Visit us at the West Coast Women’s Show


A team from Boale Wood and Company will be at the 2017 West Coast Women’s Show.

Stop by our booth and talk with the team – and make sure you enter your name to win our gift basket.

The West Coast Women’s Show is taking place in Abbotsford October 20-21-22.

Here’s a link to our web page for the show.

 

Dealing with debt – myths and misinformation

When it comes to dealing with debt, there is a lot of misinformation on the Internet about what happens in a consumer insolvency. These myths range from what debts are included in a bankruptcy to the fees of the Licensed Insolvency Trustee (“LIT”) to legal actions and so forth.

If you want to know what happens in a consumer insolvency, there are only two sources for the facts, the LIT or the Office of the Superintendent of Bankruptcy.  Why anyone would listen to someone who isn’t ether of those makes little sense, however, there are those firms out there who purport to be experts but have little or no training in insolvency matters.

The following table is to get the facts and put some of those myths to rest.

Myth

Fact

The LIT only works for and represents the creditors. An LIT doesn’t work on your creditor’s behalf. This is one of the biggest myths surrounding who the LIT works for. The LIT makes sure that both your rights, as the debtor, and the creditor’s rights are respected. We ensure that the process is fair for all involved and that everyone follows the rules.
If I go bankrupt, I will lose everything.Many personal assets, pensions and, to a certain extent, items like tools of trade, a vehicle and home are exempt from seizure. That means they are protected from your creditors.

Each province and territory is responsible for dealing with exempt assets that list the property a bankrupt can keep. In BC that is the Court Order Enforcement Act and in the Yukon Territory it is the Exemptions Act.

The Bankruptcy and Insolvency Act also states that RRSPs and RRIFs are exempt except for any contributions made in the prior twelve months.

Most debtors that file bankruptcy are able to keep all of their assets. The myth that you will lose everything is often perpetuated by debt advisors/credit counsellors as a fear mongering tactic.

As well, certain RRSPs are fully exempt if they are with a life insurance company and have a preferred designated beneficiary. The exemptions for BC can be found here

The exemptions for the Yukon Territory can be found here.

If you own assets that are above the exemptions listed above, you should speak to a Licensed Insolvency Trustee to see what can be done to keep your assets. Most LITs are accommodating in allowing you to redeem any non-exempt portion of your assets.
Income tax and government debt cannot be included in bankruptcy.Income tax and most other Government debts are discharged in bankruptcy. The myth comes from the United States where not all tax debts can be discharged in a bankruptcy.
It costs at least $1,800 to go bankruptThis is one of the most common questions LIT’s get asked and in most cases, it is usually answered by giving a response about fees. If it were only that simple.

There is an extensive article on our website about what it costs to go bankrupt. That article can be found here.

In BC, the basic fee to file a bankruptcy assuming you have no assets and your income is less than the income threshold and you have not been bankrupt before, is less than $1,700, not $1,800. Most LITs will work out a payment plan with you. You do not have to pay in advance.
Everyone including my friends and family will know I filed bankruptcyIn almost all cases the only people who will know about your bankruptcy are you, the LIT, the OSB and your creditors. If you do not tell your friends, they are unlikely to ever find out about your bankruptcy. In most cases there is no ad in the paper and there is no court file.

For almost every personal bankruptcy, creditors are notified electronically about the bankruptcy.

All of this means, that unless you tell them, your friends, co-workers and neighbors are very unlikely to find out about your bankruptcy.
My credit rating will be ruined by going bankrupt.Filing for bankruptcy is recorded on your credit report. However, if you are considering bankruptcy your credit may already be ruined and it cannot get any worse by going bankrupt. Ask yourself, what your credit rating is doing for you. Likely nothing.

Being behind on payments, missing payments, being over the limit on your credit cards, and having debts in collection will also ruin your credit. In fact, going bankrupt will clear your record, which will allow you to rebuild a good credit score, often faster and easier than through other methods.

