Tag: Vaughan

HOW BANKRUPTCIES WORK FOR BUSINESSES IN TORONTO AND VAUGHAN ONTARIO CANADA

Post author By Brandon Smith
Post date December 17, 2018

How bankruptcies work for businesses: Introduction

Recently I have written several blogs focussing on insolvency and specifically the topics of consumer proposal and personal bankruptcy. To round out the discussion, this Brandon’s Blog discusses how bankruptcies work for businesses in Canada.

To be clear, the goal for either personal bankruptcy or corporate bankruptcy is to avoid bankruptcy. We have many tools in our toolbox to help people and companies avoid bankruptcy through restructuring. It is only when the person has stewed over their personal or business problems for too long that they come to us when it is too late. When it is too late, our hands are tied for creative problem-solving.

How bankruptcies work for businesses: Where we start

When a business owner comes to our office for a free consultation, we start with some basics. The first thing we do is ask certain questions that will allow us to get a financial snapshot of the business. We need to know about the assets and liabilities of the business.

We need to understand who all the creditors are and what the assets are. Which creditors may have a deemed trust claim or a secured claim against the assets. What is the total and nature of the unsecured debts?

That information tells us what choices we may have in helping the business recover: is an informal debt settlement restructuring possible;

what do we think about the likelihood of a formal restructuring under either the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA) or the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (CCAA); or is the business too far gone and therefore bankruptcy or just shutting down are the only options remaining.

How bankruptcies work for businesses: The proprietorship

If the business is unincorporated, then the person is carrying on their business in the form of a proprietorship. They are conducting business in their personal name. They may use a business style, but the legal reality of a proprietorship is that the individual, in their personal capacity, is carrying on business. So, the assets and liabilities that are created in the business, is owned by and is the responsibility of the person.

So, in this situation, it will be a personal insolvency discussion. The available remedies will be:

an informal restructuring;
(consumer) proposal debt settlement plan; or
personal bankruptcy

If you wish to find out more about personal insolvency, or how bankruptcies work for individuals, you can read some of my previous blogs. Good examples are WHAT IS THE DIFFERENCE BETWEEN BANKRUPTCY AND INSOLVENCY CANADA or CANADIAN DEBT SOLUTIONS: AVOIDING THE BANKRUPTCY PROCESS MIGHT BE THE RIGHT THING.

How bankruptcies work for businesses: Incorporated businesses

So now we have gone through the starting point I just described and we have determined that we are dealing with an incorporated business. We first focus on many issues before even discussing how bankruptcies work for companies.

First, we want to know how well does management understand its own business problems. If management does not have a good handle on their business problems, then they first need to get that deep understanding. They may know that monthly when looking at the numbers, they see that losses are continuing. Management, especially in an entrepreneurial or family-owned company, may feel ashamed because they don’t feel like they’ve made good decisions. Or they are aggravated and embarrassed because family members have told you the company is finished.

If you know in your heart that if you do not do something today, you may be risking the entire business.

How bankruptcies work for businesses: Know your numbers

To restructure companies for a successful turnaround, you first need to know your numbers and what they mean. The goal is to have the company producing sufficient cash levels and for everyone in the business to be earning a fair market-based income.

Management must look at the entire business and ask:

Where’s the profit?.
Do we have the money to actually run and scale the business?
What is getting in the way for the business to charge the revenue its products or services are worth?
Do we have the necessary cash and people resources will we need for a turnaround?
Are there lines of business or locations that need to be shed to increase profitability?
What expenses can we cut without harming our core business?
Which contracts do we need to cut to return to profitability and growth?
Do we have the proper reporting systems to give us the information we need to get prompt and accurate information?
Can we properly analyze the business issues and take the necessary corrective action?
Do we have the right people to carry on the business while implementing the turnaround?
Are we experienced enough to carry out our own turnaround or do we need outside professionals to help us with it?
Do we know what the impediments are to having a successful informal restructuring or do we need to look at a formal restructuring process?

How bankruptcies work for businesses: Now that we have the information…

These are the main questions that first must be answered for any business experiencing financial difficulties and facing insolvency. This is especially true for more complex companies. New systems or techniques may need to be implemented. If management can answer these questions for themselves, we want to hear those answers. If not, then a financial advisor may need to be retained. My Firm has been regularly retained, either by a company or its lender, to answer these questions and provide our recommendations. This kind of assignment is called a Business Viability Review.

