{"id":10429,"date":"2021-03-03T19:36:50","date_gmt":"2021-03-04T00:36:50","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=10429"},"modified":"2021-03-03T19:36:54","modified_gmt":"2021-03-04T00:36:54","slug":"bankruptcy-filings-canada","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/bankruptcy-filings-canada\/","title":{"rendered":"BANKRUPTCY FILINGS CANADA:  THE SENSELESS TOP 12 MISTAKES TO AVOID WHEN CONSIDERING FILING FOR BANKRUPTCY"},"content":{"rendered":"<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">Ira Smith Trustee &amp; Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/span><\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/0CGqioh-N_c\" width=\"860\" height=\"484\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h2 id='bankruptcy-filings-canada-introduction'  id=\"boomdevs_1\"><b><i>Bankruptcy filings Canada<\/i><\/b><b> introduction<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">It&#8217;s not easy to admit that you&#8217;re in over your head with debt.\u00a0 One way Canadians can fix their debt problems is through <\/span><i><span style=\"font-weight: 400;\">bankruptcy filings Canada<\/span><\/i><span style=\"font-weight: 400;\">. \u00a0 Availing yourself of an <\/span><i><span style=\"font-weight: 400;\">insolvency process<\/span><\/i><span style=\"font-weight: 400;\"> can feel like an enormous weight off your shoulders.\u00a0 Unfortunately, that relief is often short-lived if did one or more of the things you should not do before taking the plunge into the <\/span><i><span style=\"font-weight: 400;\">bankruptcy process<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this Brandon&#8217;s Blog, I discuss the <\/span><i><span style=\"font-weight: 400;\">common bankruptcy mistakes<\/span><\/i><span style=\"font-weight: 400;\"> people make before they seek the advice of a <a href=\"https:\/\/www.ic.gc.ca\/app\/scr\/tds\/web\/\" target=\"_blank\" rel=\"noopener\"><em>licensed insolvency trustee<\/em><\/a> (formerly called a <\/span><a href=\"http:\/\/www.irasmithinc.com\/blog\/bankruptcy-trustee-lit\/\"><i><span style=\"font-weight: 400;\">bankruptcy trustee<\/span><\/i><\/a><span style=\"font-weight: 400;\">) (Trustee).\u00a0 Stay away from these <\/span><i><span style=\"font-weight: 400;\">common mistakes<\/span><\/i><span style=\"font-weight: 400;\"> and you should have a much easier time returning to a solvent and stress-free life.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What should you not do before filing bankruptcy?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you&#8217;re considering <em><a href=\"http:\/\/www.irasmithinc.com\/blog\/filing-for-bankruptcy-in-ontario\/\">filing for bankruptcy<\/a><\/em>, be aware that there are some things you should not do, and others you should do, to protect yourself and your assets. The <\/span><i><span style=\"font-weight: 400;\">bankruptcy filings Canada<\/span><\/i><span style=\"font-weight: 400;\"> mistakes I am going to explain in this Brandon&#8217;s Blog are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trying to hide assets from your creditors:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Transferring assets to a third party (such as a family member or friend).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Disposing of assets, for example, by giving them away or selling them for far below their fair market value.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Failing to declare all of your assets or all of your liabilities on your sworn Statement of Affairs under <\/span><i><span style=\"font-weight: 400;\">penalty of perjury<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Staying clear of loading up on <\/span><i><span style=\"font-weight: 400;\">credit card debt<\/span><\/i><span style=\"font-weight: 400;\"> or other unsecured debts.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Paying off family debts a <\/span><i><span style=\"font-weight: 400;\">short period of time<\/span><\/i><span style=\"font-weight: 400;\"> before <\/span><i><span style=\"font-weight: 400;\">declaring bankruptcy.<\/span><\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Waiting too long to consult with a Trustee.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Taking extra taxes out of your paycheque.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cashing in or making early withdrawals from retirement accounts.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Refinancing your mortgage or increasing <\/span><i><span style=\"font-weight: 400;\">lines of credit<\/span><\/i><span style=\"font-weight: 400;\"> against your <\/span><i><span style=\"font-weight: 400;\">real estate<\/span><\/i><span style=\"font-weight: 400;\"> to settle unsecured financial obligations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Keeping debt that you cannot afford to.