Here is an except from the Financial Consumer Agency of Canada website about credit reports;

Consumer proposals

A consumer proposal is a legal agreement set up by a licensed insolvency trustee. The trustee creates a proposal for your creditors where they agree to let you pay off a percentage of your debt.
Equifax removes a consumer proposal from your credit report 3 years after you've paid off all of the debts included in the proposal.

TransUnion removes a consumer proposal from your credit report either:
• 3 years after you've paid off all of the debts included in the proposal, or
• 6 years after you sign the proposal (whichever is sooner)

Bankruptcy

Generally, both Equifax and TransUnion remove a bankruptcy from your credit report 6 years after the date you're discharged.

TransUnion removes a bankruptcy from your credit report 7 years after you're discharged in the following provinces:
• New Brunswick
• Newfoundland and Labrador
• Ontario
• Prince Edward Island
• Quebec

If you declare bankruptcy more than once, then the bankruptcies will appear on your credit report for 14 years.
Student loan debt is not covered by bankruptcy.If a person has been out of school for more than seven years prior to bankruptcy, the student loan debt is erased, the same as any other debt.
Bankruptcy will affect my spouse and family.Your debts are your own; however, if you and your spouse have a joint (co-signed) debt, then a creditor can pursue your spouse for repayment

The filing of a consumer proposal or bankruptcy will have little or no effect on your spouse if your spouse is not co-signed on your debt.

Read our article here about how the filing does affect your spouse.
Bankruptcy erases all debts.Most unsecured debt is released in a bankruptcy or consumer proposal. There are a few exceptions to this rule such as student loans, spousal or child support and court fines.

Secured claims such as a car loan or mortgage can only be erased if you are willing to give up the asset.

To learn if your debts will be erased, contact us.
Licensed Insolvency Trustees only administer bankruptcies.Bankruptcy is only one of the options available to deal with debt.

The LITs at Boale, Wood & Company Ltd. work with their clients to find the best solution to their financial situation. This can also include consumer proposals, debt counselling, refinancing, settlement offers, and public education.

Our insolvency laws are designed to give people in financial difficulty a fresh start.  Bankruptcy is only one option available to deal with debt.  But is it the right option.  If you are not sure about where to start, contact us.  We will explore your options and assist provide you with unbiased information about the best course of action.

LITs are the only debt professionals who have a full range of debt relief options and LITs are the only debt professionals who can guarantee protection from your creditors.

Call us.  It’s not too late. (604) 605-3335.

Filing for Bankruptcy

Being in financial difficulty can be stressful and emotional.  It doesn’t matter how much debt you have whether it be $10,000 or $100,000, if you can’t pay it, it’s stressful.

Filing for bankruptcy is also a decision not to be taken lightly, so you will want to do whatever you can to ensure that you receive a discharge from bankruptcy at the end of the process.  Your discharge from bankruptcy is the second most important part of the process.  We discussed the importance of your discharge in our August 2017 newsletter that can be found here.

If bankruptcy is on the horizon and you have had your initial consultation with a Licensed Insolvency Trustee here are some things you definitely should not do (even if you think you should).

Don’t Pay Down Your Debt

Although it may seem counterintuitive, you should not make any payments toward your debts once you decide to file bankruptcy. The reasoning for this is two-fold.

Making preferential payments to one creditor over another or preferring one creditor over another could affect your discharge.  The Bankruptcy and Insolvency Act allows a LIT to pursue creditors who may have received a preferential payment.  As well, preferring one creditor over another, within three months of bankruptcy, may be considered a conduct issue and once again could affect your discharge.

The law is even stricter with payments made to relatives and/or friends, otherwise know as related parties. The LIT can go back up to one year and seize these payments.  So why would you drag your relatives into your problem.