After we provide our recommendations, we then work with the company to help them decide if they can carry out the recommendations and strategies themselves, or if they need our help to do so. If management can do it on their own, many times the lender will want us to stay involved by monitoring the company’s progress and reporting back to both the company and the lender.

How bankruptcies work for businesses: What if informal restructuring isn’t possible

The aim is always to avoid bankruptcy but it’s practical to recognize what it is and when it could be suitable. Companies are complex organisms. There may be the need to shed unprofitable contracts or long-term agreements that are just too expensive to continue with. It may be that disposing of such onerous contracts, leases or agreements is crucial to have a viable ongoing business. Many times a formal restructuring process is necessary to legally end those types of agreements.

It is the largest of company restructurings that we hear about in the news. From the United States, we read about Chapter 11 bankruptcy protection filings. In Canada, we read about restructurings under the CCAA. The largest of companies do not represent the size of the majority of Canadian companies.

For the biggest of companies, they can get relief and press back on creditors. There is an old adage which says: “If you owe the bank a bit of money, they own you. If you owe the bank a huge amount of money, you own them.”. In that way, in the largest company restructurings, the business can get a long time to either sell particular assets where the cash will help them rebound. They will also get the time they need to “rightsize” their employee numbers and shed unprofitable contracts. Loan changes with their secured lender or banking syndicate is also on the table and accomplished, more often than not. Their sheer size demands it and they get it.

How bankruptcies work for businesses: The reality for the majority of Canadian companies

Canadian business is full of entrepreneur-owned companies. So, that is what I will focus on in this Brandon’s Blog. If the business owner(s) come to us early enough, then we can decide if an informal restructuring will work or if not, what needs to be done in a formal restructuring. For any business that owes less than $5 million, it will normally be a BIA restructuring debt settlement proposal. We have done many successful company restructuring proposals under the BIA.

The answers to all the questions I posted above, will tell us what the restructuring needs to look like, how long it will take, and what our projections show about the profitability and viability of the business after a successful implementation of the restructuring plan.

How bankruptcies work for businesses: Company bankruptcy

In a company bankruptcy, the Licensed Insolvency Trustee (formerly called a bankruptcy trustee) (Trustee) takes possession of the assets, properties, and undertakings of the company. This assumes that there are not secured creditors who have all the assets of the company tied up. If there are, then the company may not need to go into bankruptcy. Rather, a secured creditor will take enforcement action by making a demand on the insolvent company. However, if the loan is not repaid in time, then the secured lender will appoint a receiver to take possession of the assets covered by the lender’s security. In Canada, this is normally a Chartered Bank and all the assets are secured.

Sometimes a company in receivership needs to also file for bankruptcy. The main reason would be to aid in maximizing the recovery on the assets. For example, the company is a retail chain. The only way to maximize the recovery is to run the business and sell off the assets from one or more stores. One way to guarantee quiet enjoyment of the stores the receiver needs to stay in is to have a bankruptcy. That is because, under Provincial commercial tenancy law, a trustee in bankruptcy has a certain time to stay in the premises, undisturbed, as long as the current rent is paid.

How bankruptcies work for businesses: Receivership or bankruptcy

Whether there is a receivership or bankruptcy, there are many steps that a receiver or trustee have in common. These include:

Determining whether or not the recovery on assets will be maximized if the business is operated by the receiver or Trustee.
What impediments are there in running the business?
What is the best way to sell off the assets? As an entire group or parcels of assets that make sense to keep together, or one by one?
Are there any third party assets not owned by the company on the premises or other locations?
Are there assets owned by the company in any other locations?
Is there proper insurance and physical security over the assets?
Once the assets are sold and the cash received, what claims are there against the funds and what is the priority of all the potential claimants?

How bankruptcies work for businesses: The entrepreneurial company reality

Most mid-size and small companies when they’re in difficulty, do not submit a formal restructuring plan or file for bankruptcy at all. They just shut down by closing the doors. The owner will get the company’s final income tax and other information returns completed and filed. They will make sure that employee wages are paid current. Hopefully, source deductions and HST are fully paid up.

Wages, source deductions and/or HST that are not fully paid, are a personal liability of the Directors of the company. In the entrepreneurial companies, the owner(s) have probably personally guaranteed bank loans, premises and equipment leases or have raised funds to start and invest in the business by taking out at a mortgage against their home.