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Making the wrong type of filing.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">By avoiding the things you should not do, you will be the honest but unfortunate debtor.\u00a0 That is the type of person that the Canadian <\/span><i><span style=\"font-weight: 400;\">bankruptcy law<\/span><\/i><span style=\"font-weight: 400;\"> is meant to help.<\/span><\/p>\n<h2 id='common-mistakes-trying-to-hide-assets'  id=\"boomdevs_2\"><b><i>Common mistakes<\/i><\/b><b>:\u00a0 Trying to hide assets<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">If you\u2019re thinking about <\/span><i><span style=\"font-weight: 400;\">declaring bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> because you\u2019re overwhelmed by your debt, it\u2019s important to know that you cannot hide assets from creditors during the <\/span><i><span style=\"font-weight: 400;\">bankruptcy process<\/span><\/i><span style=\"font-weight: 400;\">. There are a number of ways people try to do this.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The most common ones in <em>bankruptcy filings Canada<\/em> are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Transferring assets to a third party (such as a family member or friend) on the eve of bankruptcy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Disposing of assets, for example, by giving them away or selling them for far below their fair market value.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Failing to declare all of your assets or all of your liabilities on your sworn Statement of Affairs.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It&#8217;s also important to understand that if you choose to hide assets from the court and your creditors, it\u2019s likely that they\u2019ll find out\u2014and they will not be happy when they do!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Transfers of assets or disposing of them for less than fair value is caught under the category of transfers at undervalue.\u00a0 The Trustee can attack any transfers at undervalue and will be successful in getting a judgement against the party you made the transfer to.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">A <\/span><i><span style=\"font-weight: 400;\">transfer at undervalue<\/span><\/i><span style=\"font-weight: 400;\"> is defined in section 2 of the <\/span><i><span style=\"font-weight: 400;\">Bankruptcy and Insolvency Act<\/span><\/i><span style=\"font-weight: 400;\"> (Canada) (BIA) as disposing of property or providing services for which either no value is obtained by the debtor\/bankrupt or for which the value gotten by the debtor\/bankrupt is obviously less than the fair market value of the consideration handed over by the debtor.\u00a0 You certainly won&#8217;t be doing your friend or family member any favours by having done this.<\/span><\/p>\n<h2 id='bankruptcy-filings-canada-debtor-trying-to-hide-assets-usually-doesn-t-work-and-could-be-counterproductive-due-to-exemption-categories'  id=\"boomdevs_3\"><b><i>Bankruptcy filings Canada<\/i><\/b><b>:\u00a0 Debtor trying to hide assets usually doesn&#8217;t work and could be counterproductive due to exemption categories<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Failing to declare assets may or may not work.\u00a0 If you are caught, again, this spells trouble.\u00a0 The Trustee is required to perform an investigation and many times there are tell-tale signs that not all assets have been declared.\u00a0 I have many times found when reviewing a bankrupt&#8217;s bank statements, regular automatic withdrawals for life insurance, yet no life insurance policy or CSV in a life insurance policy was declared.\u00a0 The same goes for vehicle insurance premiums.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Contrary to popular belief, many times when a person tries to scam the <em>bankruptcy filings Canada<\/em> system, it is not a very sophisticated one.\u00a0 In fact, most times they are just plain dumb and the person is exposed.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The irony is that if they listed all of their assets, the ones they tried to hide may very well have fit under one of their <\/span><i><span style=\"font-weight: 400;\">bankruptcy exemptions<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 Perhaps the insurance policy was a term life policy, so it had no CSV.\u00a0 Or, when the policy was first taken out, the person designated a spouse or child as their <\/span><i><span style=\"font-weight: 400;\">designated beneficiary<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In that case, the entire CSV or the proceeds from the life insurance policy if the bankrupt died, would be <\/span><i><span style=\"font-weight: 400;\">exempt from seizure<\/span><\/i><span style=\"font-weight: 400;\"> by the Trustee.