Paying off a credit card debt once you intend to file bankruptcy usually doesn’t help your case in getting a credit card with that same lender after bankruptcy. In almost all cases, creditors will close your account once you file bankruptcy, even with a zero balance.  Regardless of your continued payments, even those with a minimal balance are likely to be discharged anyway, so making payments is really just throwing good money after bad.  It is not enhancing your credit rating.

You should continue to pay on secured debts such as your mortgage or car loan if you intend on keeping the property and reaffirming, or continuing to pay, the debt once your bankruptcy is over.

Don’t Redeem Your RRSPs

They are exempt (protected) from your creditors except for any contributions you have made in the previous twelve months.  And in some instances, they are totally protected.  So there is no reason to do so if you get to keep the asset.

Don’t Max Out Your Credit Cards or Lines of Credit

If you max out your credit cards or lines of credit knowing you don’t have the ability to pay them back, it could affect your discharge.  As well, it could very well be considered an offence under the Bankruptcy and Insolvency Act in that you knowingly used credit when you had no ability to pay.

If you need to use your credit cards, you best use them as you had been using them in the normal course of business and not make any extraordinary purchases.

Don’t Give Away or Transfer Any of Your Possessions

You are required to disclose all assets that you sold or gave away within five years of filing.  There’s no issue if you transferred the property to an independent party at fair market value. However, if the assets end up in the hands of friends or relatives, the LIT could very well attack the transaction.  That means dragging your relatives into the mix again (see Pay Down Your Debt Above).

Be Truthful

It is essential that you disclose everything to your LIT.  Failing to disclose any information about your income, assets, or debts to your LIT can affect your discharge or it could possible have changed the advice the LIT gave you had everything been disclosed.  You must be completely upfront, even if you think your situation is embarrassing. It’s even more important to be honest if you think you did something that goes against the bankruptcy rules, so the LIT can advise you on the best course of action.

We hope that these are helpful suggestions in the event that you decide to file for bankruptcy.

At Boale, Wood and Company Ltd, we can help you understand the bankruptcy process so you can make an informed decision.

Call us. It’s not too late.  (604) 605-3335.

A Closer Look at July 2017 Insolvency Stats

Consumer insolvencies in BC decreased in July 2017 by 15.9 percent from June 2017.  Consumer proposals decreased 12.4 percent while bankruptcies decreased 20.7 percent.

The proportion of proposals in consumer insolvencies in BC accounted for 60.2 percent during July 2017 while they accounted for 53.3 percent for all insolvencies across Canada for the same period.

Consumer insolvencies in BC for the 12-month period ending July, 2017, decreased by 9.9 percent compared with the 12-month period ending July, 2016. Consumer bankruptcies decreased by 24.0 percent, while consumer proposals increased by 2.6 percent. Consumer insolvencies in all of Canada are down by 2.4 percent over the same period last year.  BC accounts for 8.3 percent of all insolvencies in Canada in July 2017.

The proportion of proposals in consumer insolvencies in BC was 60.2 percent during the 12-month period ending July, 2017, up from 54.3 percent during the 12-month period ending July 2016.  It continues to indicate the popularity of consumer proposals as a way for consumers to deal with their debt and with dealing with a Licensed Insolvency Trustee over other unregulated service providers.

Insolvencies across Canada are down overall by 2.4 percent compared with the previous 12 month period, bankruptcies are down 9.0 percent but proposals are up by 2.1 percent.

The insolvency statistics indicate the increasing benefits of the protections provided to consumers under the Bankruptcy and Insolvency Act over other non-legislated options, whether that is a consumer proposal or a bankruptcy.   It also indicates that consumers are seeing the benefits of seeking the professional advice of a Licensed Insolvency Trustee rather than those of other non-regulated service providers.

If you would like to know exact details of how a consumer proposal or a bankruptcy would benefit you in dealing with debt, call us at (604) 605-3335 to schedule a free consultation.

Call us.  It’s not too late.

See this article for more on Canadian insolvency statistics for July 2017.