This brings us to the reality of most midsize and small businesses. The business failure leads to personal insolvency issues. Many times we advise entrepreneurs that their company filing an assignment in bankruptcy is not necessary. Rather, they should just shut down their business and then we will deal with their personal insolvency issues. This will allow the entrepreneur to get a fresh start.

Now what is required is getting a job in their field and earning a salary without the risk and challenges of running their own business. Once they get their fresh start, are back on their feet and saved up some money, they can decide if being an employee or starting a new business will be their future.

How bankruptcies work for businesses: Does your company have too much debt?

Is your company insolvent and needs to restructure? Is your business viable but can only continue if it can reorganize its debt? We know your pain and understand the stress you are living with. The Ira Smith Team has decades and generations of experience in company restructurings of all sizes.

Contact the Ira Smith Trustee & Receiver Team. If we can meet with you in our free first consultation early enough, we can create and help you start a restructuring and turnaround plan. This will allow your company to continue to do business, create jobs and be profitable for many years to come.

Tags bankruptcy trustee, canadian debt solutions, Company bankruptcy, Corporate Bankruptcy, how bankruptcies work, how bankruptcies work for businesses, how bankruptcies work for companies, how bankruptcies work for individuals, how bankruptcies work in canada, Ira Smith Trustee, licensed insolvency trustee, receiver, receivershhip, restructuring, toronto, trustee, Vaughan

Brandon Blog Post

BANKRUPTCY TRUSTEE IN VAUGHAN BECOMES LICENSED INSOLVENCY TRUSTEE

Post author By Brandon Smith
Post date February 22, 2017

The bankruptcy trustee in Vaughan: Why did we transform into a licensed insolvency trustee?

Similar to caterpillars turning into butterflies, this bankruptcy trustee in Vaughan went through a metamorphosis. The Office of the Superintendent of Bankruptcy officially changed the name “bankruptcy trustee” to “licensed insolvency trustee” (LIT). As of April 1, 2017, all licensed trustees must have fully transitioned to the use of the LIT designation.

The purpose of this blog is to offer an overview of the Canadian insolvency process. Think of it as a bankruptcy and insolvency lesson 101.

What is the purpose of the Bankruptcy and Insolvency Act

Among the primary functions of this insolvency process, it is to release the individual from specific financial debts. It is to give a straightforward honest but unfortunate debtor a “new beginning.”. The debtor has no responsibility for discharged financial obligations.

A discharge is available to personal bankrupts, not to corporations. Although a personal case typically causes a discharge of financial debts, the right to a discharge is not absolute. Some sorts of debts may not be released. Section 178(1) of the Bankruptcy and Insolvency Act (Canada) (“BIA”) sets out the types of debts that are not released by the discharge of the bankrupt. The kinds of debts that are not released are:

1. child support and alimony;

2. fraud or near fraud;

3. debts arising from Court orders.

Where can I do some of my research?

You must initially do some of your own research to get an idea of exactly what your choices are. One place to start is our website to learn about:

Personal Services

Once you have a good handle on what to expect, speak to a LIT to begin discussing what actions you have to take next.

bankruptcy trustee in vaughan

The BIA

The BIA allows for a procedure that permits people and companies to be released from all of their financial debts through either:

a restructuring (Consumer Proposal, Division I Proposal or the Companies’ Creditors Arrangement Act) under secure arrangements of the federal insolvency statute; or
through bankruptcy by turning over their property to a licensed insolvency trustee to realize upon it for the general benefit of creditors.

Either way, the funds available for distribution to the creditors are paid out by the licensed insolvency trustee. It is according to the scheme of priority laid out in the BIA.

The Court will consider approving a repayment plan that will repay the approved part of the financial obligations in no more than 5 years. When you use the restructuring provisions of the BIA (Consumer Proposal or Division I Proposal), you need to have a payback strategy to show your creditors just how you are going to pay back your debts. A successful restructuring plan is an alternative to bankruptcy and will allow a person or company to avoid bankruptcy.

There are various rules and ways that must be followed. Your licensed insolvency trustee can go over all the issues with you and is there to aid you through the process.

How does it all work?

Canada’s insolvency legislation is designed for debtors experiencing financial problems who cannot pay their present financial obligations and don’t have enough cash flow to offer a restructuring plan to avoid bankruptcy. The aim is to get a release from their existing debts.

