great care in reviewing and vetting each claim. The Trustee will have to make a determination in each case if the claim is barred by the statute of limitations in Ontario or not. If there is insufficient detail in the schedule attached to the Form 31 proof of claim, the Trustee will have to go to each such creditor and get more details. I suspect there will be a whole lot more claims being disallowed than in the past.

Of course, each creditor whose claim has been disallowed by the Trustee because it is barred by the statute of limitations in Ontario has the right to appeal the Trustee’s decision to the Master sitting in the Ontario Superior Court of Justice in Bankruptcy and Insolvency).

Statute of limitations in Ontario: Get a personalized debt free plan today

I hope that you found this statute of limitations in Ontario Brandon Blog interesting. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

statute of limitations in ontario
statute of limitations in ontario

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

Categories
Brandon Blog Post

FILE FOR BANKRUPTCY: CAN YOU FILE FOR BANKRUPTCY CANADA FROM THE LUXURIOUS CARIBBEAN?

file for bankruptcy
file for bankruptcy

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the bottom and click play on the podcast.

File for bankruptcy introduction

You have all probably read about or heard about the Ontario judge who presided over Toronto-area court cases from the Caribbean. With today’s technology, it is electronically possible to attend Zoom court from anywhere in the world. That got me thinking. Can a Canadian file for bankruptcy from the Caribbean or anywhere else in the world?

So I did the research. In my opinion, using what is right now permissible technology, I think it is possible for a licensed insolvency trustee to either accept a Canadian filing bankruptcy or make it happen from the luxurious Caribbean or anywhere else outside of Canada. In this Brandon Blog, I will explain the bankruptcy process and why I think a person or company can file for bankruptcy from outside Canada.

You owe money: Considering bankruptcy?

To file for bankruptcy is a difficult decision to make, especially considering the financial and personal consequences it has on you and your family. But sometimes, there is no other option. If you find yourself unable to pay your debts, filing for bankruptcy may be your best bet for a fresh financial start. But before you decide to file for bankruptcy, you must assess your situation and understand the consequences.

It’s easy to be overwhelmed when you’re facing the prospect of filing for bankruptcy. Bankruptcy is a complicated legal proceeding, and the law has established procedures that must be followed in a specific order. If you’re considering bankruptcy, it’s important that you understand how the process works and the critical role a licensed insolvency trustee (formerly called either a trustee in bankruptcy or a bankruptcy trustee (Trustee) plays in that process.

As a Trustee, I can tell you that bankruptcy is a serious undertaking. It can have a big impact on you financially and emotionally, and there are many important decisions you must make before, during, and after the process. The decisions you make now will have a big impact on your future. As a Trustee, I always first try to help people and companies look at the alternatives to bankruptcy in order to avoid bankruptcy, rather than file for bankruptcy. Personal bankruptcy or business bankruptcies are truly a last resort when there is no other choice.

How to file for bankruptcy Canada: Let the licensed insolvency trustee no-cost consultation happen first

You may be considering filing for bankruptcy in Canada because you have debts that you can no longer pay. If you are drowning in debt, you might feel like there is no way out. But bankruptcy isn’t the end of the world. In fact, it can help many people get a fresh start by eliminating debts they can no longer pay. But as I always say, an individual or company may not need to file for bankruptcy. You have to consider all of your options. But in this section, we will focus on the bankruptcy filing process.

It all starts with you going to see a Trustee for a free, no-obligation initial consultation. The Trustee will listen to the facts you describe and ask you some questions to gain a better and deeper understanding of your specific situation. The Trustee will then tell you about the various debt relief options he or she believes are available to you. The Trustee will then provide you with his or her recommendation as to what is best for your situation and why.