\u00a0 The same is true with a vehicle.\u00a0 Perhaps their equity in the vehicle would fit under their bankruptcy exemption;\u00a0 either in its own right or after taking into account any loan secured against the vehicle.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So with the possibility of no loss of the asset due to a bankruptcy exemption, the person has committed a bankruptcy offence.\u00a0 Or, the asset involved in the transfer under value could have been saved in some way if the debtor had only made full disclosure to the Trustee before filing.\u00a0 Many times we can help a person perform a successful restructuring consumer proposal and keep their assets, rather than losing them in <\/span><i><span style=\"font-weight: 400;\">bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 It is possible to <\/span><i><span style=\"font-weight: 400;\">avoid bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> and not commit a <\/span><i><span style=\"font-weight: 400;\">bankruptcy offence<\/span><\/i><span style=\"font-weight: 400;\"> just by being open and honest and getting good advice ahead of time.<\/span><\/p>\n<figure id=\"attachment_10433\" aria-describedby=\"caption-attachment-10433\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-10433 size-medium\" title=\"bankruptcy filings canada\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg\" alt=\"bankruptcy filings canada\" width=\"300\" height=\"169\" data-wp-pid=\"10433\" data-pin-nopin=\"nopin\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-10433\" class=\"wp-caption-text\"><em>bankruptcy filings canada<\/em><\/figcaption><\/figure>\n<h2 id='common-mistakes-do-not-incur-any-additional-debts-like-maxing-out-credit-cards-before-filing-bankruptcy'  id=\"boomdevs_4\"><b><em>Common mistakes<\/em>:\u00a0 <\/b><b><i>Do Not Incur Any Additional Debts like maxing out credit cards before filing bankruptcy<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">You\u2019re probably already knee-deep in debt and have been for quite some time. Maybe you\u2019ve tried to get out from under it by yourself but it just hasn\u2019t worked. It doesn\u2019t mean you\u2019re a bad person, it just means you need a fresh start, and that\u2019s what a Trustee can do for you. If you\u2019re thinking about filing any <\/span><i><span style=\"font-weight: 400;\">type of bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> under the <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\">, the first thing you need to do is stop incurring new debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The last thing you need is more debt and more debt collectors calling you.\u00a0 As well, you may very well be committing a bankruptcy offence, especially if you take on the new debt within 3 months of the date of bankruptcy.\u00a0 You were probably insolvent at that time, and taking on more debt, under those circumstances, is a bankruptcy offence.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">What are the ramifications?\u00a0 Your Trustee will have to oppose your discharge and the creditor(s) who realize that their debt was further run up when you knew, or ought to have known, that you were going bankrupt will also oppose.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So especially as a first-time bankrupt, instead of possibly going through the <\/span><i><span style=\"font-weight: 400;\">bankruptcy process<\/span><\/i><span style=\"font-weight: 400;\"> unscathed and discharged in as early as 9 months, you will be <\/span><i><span style=\"font-weight: 400;\">undischarged bankrupt<\/span><\/i><span style=\"font-weight: 400;\"> perhaps for years and then face the potential of harsh repayment conditions in order to get a <\/span><i><span style=\"font-weight: 400;\">bankruptcy discharge<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 It really isn&#8217;t worth it.<\/span><\/p>\n<h2 id='common-bankruptcy-mistakes-do-not-repay-relatives-or-insiders'  id=\"boomdevs_5\"><b>Common <\/b><b><i>Bankruptcy mistakes<\/i><\/b><b>:\u00a0 <\/b><b><i>Do Not Repay Relatives or Insiders<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The <\/span><i><span style=\"font-weight: 400;\">BIA<\/span><\/i><span style=\"font-weight: 400;\"> is a federal law that governs <\/span><i><span style=\"font-weight: 400;\">bankruptcy and insolvency in Canada<\/span><\/i><span style=\"font-weight: 400;\">. This Act is a comprehensive piece of legislation that is meant to protect both <\/span><i><span style=\"font-weight: 400;\">creditors<\/span><\/i><span style=\"font-weight: 400;\"> and <\/span><i><span style=\"font-weight: 400;\">debtors<\/span><\/i><span style=\"font-weight: 400;\"> while providing the tools needed for a debtor to start over with a clean slate.