The premise of the BIA is that the individual must deliver all of his or her non-exempt assets to the licensed insolvency trustee. The trustee will sell them for distribution to the creditors. In return, other than for either secured debts or the class of debts not released by a discharge from bankruptcy discussed above, the person’s debts will be erased. The person will be able to maintain any type of property that is categorized as exempt under provincial regulations. In this way, a discharge allows the individual to return to society as discharged bankrupt. This allows the person to start all over again.

Your credit score

Filing in an insolvency process could impact your financial resources and credit score for years. You should very carefully weigh all your options before choosing the bankruptcy option. That is a discussion a licensed insolvency trustee will be happy to have with you and will help you in first trying to find one of the possible bankruptcy alternatives. Hopefully, together you can see which one is best for you. Only if there is not an available alternative, will the trustee recommend bankruptcy?

A current bankruptcy filing may prevent you from acquiring a mortgage or other financing for years. Credit card businesses will instantly end your charge cards when you file for bankruptcy. Likewise, if you are trying to find a job or rent a place to live, some employers or property owners might look unfavourably on a current bankruptcy filing. If other applicants are as qualified as you and don’t have a bankruptcy on their record, you probably won’t be chosen.

Fresh start

Bankruptcy permits people or companies that are unable to pay their debts to settle their monetary difficulties and start restoring their credit. Declaring bankruptcy will trigger the “stay of proceedings”, preventing creditors from starting or continuing any legal action to collect their debts.

A bankruptcy filing will stay on your credit report for about 7 years. Since many financial debts can be discharged in bankruptcy with certain exceptions, people can take certain steps to begin boosting their credit rating after filing for bankruptcy and for sure after obtaining their discharge.

What to do if you are experiencing financial hardship

I hope this bankruptcy trustee in Vaughan Brandon’s Blog was helpful to you. People experience financial hardship for many reasons. If you’re experiencing financial hardship and are looking for a way out, contact Ira Smith Trustee & Receiver Inc. With immediate action and the right plan for moving forward, we can set you on a path to debt-free living Starting Over, Starting Now. All it takes is one phone call.

vaughan bankruptcy Big canada ira smith trustee

Brandon Blog Post

#VIDEO-DEBT MANAGEMENT PROGRAMS REVIEW#

Post author By Brandon Smith
Post date August 3, 2016

Not all debt management programs are created equal

I have written previous blogs and made vlogs in the past about debt management programs, including:

Non-profit credit counselors are the good guys in the debt relief industry, which is otherwise full of players that are bursting with lies, scams and sketchy practices.

We have done the consumer proposal or bankruptcy of many people who first paid upwards of $2,500 to for profit “counselors” who ultimately did no more than pass the people on to a licensed insolvency trustee. They could have received a better service just going straight to a trustee for a free consultation.

Contrary to popular belief, a licensed insolvency trustee by law must first evaluate to see if the person can AVOID bankruptcy. So as you can see, not all debt management programs and companies are equal.

Do debt management programs work for everyone?

Debt management credit counselors need to acknowledge that their signature offering — the debt management plan — doesn’t work for everyone.

Debt management programs are promoted as the best bankruptcy alternative and an affordable way to pay back credit card debt. Borrowers make payments to the counseling agency, which then pays the creditors. Thanks to standing agreements that counselors have with credit card companies, the plans typically cut the interest rates, fees and payments that borrowers need to make. Full repayment of the debt often takes four to five years.

If borrowers make all the payments and repay the principal completely, debt management programs have much less impact on their credit scores than other types of debt relief.

Debt management programs were rampant in the United States

During the financial crisis in 2007-2009, debt management programs could be found on infomercials day and night. There were so many shady characters in the industry, the States ultimately had to enact laws to reign the shady operators in.

Needless to say, the shady operators did not give any worthwhile service for the fees they charged. But even the legitimate and well-meaning credit counselors mistakenly believed that their debt management programs were good for everyone. What I have found in my experience as a licensed insolvency trustee, is that no two people’s situations are the same, and one size does not fit all.

The story of Francine Bostick

Francine Bostick, a woman who lives in Kansas and paid off more than $120,000 in credit card debt in 2012, says she emerged with credit scores good enough to buy her first-ever new car. “It was exciting and made me a little nervous when they did the credit check,” says Mrs. Bostick, 66. “We got 0 percent interest for the life of the loan.”

This sounds great, but, yet Mrs. Bostick is also an example of what may be wrong with credit counseling because:

Her husband Jim Bostick had Alzheimer’s disease and she was his caregiver
Francine worked 12-hour days to earn the money to make debt payments while also caring for her increasingly incapacitated husband, who died in May
She had to do this when others her age were retiring
She never got to spend quality time with Jim before his death

If she lived in Toronto or Vaughan, what would I have advised?