Many factors will play into the Trustee’s recommendations, especially around your debt issues, including:

  • The types of debts.
  • Your unsecured debt vs. secured debts.
  • Do you have any student debt and if so, when did you graduate from the program that you acquired the student loan debt for?
  • The total amount of your Canadian debts and any foreign debt you may have.
  • Is Canada Revenue Agency hounding you for tax debt?
  • How appropriate are all the various debt options for your situation?
  • What percentage of debts are related to your assets that you cannot afford to lose.
  • What is the nature and extent of all of your assets?
  • Which assets are exempt from seizure and which are non-exempt?
  • Do you have any joint (co-signed) debt and how will your insolvency filing affect the other person?
  • Is the pressure from debt you are feeling right now require an immediate filing or could you wait a bit to see how some things play out over the short-term future?
  • Do you need immediate protection from debt and the related creditors or debt collectors taking collection actions right now such as trying to enforce against your assets, sue you or garnish your wages under a judgement?
  • How is your burden of debt currently affecting you and your family?
  • Comparing your current debt situation pre-filing to what your debt after filing and after your discharge will look like under each of the available alternatives.
  • How does the Trustee’s debt assessment factor into the realistic alternatives available to you to avoid bankruptcy?
  • Does your debt level at this stage that of overwhelming debts or are you right now only feeling mild indigestion? Perhaps you could work out of your debt problems on your own with just one or two strategies the Trustee will share with you at the no-cost consultation stage.

The Trustee considers all of this to see if you have an unmanageable debt to determine the best options available to you, including having you file for bankruptcy. You don’t want to do a consumer bankruptcy filing for yourself or have your company filing bankruptcy if it is not necessary to fix the debt problems.

How to file for bankruptcy – How the bankruptcy process starts

Alright, now for getting to answering the question I posed in the title and at the beginning of this Brandon Blog. Can a Canadian file for bankruptcy from the luxurious Caribbean? Can Canadian bankruptcy filings start from outside of Canada? To answer this question, we must look at what are the requirements of both the debtor, be it a person or company, and the Trustee, for a bankruptcy file to begin? All of my comments below, with appropriate amendments for context, will apply to:

  • an individual filing a debt settlement consumer proposal;
  • a person filing for personal bankruptcy;
  • either a person or a company filing a debt settlement financial restructuring proposal under Part III Division I of the Bankruptcy and Insolvency Act (Canada) (BIA); or
  • a company filing an assignment in bankruptcy.

Before the COVID-19 pandemic, the debtor and Trustee met in-person at the Trustee’s office in order for the Trustee to assess the debtor’s financial situation. If an insolvency process was required to help fix the debtor’s financial problems, then there was also an in-person meeting at the Trustee’s office to sign up the filing documents. Since the pandemic began, the Office of the Superintendent of Bankruptcy Canada (OSB) Messages to LITs concerning COVID-19 gave Trustees the authority to hold meetings by video conference. This is how the whole world has been operating for almost 1 year now. So this is how the insolvency process begins.

In addition to the initial consultation and signup. other meetings are also held via video meetings. Examples are a Meeting of Creditors and the two credit counselling sessions. Although the OSB’s guidance does say that Trustees can use methods other than in-person…..” for those areas where they have an approved resident or non-resident office…” keep in mind that a Trustee is licensed to act within an entire province! I won’t get into the semantics of the apparent conflict between the OSB’s guidance and its licensing approval process in this Brandon Blog.

file for bankruptcy
file for bankruptcy

Who can file for bankruptcy?

Any insolvent person can file for bankruptcy. Section 2 of the BIA defines an insolvent person as:

“insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

  • (a) who is for any reason unable to meet his obligations as they generally become due,
  • (b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or
  • (c) the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due;”
  • So to file for bankruptcy, amongst other requirements, the person or company must reside, carry on business or have property in Canada.