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><em>Bankruptcy filings Canada<\/em> are administered under the Canadian <\/span><i><span style=\"font-weight: 400;\">bankruptcy law<\/span><\/i><span style=\"font-weight: 400;\"> has rules and regulations regarding how you can file and proceed with a bankruptcy application.\u00a0 One of them is that you are not allowed on the eve of bankruptcy to prefer any of your creditors by repaying some, but not others. No one, and especially, your <\/span><i><span style=\"font-weight: 400;\">relatives and insiders<\/span><\/i><span style=\"font-weight: 400;\">, should be repaid right before you are <a href=\"http:\/\/www.irasmithinc.com\/blog\/declaring-bankruptcy-in-canada\/\"><em>declaring bankruptcy<\/em><\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Trustee is required to review your <\/span><i><span style=\"font-weight: 400;\">financial history<\/span><\/i><span style=\"font-weight: 400;\"> including looking at your bank statements and will no doubt find the <\/span><i><span style=\"font-weight: 400;\">preference payments<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 Making <\/span><i><span style=\"font-weight: 400;\">preference payments<\/span><\/i><span style=\"font-weight: 400;\"> is a <\/span><i><span style=\"font-weight: 400;\">bankruptcy offence<\/span><\/i><span style=\"font-weight: 400;\"> and will negatively affect your ability to get a <\/span><i><span style=\"font-weight: 400;\">discharge from bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2 id='bankruptcy-filings-canada-waiting-too-long-for-consultations-with-trustees'  id=\"boomdevs_6\"><b><i>Bankruptcy filings Canada<\/i><\/b><b>:\u00a0 <\/b><b>Waiting too long for <\/b><b><i>consultations<\/i><\/b><b> with Trustees<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The question of whether or not you should <\/span><i><span style=\"font-weight: 400;\">file for bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> is a difficult one and should be taken seriously. If you&#8217;ve just received a notice of civil action from a creditor, or if you&#8217;re worried about your upcoming income tax bill, it is time to speak with an experienced Canadian Trustee to discuss your options.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before you jump into <em>filing bankruptcy<\/em>, however, it&#8217;s important to take a step back and consider the consequences. It may be that filing for bankruptcy is the wrong move for you.\u00a0 If you meet with a Trustee at the first sign of trouble, rather than waiting until you are up against the time crunch of an impending deadline, the Trustee may be able to recommend other options for you.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">One of those options is filing a <\/span><i><span style=\"font-weight: 400;\">consumer proposal<\/span><\/i><span style=\"font-weight: 400;\"> to successfully perform a <\/span><i><span style=\"font-weight: 400;\">government-approved debt settlement plan<\/span><\/i><span style=\"font-weight: 400;\"> and <\/span><i><span style=\"font-weight: 400;\">avoid bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">.\u00a0 The earlier you consult with a <\/span><i><span style=\"font-weight: 400;\">Trustee<\/span><\/i><span style=\"font-weight: 400;\">, the more options and flexibility you have.<\/span><\/p>\n<figure id=\"attachment_10433-2\" aria-describedby=\"caption-attachment-10433-2\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10433\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg\" alt=\"bankruptcy filings canada\" width=\"300\" height=\"169\" data-wp-pid=\"10433\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-10433-2\" class=\"wp-caption-text\"><em>bankruptcy filings canada<\/em><\/figcaption><\/figure>\n<h2 id='huge-bankruptcy-mistake-taking-extra-taxes-out-of-your-paycheque'  id=\"boomdevs_7\"><b><em>Huge bankruptcy mistake<\/em>:\u00a0 Taking extra taxes out of your paycheque<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">When people do <em>bankruptcy filings Canada<\/em>, they have more financial obligations than your typical income can manage. Among the reductions from your gross pay is the income tax. It&#8217;s unpreventable. When you apply for bankruptcy, one of your financial obligations is probably income tax debt owed to Canada Revenue Agency (CRA).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Just how much in added <\/span><i><span style=\"font-weight: 400;\">income tax deductions<\/span><\/i><span style=\"font-weight: 400;\"> can you stand not to get in your take-home pay when you are currently insolvent? Most likely none. It is more important to have the cash to pay for rent and food.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So should you take <\/span><span style=\"font-weight: 400;\">extra taxes out of your paycheque before filing bankruptcy?<\/span><span style=\"font-weight: 400;\"> I say no.