Francine had never been bankrupt before and she did not have any significant assets. She and Jim rented – they did not own a home. In Francine’s case, she would not have had to make any surplus income payments in a bankruptcy. Although a consumer proposal is a great alternative to bankruptcy, Francine could not afford to complete one by only working one job in an 8-hour day, but she and Jim would be able to live on those earnings and their pensions.

In this case, I would have advised Francine that bankruptcy was a better alternative because:

Francine could have spent more time with her dying husband – that she can never get back now
She would received an automatic discharge after 9 months, and not worked so hard for several years
Just like in bankruptcy, she had no access to credit while in her debt repayment program
She could have begun rebuilding her credit faster after the bankruptcy
There is little leeway for missing a payment in debt management programs – many times if you miss 1 payment the entire program ends
Some people find that they simply can’t afford the payments on debt management programs, while others drop out because of setbacks such as job loss, unexpected expenses or illness
If you cannot fully complete the debt management programs, creditors can resume collection efforts, and borrowers also have flushed thousands of dollars down the drain and might not have enough money left to live on

What should you do if you have too much debt and are considering one of the debt management programs?

So, those thinking about debt management programs should book an appointment with an experienced licensed insolvency trustee first. (The first consultation is free.) That way, they will be able to understand the choice they make.

Ira Smith Trustee & Receiver Inc. brings a cumulative 50+ years of experience dealing with diverse issues and complex files and we deliver the highest quality of professional service. Contact us today and Starting Over, Starting Now you’ll be well on your way to overcoming your financial difficulties.

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

Tags Bankruptcy, Consumer Proposal, credit counselor, debt management programs, Ira Smith Trustee, licensed insolvency trustee, starting over starting now, surplus income, toronto, Vaughan

Brandon Blog Post

ARE YOU UP ON THE LATEST PHISHING SCAMS? YOU SHOULD BE!

Post author By Brandon Smith
Post date March 2, 2016

Beware of both old and new phishing scams

We previously published three blogs and one vlog warning about various phishing scams:

BEWARE OF PHISHING AND SPEAR PHISHING SCAMS
VAUGHAN DEBT COUNSELLING ADVISES BEWARE OF TAX SEASON SCAMS
CANADA REVENUE AGENCY SCAMS: IF YOU READ ONE ARTICLE, READ THIS ONE
#VIDEO: CRA PHONE SCAM: IF YOU WATCH ONLY 1 VIDEO WATCH THIS ONE!#

The vlog on the CRA phone scam was published in December 2015. Since then, I know several people who received the CRA phone scam call and one person who actually fell for it and was defrauded.

On March 1, 2016, the Bank of Canada issued a press release on the Bank of Canada email scam, one of the newest phishing scams around. Here is a copy of the Bank of Canada press release:

Since the CRA phone scam remains rampant and now there is a Bank of Canada email scam. we wish to again present to you, as a caution to remain vigilant, our video on the CRA phone scam and to protect yourself against the scammers.

What to do if you are a victim of one of the phishing scams and have too much debt

If you’ve been scammed by one of the phishing scams, and now are trapped with high debt that you cannot repay, you need a professional trustee to help you manage the situation before it reaches a critical stage where bankruptcy is your only option. We have been able to help many individuals carry out a successful debt settlement program. It all began with debt counseling. The first step is a realistic household budget. Successful completion of such a program, will free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

If you’re like many Canadians on the brink of a financial crisis, you need the help of a professional trustee today while you have options. The Ira Smith Team can help before disaster strikes. There is a way to manage debt Starting Over, Starting Now. Contact us today.

Brandon Blog Post

DEBT COUNSELING TORONTO SERVICES NEAR ME

Post author By Brandon Smith
Post date February 24, 2016

A debt settlement company is not debt counseling Toronto

Many реорlе thіnk trying a debt settlement company is all about debt counseling. Many people certainly will choose this bеfоrе they іnvеѕtіgаtе bаnkruрtсу. I’m hеrе to tell you that many of thеѕе companies are not асtіng in уоur best interest.

Many are paid—and in ѕоmе cases mаnаgеd—bу сrеdіt саrd companies.