The locality of the debtor

Once all the documents are signed up to file for bankruptcy, the Trustee has to file them with the OSB in the “locality of the debtor“. Section 2 of the BIA defines “locality of the debtor” as:

“locality of a debtor means the principal place

(a) where the debtor has carried on business during the year immediately preceding the date of the initial bankruptcy event,

(b) where the debtor has resided during the year immediately preceding the date of the initial bankruptcy event, or

(c) in cases not coming within paragraph (a) or (b), where the greater portion of the property of the debtor is situated;”

If the debtor has been living in the Caribbean for 4 months immediately preceding the date of the filing of the assignment in bankruptcy, do they qualify? The answer is yes. Court decisions have determined that the word “during” means “at some time” during the year preceding the date of bankruptcy. It does not mean continuously. So during these pandemic days where we meet with everyone online, it is possible for the Canadian person to be in the Caribbean, meet with the Trustee for the initial consultation, decide on an insolvency process, in this case, bankruptcy and then initiate the bankruptcy proceedings, all from the luxury of a Caribbean vacation spot.

Let’s not delve into how a debtor who needs to file for bankruptcy can afford to live in the Caribbean or whose villa it is. That is beyond the scope of this Brandon Blog.

What about the Trustee?

The same way the debtor, or a judge, can transact business by video meeting from outside Canada, the same is true for the Trustee. As long as the Trustee can access all his or her office documents and systems online from outside of the office, there is no reason why the Trustee could not operate from the Caribbean as well to handle the person or company that wants to file for bankruptcy.

I am not advocating for this position, especially when you consider both the danger of and the appropriateness of travelling during these times of hardship and sacrifice. But since the question was “Can a Canadian file for bankruptcy from the Caribbean or anywhere else in the world?”, the answer is YES.

So whether you are a judge in the Ontario court, an insolvent debtor or a Trustee, I do not see any legal reason why someone could not file for bankruptcy from the Caribbean or anywhere else in the world.

File for bankruptcy summary

I hope you enjoyed the file for bankruptcy Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Categories
Brandon Blog Post

Debt problems: 8 Mistakes To Avoid When You Are Having Money Problems

debt problemsIntroduction

I have advised many entrepreneurs and non-business people who have debt problems. Many times, there are things they have done before coming to see me for a no-cost consultation that I wished they had not done. So, I thought I would discuss the 8 mistakes to avoid when you are having money problems.

1. Using money from your RRSP to pay debts

This can be a costly error. Using retirement funds to pay off debts can hurt you in numerous ways. The vast majority of retirement accounts are exempt. This means your creditors cannot get at them and you won’t lose them if you file for a consumer proposal or for bankruptcy (“an insolvency filing”).

Using retirement money to pay debts that can be discharged in an insolvency filing, like credit card and income tax debt, rarely makes sense. If you make an insolvency filing, you can eliminate the debt without spending any of your retirement funds. Using retirement funds to pay debt jeopardizes your future when you will be in more need of the funds due to lack of other income.

The withdrawal from the RRSP counts as income on which you will owe taxes and possibly even an early withdrawal penalty. Depending on how large the amount is, the added income and related income tax debt could affect the nature of your insolvency filing, the total amount you will still have to pay and provide problems with your discharge from bankruptcy.

2. Paying unsecured debts like credit cards, income tax and personal instead of secured debts like mortgages and car loans

Some creditors are so aggressive and sometimes predatory that they make you think that you must pay off their debts immediately or suffer severe consequences. Frightened by these tactics you may be tempted to pay their unsecured loans first and leave a secured loan unpaid. This creates multiple problems.

The two most common types of property subject to a security interest are probably the two most important things you own: your home and your car. A car loan creditor can repossess a car after one missed payment. If that occurs, you will lose your car and you will be responsible for any deficiency amount you still owe on your car loan after the car is auctioned off usually for significantly less than it is worth.

While a mortgage lender may not be able to kick you out of your home as quickly, arrears, a higher arrears rate of interest that kicks in upon default and late fees can significantly increase what you owe and make it very difficult to catch up. As a general rule, you should prefer to pay your secured creditors so you can keep your car and home, as opposed to paying unsecured creditors who don’t have near the recourse that a secured creditor has. This assumes that you will be able to afford the car and mortgage payments after we help you eliminate your debts and balance your budget.