<\/span><\/p>\n<h2 id='a-mistake-in-bankruptcy-cashing-in-or-making-early-withdrawals-from-retirement-accounts'  id=\"boomdevs_8\"><b>A<\/b><b><i> mistake in bankruptcy:\u00a0 <\/i><\/b><b><i>Cashing in or making early withdrawals from retirement accounts<\/i><\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The last thing you want to do in advance of bankruptcy is to cash in a retirement account such as your RRSP.\u00a0 In fact, doing so could cost you dearly.\u00a0 Here&#8217;s what you need to know.\u00a0 In a word, \u201cno.\u201d\u00a0 That&#8217;s the answer to the question of whether debtors should take money out of their retirement account to pay bills.\u00a0 And it&#8217;s the best advice for anyone, but particularly for people who are in the throes of <em>bankruptcy filings Canada<\/em>.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are three main reasons for this.\u00a0 First, if you have set up your RRSP with your spouse or child as the beneficiary, then in Ontario, your RRSP is exempt from seizure.\u00a0 There is an RRSP issue when it comes to bankruptcy.\u00a0 Any contributions you made within 12 months of filing for bankruptcy must be paid into your bankruptcy estate.\u00a0 You don&#8217;t need to withdraw those funds from your RRSP to do so.\u00a0 You just need to make the payments into your bankruptcy estate.\u00a0 The source of those funds do not have to be from the RRSP.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Second, when you cash in all or a portion of your RRSP, income tax must be deducted at source.\u00a0 So you lose a significant amount off the top.\u00a0 What you are left with may not be enough to fully repay all your debts and help you avoid falling back into unmanageable debt in the future.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Third, you probably will never have enough working years left to make enough contributions back into a retirement plan to make up for what you have lost.\u00a0 You will be sacrificing further <\/span><i><span style=\"font-weight: 400;\">retirement payment<\/span><\/i><span style=\"font-weight: 400;\"> plan payments when you did not need to cash in your plan in the first place.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fortunately, your retirement funds are generally protected from loss in bankruptcy.\u00a0 So, why ask for this kind of trouble?<\/span><\/p>\n<h2 id='bankruptcy-filings-canada-what-debts-are-not-wiped-out-through-bankruptcy'  id=\"boomdevs_9\"><em><b>Bankruptcy filings Canada:\u00a0 What debts are not wiped out through bankruptcy?<\/b><\/em><\/h2>\n<p><span style=\"font-weight: 400;\">Unsecured debt is a financial term that describes any loan, credit card or other debt that is not secured against collateral. In other words, it is debt that is not backed by an underlying asset that can be seized in the event of a default.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">That means that if you don&#8217;t repay the debt &#8211; or if you decide to use the money for something else &#8211; there is no asset for the creditor to come after.\u00a0 Bankruptcy is a remedy available to the debtor to discharge unsecured debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A common misconception is that bankruptcy will result in a loss of the home you&#8217;ve worked so hard for; this is not necessarily so. The Trustee is entitled to the debtor&#8217;s equity in the home.\u00a0 Not the home itself.\u00a0 There is a difference.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It should be noted that the courts do not allow you to intentionally strip yourself of your assets. However, it is possible to strip yourself of these assets by making a bad decision in the midst of your financial crisis. If you refinanced your mortgages or increased lines of credit against your real estate to settle unsecured financial obligations, this is a <\/span><i><span style=\"font-weight: 400;\">mistake of bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">First, the Trustee and your creditors will want to know what you did with any spare cash that you received coming out of the refinancing.\u00a0 As I described above, trying to hide assets is not a smart strategy.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Second, you have now turned <a href=\"https:\/\/nomoredebts.org\/debt-help\/bankruptcy\/secured-non-secured-debts-in-bankruptcy\" target=\"_blank\" rel=\"noopener\">unsecured debt into secured debt<\/a>.\u00a0 The unsecured debt could have been settled for less than 100 cents on the dollar through a consumer proposal or discharged in bankruptcy.\u00a0 Now it is debt that cannot be compromised;\u00a0 it can only be repaid in full.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Third, what if your income in the future is not enough to make the necessary payments on this secured debt?