Insolvencies in Canada show big drop in July 2017 stats

The latest numbers from the office of the Superintendent of Bankruptcy Canada shows a 12.2% percent decrease in the total number of insolvencies in Canada in July 2017 compared to the previous month.

Bankruptcies decreased by 14.5 percent and proposals decreased by 10 percent.

Compared to a year earlier, insolvencies decreased by 2.4 percent.

Other stats: For the 12 month period ending July 31, 2017, the total number of insolvencies decreased by 1.4 percent compared with the 12-month period ending July 31, 2016.

You can read the summary and full report here.

Indebted households vulnerable – but banking system could cope – BOC

In an article in the Vancouver Sun, Bank of Canada senior Deputy General Carolyn Wilkins says despite the vulnerability, Canada’s banking system could weather a drop in house prices.

She was speaking an an IMF panel in Washington DC.  You can read the Suns’ article here.

More on Ms. Wilkins here including transcripts of recent speaches.

Canadians Pessimistic About Economic Future

A new poll by Ekos-Canadian Press indicates Canadians aren’t feeling terribly optimistic about their economic future.

The Vancouver Sun’s coverage here.  Ekos report and data tables here.

More Warnings about Canada’s Borrowing Binge

Another report is drawing attention what it calls “mortage meltdown math” and questions the ability of Canada’s government to remedy a financial crisis.  The report is by of Moody’s Analytics.  As the Vancouver Sun puts it:

Moody’s Analytics paints an ugly picture of what could happen to the Canadian economy if everything goes wrong in the housing market

Read the Vancouver Sun story here.

Student Loan Regret

A new survey for BDO Canada Ltd. shows that and over-whelming number of Canadian students under 40 regret their student loans.  The study, shows:

Three in four (77%) Canadian graduates under 40 who had student debt after graduation have at least some regrets about their decision to take out student debt, mostly centered on the fact they could have saved or earned more and spent less.

The poll, which surveyed Canadians aged 21-39 with a completed college diploma or university degree finds that the most common regrets include wishing they’d lived more frugally or had a budget while in school (30%), worked more hours at a side job during school (28%), or avoided adding to other debts (like credit card debts or vehicle loans) while at college or university (25%).

The study offers some advice from grads to perspective students, including making more financial sacrifices during school and getting part-time job to lower the amount borrowed.  Two in 3 students reported having debt upon graduation – the average $22,084.00.

Many reported they thought they would be able to pay off their student debts within a year. In reality, those who did pay off their student debts took more than 3 years to do so.  However, a majority of students with outstanding debt (68%) have turned to some form of assistance or relief to pay down their debt:

Taking a job outside their chosen field of study is the most common means of dealing with student debts (24%), followed by Repayment Assistance Plans (RAPs) from the federal government (20%), or pursuing additional employment alongside their full-time job 19%). Graduates with debts still outstanding have also sought out financial assistance from parents or grandparents (17%) or a spouse or partner (13%), while smaller numbers have consolidated their private loans with a bank or lender (8%), filed a consumer proposal (3%) or even filed for bankruptcy (3%).

You can read more about the study here.

Canadians and BC Residents still living paycheck to paycheck – new CPA study

The Canadian Payroll Association’s latest survey shows that 47% of Canadians say it would be difficult to meet their financial obligations if their paycheck was delayed by even a single week.

The number is even higher for BC residents – 59% live pay cheque to pay cheque, more than anywhere else in Canada.

The survey also shows that 41% of employees nationally, and 49% in B.C spend all of or more than their net pay.  The number one reason given for increased spending is higher living costs. Forty-two per cent of survey respondents  (and 46% in B.C.) said they save 5% or less of their earnings, below the 10% savings level generally recommended by financial planning experts.

Illustrating just how strapped some employees are, 22% (nearly 1 in 4) say they could not come up with just $2,000 within a month for an emergency expense. Twenty-six percent of B.C. employees would struggle to come up with $2,000.

This is the 9th annual survey by the CPA.  You can access the full report and other documents here.