According to a аrtісlе by fіnаnсіаl guru Dаvе Ramsey:

“Some of the thеѕе ‘counseling’ соmраnіеѕ wіthhоld credit саrd рауmеntѕ untіl the account іѕ thrее to ѕіx mоnthѕ past duе. Then, thеу соntасt the lender and nеgоtіаtе to ѕеttlе the bad debt….That’s hоw thеу get nеgоtіаtеd dіѕсоuntѕ on сrеdіt саrd debt. Card companies don’t ѕеttlе on your debts when уоur рауmеntѕ are on time. These ѕеrvісеѕ are аlwауѕ a bad іdеа, and ѕоmеtіmеѕ thеу’rе a complete ѕсаm.”

Dаvе Rаmѕеу isn’t the only one lееrу of these settlement companies. Gail Vaz-Oxlade writes:

“One of the big drawbacks of ….. debt management company is that they don’t come with any serious advice, so people often fulfill their commitment and then go right back out and rack up their debt again.”

The provincial governments have their own opinion. Most provinces have enacted legislation to try to thwart many of their shady practices. Stay away from debt settlement companies. Don’t be afraid to go to a LIT for a free consultation at the first sign of financial trouble.

Why credit counseling?

If done properly, credit advisory services take a holistic approach. It looks at your specific situation, your family, your personal financial objectives and you a person, not just another money spending machine. It takes all of your needs (as opposed to your desires) into account. It also looks into the future as to where you and your family want to be, in order to provide a clear road map to assist you to achieve your goals.

Does a Licensed Insolvency Trustee perform such services?

If you are experiencing financial problems, do not be afraid to consult with a Licensed Insolvency Trustee. By statute, the Licensed Insolvency Trustee is required to do an assessment of your entire asset and liability situation. If the assessment results in a finding that your best option is to work with a qualified counsellor with ongoing follow up, then you will be referred to an appropriate service and you will stay away from any bankruptcy proceeding.

On the other hand, if the Licensed Insolvency Trustee feels that you won’t be able to settle your debts on your own, but it is still early enough for settling with your creditors as an alternative to bankruptcy, then the Licensed Insolvency Trustee will recommend that you settle your debts (if less than $250,000) through a consumer proposal, or (if your debts are $250,000 or greater) through the other proposal provisions of the Bankruptcy and Insolvency Act (Canada). The earlier you recognize that you have debt problems, the more options there will be available to you to avoid bankruptcy.

The next step

As seen in the video, even people with a good profession and high income can experience a bump in the road. If you’re trapped in high household debt, you need a professional trustee to help you manage the situation before it reaches a critical stage where bankruptcy is your only option.

We have provided debt counseling services to many people. This has led us to help them carry out a successful debt settlement program. It all began with debt counseling. The first step is a realistic household budget. Successful completion of such a program will free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

Tags avoid bankruptcy, Bankruptcy, Consumer Proposal, debt counseling, debt counseling toronto, debt counseling vaughan, financial trouble, Ira Smith, Ira Smith Trustee, professional trustee, Vaughan

Brandon Blog Post

CONSUMER PROPOSAL VS BANKRUPTCY – BANKRUPTCY OR CONSUMER PROPOSAL IN CANADA

Post author By Brandon Smith
Post date February 17, 2016

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:

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.
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.
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.
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.
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.
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.

Tags avoid bankruptcy, Bankruptcy, bankruptcy discharge, bankruptcy discharge process, Consumer Proposal, consumer proposal vs bankruptcy, insolvency, Ira Smith Trustee, licensed insolvency trustee, professional trustee, toronto, Vaughan

Brandon Blog Post

SENIORS DEBT RELIEF CANADA: STRESS FREE THROUGH SENIORS DEBT RELIEF CANADA

Post author By Brandon Smith
Post date October 28, 2015

SENIORS DEBT RELIEF CANADA: STRESS FREE THROUGH SENIORS DEBT RELIEF CANADA

The topic of seniors debt relief Canada has been described in the media frequently over the last year. Last week we published our blog THE MODERN RULES OF SENIORS CARRYING DEBT. Before that we’ve done a series of blogs about seniors in debt:

Many Canadian seniors are struggling financially in what should have been a carefree retirement. They desperately need seniors debt relief Canada.

However, the problem with seniors carrying indebtedness into retirement is not going away. In fact, seniors have now become so accustomed to living this way that they are using it to finance their lifestyles instead of downsizing or cutting back on expenses.

The full story has not yet played out. Given that retirees and working seniors are less likely to be taking steps to accelerate their liabilities repayment, the stress on them will get worse.