\u00a0 Now you are at risk of having your home seized, notwithstanding you received your discharge from <em>bankruptcy filings Canada<\/em>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fourth, perhaps the refinancing should have been done in conjunction with advice from the Trustee, so, it could be used in part to fund a consumer proposal.\u00a0 By having done the refinancing and spending the money before filing, you have now lost that opportunity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So having that secured <\/span><i><span style=\"font-weight: 400;\">debt in bankruptcy<\/span><\/i><span style=\"font-weight: 400;\"> was not a smart move.\u00a0 It was a big mistake.<\/span><\/p>\n<figure id=\"attachment_10433-3\" aria-describedby=\"caption-attachment-10433-3\" style=\"width: 300px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-10433\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg\" alt=\"bankruptcy filings canada\" width=\"300\" height=\"169\" data-wp-pid=\"10433\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada.jpg 1280w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-10433-3\" class=\"wp-caption-text\"><em>bankruptcy filings canada<\/em><\/figcaption><\/figure>\n<h2 id='bankruptcy-filings-canada-not-sufficiently-exploring-self-help-options'  id=\"boomdevs_10\"><em><b>Bankruptcy filings Canada:\u00a0 Not sufficiently exploring self-help options<\/b><\/em><\/h2>\n<p><span style=\"font-weight: 400;\">It\u2019s all too easy to get into debt, but if you catch things early, it\u2019s also easy to get out from under it. All it takes is a realistic plan for paying off your debts, and a commitment to sticking to it. If you can do that, you\u2019ll be surprised how quickly your debt can disappear. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The first step is to figure out what you owe \u2013 and to whom. If you owe money to several creditors, you\u2019ll need to prioritize them. The most likely to accept a deal are those that are smaller and charge a reasonable interest rate. You may be surprised at how many deals you can cut.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Speak to your accountant, your lawyer, your financial adviser and even a Trustee.\u00a0 You may find that your situation is not as bad as you thought and through some careful analysis, planning, budgeting and behaviour changes, you can eliminate your debt using a self-help remedy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are many unscrupulous <\/span><span style=\"font-weight: 400;\">debt-settlement or debt-relief companies who try to scare you and then after they do, they make all sorts of great-sounding promises that they will not be able to keep.\u00a0 the reality is that they just want to snag you so you can pay them high fees to do what you can do on your own.\u00a0 Do not fall for their tricks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If everyone made sure that they fully explored all their self-help options first, many could avoid <em>bankruptcy filings Canada<\/em> altogether.<\/span><\/p>\n<h2 id='bankruptcy-filings-canada-making-the-wrong-type-of-filing'  id=\"boomdevs_11\"><em><b>Bankruptcy filings Canada:\u00a0 Making the wrong <\/b><b>type<\/b><b> of filing<\/b><\/em><\/h2>\n<p><span style=\"font-weight: 400;\">If you have reached a point where you feel you can no longer control your finances, one of the first things you should do is consult a Trustee. <\/span><i><span style=\"font-weight: 400;\">Making the wrong type of bankruptcy filing<\/span><\/i><span style=\"font-weight: 400;\"> is a big mistake and will only make the situation worse, but with the right advice, it is easy to find the right solution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The most common type of <\/span><i><span style=\"font-weight: 400;\">personal insolvency<\/span><\/i><span style=\"font-weight: 400;\"> filing is a consumer proposal. A consumer proposal allows you to work out a payment plan with your creditors that you can actually afford. This allows you to eliminate all your debt without filing bankruptcy.\u00a0 In a no-cost initial consultation with a Trustee, you will discuss what is the right type of filing for your situation.<\/span><\/p>\n<h2 id='bankruptcy-filings-canada-summary'  id=\"boomdevs_12\"><b><i>Bankruptcy filings Canada<\/i><\/b><b> summary<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">I hope that you found the question posed in this <\/span><i><span style=\"font-weight: 400;\">bankruptcy filings Canada<\/span><\/i><span style=\"font-weight: 400;\"> Brandon Blog.\u00a0 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.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The <\/span><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><span style=\"font-weight: 400;\">Ira Smith Team<\/span><\/a><span style=\"font-weight: 400;\"> utilizes new modern-day ways to get you out of your debt difficulties while <\/span><a href=\"http:\/\/www.irasmithinc.com\/blog\/bankruptcy-alternative\/\"><b><i>avoiding bankruptcy<\/i><\/b><\/a><span style=\"font-weight: 400;\">. We can get you the relief you need and so deserve.