In addition, if you decide to make an insolvency filing, the money paid to your unsecured creditors might as well have been thrown in the trash. Meanwhile, you will still have to catch up on your secured debts if you want to keep the property.

Finally, you might have to explain to the licensed insolvency trustee why you were able to pay certain creditors, but not others, so close to the filing. Such payments may be considered preferences that the trustee can force the creditor to return in a bankruptcy. It is always better to avoid such a problem and keep your secured debts current, even if you have to neglect the unsecured ones.

3. Maintaining accounts at a bank or other financial institution where you owe money

Almost every bank and financial institution will require you to sign an agreement authorizing the bank to automatically garnish your account if you miss a payment owed to it. In other words, if you have your mortgage and a savings account at the same bank and you miss a mortgage payment, the bank can take it from your savings account. This is called a setoff.

You should transfer your accounts, other than for the one account need to pay your monthly loan payment, to another institution where you don’t owe money to avoid this situation. You can keep a minimum amount in that one account and replenish it monthly so you can’t lose much in case of a setoff.

4. Using a second mortgage or home equity line of credit to pay off credit cards or other unsecured debt

As mentioned previously, credit card and other unsecured debt can be discharged in an insolvency filing. If you don’t make your mortgage payments, you could lose your home.

If the amount you borrow against your home doesn’t get you out of debt, you may have no choice but to end up not being able to afford the higher payments, in bankruptcy, having wasted money that could have been used elsewhere. To make matters worse, you have allowed a second lien against your home, which increases your monthly expenses and the length of time before you are able to pay your home off. In addition, the second mortgage, is a secured debt, will not be dischargeable in an insolvency filing and you may end up losing your home.

Don’t fall for the advertisements that suggest you consolidate your debts with a home equity loan. This strategy only makes sense after you have seen a licensed credit counsellor and have created and understood your balanced budget. The licensed insolvency trustees at Ira Smith Trustee & Receiver Inc. are also licensed, credit counsellors.

5. Not filing your tax returns

If you do not file your tax returns on time, you will have an issue if you make an insolvency filing. Your case will not be closed and your debts will not be discharged until you file your missing income tax returns with the Canada Revenue Agency (“CRA”) and they have a chance to review it. The CRA will not allow you to get through the insolvency filing without ensuring your returns have been filed.

It will also be impossible for us to properly advise you on whether you can avoid bankruptcy through a consumer proposal because will not know the total amount you owe to CRA. You always need to bring your income tax filings current BEFORE making an insolvency filing. Better not to have this problem delay a filing when you really need to protect yourself immediately at that time.

6. Telling a creditor that you intend to pay

When you have debt problems, it is always best not to say anything to a creditor than to promise the creditor that you will pay. Once you tell creditors to expect money, their harassment will grow every day they don’t receive the promised money.

7. Making a written promise to pay or making a partial payment on an old debt

Creditors are barred from collecting a debt once the limitation period has run. The limitation period on a particular unsecured debt incurred in Ontario is 2 years. Making a written promise to pay or making a partial payment on the debt (no matter how small) may reset the clock on the creditor’s ability to take legal action.

8. Ignoring pending lawsuits

Pending lawsuits on debts is an obvious sign that you have debt problems. Ignoring pending lawsuits is a huge mistake as these lawsuits lead to judgments. Upon receiving a judgment, the creditor will be able to garnish your wages and freeze your bank accounts.

If you are sued on a debt, it’s wise to at least consult a lawyer. You may have legal defenses. It is normally best to make an insolvency filing either before or immediately upon a judgment being made against you. That way, the creditor who received the judgment cannot enforce against your wages or bank accounts. You are protected in an insolvency filing by an automatic stay of proceedings.

Debt problems summary

I hope you found this Brandon’s Blog, What is a Consumer Proposal, helpful. Sometimes things are too far gone and more drastic and immediate triage action is required.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Call a Trustee Now!