The number of seniors in this situation is not only in low rate mortgages right now but is also increasing in other credit categories, such as auto loans, bank loans, lines of credit and credit cards.

This can be a recipe for disaster if interest rates rise. Where is the extra income going to come from? If you’re one of these seniors or anyone else who is relying on credit to support their lifestyle, give the Ira Smith Trustee & Receiver Inc. Team a call before interest rates rise and while you still have options. With immediate action and the right plan, we can solve your financial problems and set you on a path to a debt free and stress-free living Starting Over, Starting Now.

seniors debt relief canada — Seniors debt relief Canada – Picture courtesy of The Globe & Mail

Tags auto loans, bank loans, Bankruptcy, credit card debt, increase of seniors carrying debt, Ira Smith Trustee, Lines of Credit, retirees, seniors are carrying debt, seniors carrying debt, seniors debt relief canada, seniors in debt, stress of carrying debt, Vaughan, vaughan bankruptcy

Brandon Blog Post

THE NEW ECONOMIC ATTACK IS ON CANADA MIDDLE CLASS

Post author By Brandon Smith
Post date September 30, 2015

Canada middle class – what is your definition?

My definition of Canada middle class is the group under a new economic attack because of housing costs. Affordable rental housing for Canadians has become an oxymoron in term. In fact, rental housing has enslaved young Canada’s middle class, forcing them to spend so much of their incomes on a place to live, that many are in danger of becoming homeless.

What Statistics Canada says

According to the experts, spending more than 30% on housing is unaffordable. This doesn’t take into account food, clothing, transportation or any of the other necessities of life. According to data from Statistics Canada:

There are more than 4 million renters in Canada
Over 40% of all renter households are spending in excess of 30% of their gross income on rent
20% of all renter households are spending in excess of 50% of their gross income on rent which housing advocates say puts them at high risk of becoming homeless
In Vancouver and Toronto, 45% of renter households are spending more than 30% of their income on rent

Not just a big city problem for Canada middle class

The lack of affordable rental housing is not a problem exclusive to the big cities. Renters in small cities across Canada are also struggling financially. In the Toronto area, average rents are higher in the suburban communities of Milton and Vaughan than in the City of Toronto. And, Mississauga ranked among the worst cities in the country when it comes to a shortage of affordable rental housing.

Traditionally people rented apartments to save money and eventually buy a house. With young Canada middle class enslaved by rental prices, buying a house isn’t even on their radar; keeping a rental roof over their heads is a primary concern.

What to do if you have debt problems

Are you living paycheque to paycheque because you’re enslaved by rental prices? We can’t help you find a cheaper place to live, but we can help you deal with what may seem to be insurmountable debt. Call Ira Smith Trustee & Receiver Inc. today. We’ll review your file and come up with a plan so that you can be Starting Over, Starting Now.

Tags Bankruptcy, Canada middle class, Canada’s middle class, Debt, definition of Canada middle class, living paycheque to paycheque, Middle class, renter households, starting over starting now, Statistics Canada, toronto, trustee, Vaughan, young Canada’s middle class

Brandon Blog Post

BANKRUPTCY CANADA FAQ WILL CHANGE YOUR LIFE

Post author By Brandon Smith
Post date May 26, 2015

Bankruptcy Canada FAQ could change your life, but only if you took positive action after reading it. Can the Better Business Bureau (BBB) change your life? Definitely. We all think that the BBB could only change your life in a positive way. However the BBB could also change your life if it helped one of its member’s perpetrate a scam. If you suffer financial damage by relying on a BBB member’s scam, then you very well may have to read our Bankruptcy Canada FAQ to consider getting out of the debt the scam placed you in. In the past we’re warned you about several scams:

As consumers we all try to be diligent about companies we choose to do business with and it’s quite common to check with the BBB to see how they’re rated. However, it’s a common misconception that the BBB is a government agency that advocates and protects the consumer. We should be wary about relying on the BBB ratings. Any scam will hurt you and if it has caused a serious debt problem, then you will have to read our Bankruptcy Canada FAQ in order to change your life for the better.

What is the BBB?

The BBB is NOT a government agency.
It is a FOR PROFIT
It is NOT a consumer watchdog.
BBBs are franchises designed to generate profit.
They sell advertising and memberships to companies.

How does a company acquire a BBB accreditation? Businesses pay a fee for accreditation review and monitoring for continued compliance and for support of BBB services to the public.