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">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.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We understand that people and businesses facing financial issues need a realistic lifeline. There is no \u201cone solution fits all\u201d method with the<\/span><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><span style=\"font-weight: 400;\">Ira Smith Team<\/span><\/a><span style=\"font-weight: 400;\">. Not everyone has to <\/span><i><span style=\"font-weight: 400;\">file bankruptcy in Canada<\/span><\/i><span style=\"font-weight: 400;\">. The majority of our clients never do. We help many people and companies stay clear of <\/span><i><span style=\"font-weight: 400;\">bankruptcy<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That is why we can establish a new restructuring procedure for <\/span><i><span style=\"font-weight: 400;\">paying down debt<\/span><\/i><span style=\"font-weight: 400;\"> 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, <\/span><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><b>contact the Ira Smith Trustee &amp; Receiver Inc. group today<\/b><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><a href=\"http:\/\/www.irasmithinc.com\/contact_us.html\"><b>Call us now for a no-cost consultation<\/b><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">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, <\/span><b><i>Starting Over, Starting Now<\/i><\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">Ira Smith Trustee &amp; Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/span><\/p>\n<figure id=\"attachment_10433-4\" aria-describedby=\"caption-attachment-10433-4\" style=\"width: 580px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/g.page\/torontobankruptcy?share\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-10433\" src=\"http:\/\/www.irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1024x576.jpg\" alt=\"bankruptcy filings canada\" width=\"580\" height=\"326\" data-wp-pid=\"10433\" data-pin-nopin=\"nopin\" title=\"\" srcset=\"https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1024x576.jpg 1024w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-300x169.jpg 300w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-768x432.jpg 768w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-1200x675-cropped.jpg 1200w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada-150x84.jpg 150w, https:\/\/irasmithinc.com\/blog\/wp-content\/uploads\/2021\/03\/bankruptcy-filings-canada.jpg 1280w\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" \/><\/a><figcaption id=\"caption-attachment-10433-4\" class=\"wp-caption-text\"><em>bankruptcy filings canada<\/em><\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>We hope that you and your family are safe, healthy and secure during this coronavirus pandemic. Ira Smith Trustee &amp; Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. Bankruptcy filings Canada introduction It&#8217;s not easy to admit that you&#8217;re in over [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[2699,4771,178,4782,4778,4774,4776,4779,3847,1159,4780,863,4772,4783,4781,4773,4775,4777],"class_list":["post-10429","post","type-post","status-publish","format-standard","hentry","category-brandon-blog-post","tag-bankruptcy-and-insolvency-act-canada","tag-bankruptcy-filings-canada","tag-bankruptcy-law","tag-cashing-in-or-making-early-withdrawls-from-retirement-accounts","tag-common-bankruptcy-mistakes","tag-common-mistakes","tag-do-not-incur-any-additional-debts-like-maxing-out-credit-cards-before-filing-bankruptcy","tag-do-not-repay-relatives-or-insiders","tag-exempt-from-seizure","tag-filing-for-bankruptcy","tag-huge-bankruptcy-mistake","tag-ira-smith-trustee","tag-licensed-insolvency-truste","tag-making-the-wrong-type-of-filing","tag-mistake-in-bankruptcy","tag-penalty-of-perjury","tag-transfer-at-undervalue","tag-type-of-bankruptcy"],"_links":{"self":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/10429","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/comments?post=10429"}],"version-history":[{"count":5,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/10429\/revisions"}],"predecessor-version":[{"id":10438,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/posts\/10429\/revisions\/10438"}],"wp:attachment":[{"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/media?parent=10429"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/categories?post=10429"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/irasmithinc.com\/blog\/wp-json\/wp\/v2\/tags?post=10429"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}