How is the BBB funded? The BBB is funded from the advertising and membership dues paid by its accredited companies.

Could this create a conflict of interest? This has been an ongoing issue and many are of the belief that this is a conflict of interest. Do you believe the BBB can accurately “rate” a company that is one of its paying clients? In addition only companies that are BBB members can defend their reviews and you can’t post a positive review about a company that is not a BBB member, so it’s not a level playing field.

Here is a perfect example: SaveOnResorts.com is rated an A+ by the BBB. Yet many websites including Scam-Detector, RipOffReport and ComplaintsBoard have numerous complaints against them dating as far back as 2007, and call it a travel scam. Even TripAdvisor advises caution when booking with SaveOnResorts. Logic dictates that there is no conceivable way that SaveOnResorts.com could have an A+ rating. Yet, they are a paying member of BBB and enjoy an A+ rating, which no doubt has cost many people money. There is nothing new about a travel scam, but one that comes with a glowing report from the BBB is a prime candidate to have to drive you to read our Bankruptcy Canada FAQ.

It seems that having a BBB accreditation will not prevent you from being ripped off by that BBB accredited member! Buyer Beware! Don’t take things for granted and always do your due diligence. Such a scam could cause you serious financial harm, forcing you to consider all options in dealing with your debt, including reading our Bankruptcy Canada FAQ to find out more about the bankruptcy process.

We hope that you will never be a victim of a scam or experience serious financial difficulties for any reason. But if life throws you a curveball, find out information by reading our Bankruptcy Canada FAQ and then contact the Ira Smith Team today. We can help put you back on the road to financial health with practical advice and a solid financial plan. You can also gain quick answers to find out all about the personal bankruptcy process by reading our Bankruptcy Canada FAQ. Starting Over, Starting Now you can put your money problems behind you and regain a great quality of life.

Watch for our next blog when we’ll be discussing Disaster Relief Scams.

Tags Bankruptcy, bankruptcy canada faq, BBB, Better Business Bureau, financial plan, personal bankruptcy, RipOffReport, SaveOnResorts, scam, starting over starting now, travel scam, Vaughan

Brandon Blog Post

VAUGHAN BANKRUPTCY TRUSTEE WARNS OF DANGERS IN TAKING FREE TAX ADVICE

Post author By Brandon Smith
Post date March 3, 2015

As a Vaughan bankruptcy trustee, we always warn our clients that this time of year can be dangerous. In our last blog we warned you about tax season scams. This week your Vaughan bankruptcy trustee is warning you about the dangers of taking free tax advice. There are many places to get free tax advice, and quite frankly all of them are dubious. Unless the person giving the advice is a trained and licensed financial services professional, the only thing you should do with free tax advice is ignore it, or you could find yourself in a worse financial and legal position than you started in.

It seems that everyone is looking ways to avoid paying income tax. As we discussed in a previous blog The Tax Lawyer; Even A High Profile Tax Fighting Lawyer Has To Pay His Income Tax, there is no miracle cure or quick fix when you owe money to the Canada Revenue Agency (CRA). Yet that doesn’t stop people from posting all sorts of questions on the Internet looking for free advice. The problem is when you post questions in online forums and chat rooms you have no idea who is answering your question and giving you advice. As a Vaughan bankruptcy trustee, many times we are shocked to see the kind of advice is being posted on the Internet also about frequently asked bankruptcy questions.

Although we do not provide income tax advice, as a Vaughan bankruptcy trustee, we do set filters to obtain postings having to do with income tax debt; many questions and answers regarding income tax are posted. The Internet allows for anonymity and the person who has identified himself/herself as a tax professional may in reality be a teenager having some fun. Or worse, perhaps it is a scammer or malware malcontent collecting email addresses! Although the Internet can be a valuable resource, online forums and chat rooms are not the places to seek tax advice. The same applies to well meaning friends, family and colleagues unless they are trained financial services professionals.

Seek financial advice from a trained, experienced, licensed professional ONLY! If you’re experiencing financial difficulties for any reason including monies owed to the CRA contact your Vaughan bankruptcy trustee, Inc. today. Starting Over, Starting Now you can put your financial difficulties behind you.

Tags Bankruptcy, Canada Revenue Agency, CRA, frequently asked bankruptcy questions, income tax, income tax debt, starting over starting now, tax, tax advice, tax professional, tax season scams, trustee, Vaughan, vaughan bankruptcy trustee