Albertans Deepest in Debt

Headline: ‘People are still having a very hard time’: Survey shows Albertans deepest in debt, despite highest incomes
Via: CBC News

 

Canadian economy facing deep-rooted problems as wages stagnate, household debt mounts

Headline: Canadian economy facing deep-rooted problems as wages stagnate, household debt mounts:
Wages are barely keeping up with the cost of living, business executives complain they can’t compete and households are carrying record levels of debt.

Via: Vancouver Sun

Household debt will pose major risk to Canada’s economy

Headline: Household debt will pose major risk to Canada’s economy for next three years. Past 2020, ‘it’s really going to hit the fan,’ warn economists

Via: Vancouver Sun

Take Control of Your Debt

Money pouring out of cupped hands

One of the top concerns of the Bank of Canada is the high level of Canadian household debt.  Notwithstanding those concerns, the level of household debt continues to rise, hitting 171.1 per cent of disposable income in the third quarter of 2017.  If your debt is starting to feel overwhelming, minimum payments might keep the calls from coming but, you realize that you’re treading water.  Is it time to panic or deal with your debt head on?

There are some tips that can help you take control of your debt and build towards a sound financial future to avoid having your debts get out of control.

  • Prepare a budget so that you know where you are spending your money. A budget will help you identify areas where potential savings can be made. For anyone who is tech savvy, you can download a number of free apps which might make tracking expenses more fun. The results of will show you how much is left over for debt servicing and where your money is being spent.
  • Curb your spending habits. One of the most common ways to get into debt is overspending.  Everyone needs to know where they are spending their money.  It’s the little things that nickel and dime you to death that are the problem.
  • Figure out the best way to reduce debt. Two well known methods are called the Snowball Plan. This starts with trying to pay off the smallest debt and leads up to the largest.  This occurs while you are still paying only the minimum payment on all your other debts.  The other method is called the Avalanche Plan. The Avalanche Plan method starts by throwing as much money as you can at the debt with the highest interest rate.  Again all while still paying only the minimum on all your other debts. Once that highest interest debt is paid off you go onto the next highest interest debt and so on and so forth.
  • Lastly get some professional help. Some of you will get a better sense of where you are financially and be able to get out of it on your own. But for most, it won’t be that simple. The amount of money left over at the end of the day will show that you only have enough left over to make minimum payments, which will only leave you treading water. And if something happens where you income is suddenly reduced, you might not even be able to make the minimum payments and you will soon fall behind on the payments.  Then the calls will come.

So, the best way to meet that debt head on is to take control. Licensed Insolvency Trustees are the go to professionals of choice when dealing with debt.  We are mandated to explain all of your options to you.

The experienced professionals at Boale, Wood & Company Ltd. understand the stress that financial difficulty can cause.

We know that realizing that you are experiencing financial problems is a hard thing to do for most people and sometimes you feel helpless. But instead of feeling helpless, let us help you gain control of your debts and understand your options.

Start by scheduling a meeting with us to discuss the solution best suited to your situation. This meeting is free and there is no pressure or obligation for you to make a decision right away.

We have the expertise to find the solution best suited to you.

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

 

 

 

 

Self-Employed and Can’t Pay CRA?

stopwatch with the word tax printed on the dial

The June 15 deadline for self-employed individuals to file their 2018 tax return has come and gone.  And if you don’t have the funds to pay your tax bill you are probably wondering what can be done.

If you owe taxes and are struggling to come up with the funds to pay the Canada Revenue Agency (“CRA”) you need to speak with us right away.  Don’t delay.

There are debt advisors out there who state that they can “settle” or “reduce” a tax debt with Canada Revenue Agency. If it sounds too good to be true, then it probably is.

They don’t “negotiate” and they don’t “settle” tax debts. CRA is not your typical creditor.  They didn’t choose to lend you money and become a creditor.  They become a creditor by virtue of the self reporting tax system we have.  And they want to be paid. In full.

They are not business people in the traditional sense.  Collectors have no authority to settle or reduce a tax debt save and except for circumstances governed by the Income Tax Act or the Bankruptcy and Insolvency Act.

They also have extraordinary powers.  This would include issuing garnishees to banks, investment sources, and to your customers. They file liens and writs on a daily basis.

CRA uses a number of methods to try and collect the tax debt:

Firstly, CRA collections will demand payment. If you pay, all further action stops. If you don’t pay, the collection action gets stepped up a notch.  There is no negotiation over how much you owe. The collector has no authority to do that.

If you fail to pay, the agent assigned to your case will begin contacting you to try and find out as much as they can about you.

Once you have engaged in a dialogue, the agent may try to negotiate with you if you provide further information. They may offer to consider a payment plan. They will provide you with a financial disclosure form asking you to disclose where you live, work, bank, monthly income and expenses, debts, and assets.

Payment plans are based on essentially two things;

  1. Income available over and above basic household needs or in the case of a business, monthly operating costs.
  2. Your ability to borrow or liquidate assets to satisfy the debt.

Lastly, if you can’t make the payment, for whatever reason, the CRA collections department will take action. Remember that financial disclosure form? It now proves very handy for that agent:

  • Your banking information will be used to freeze your account;
  • Your employment information will be used to garnish your wages;
  • Your housing information will be used to place a lien on your home.

So when you hear debt advisors saying they can settle the debt.  Be careful.

So, the best way to meet that debt head on is to take control. Licensed Insolvency Trustees are the go to professionals of choice when dealing with debt.  We are mandated to explain all of your options to you.

The experienced professionals at Boale, Wood & Company Ltd. understand the stress that financial difficulty can cause.

We know that realizing that you are experiencing financial problems is a hard thing to do for most people and sometimes you feel helpless. But instead of feeling helpless, let us help you gain control of your debts and understand your options.

Start by scheduling a meeting with us to discuss the solution best suited to your situation. This meeting is free and there is no pressure or obligation for you to make a decision right away.

We have the expertise to find the solution best suited to you.

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

 

 

 

 

 

 

Can I Pursue an Undischarged Bankrupt For Collection?

Businessman holding a blank notepad. Room for you text.Yes, but not until the Licensed Insolvency Trustee (“LIT”) is discharged AND the bankrupt is not discharged.

When a person declares bankruptcy, there is a Stay of Proceedings that prevents creditors from pursuing collection of their debt.  The Stay is automatic.  It is not a Court Order and doesn’t have to be applied for.  It is set out in the Bankruptcy and Insolvency Act.

The Stay of Proceedings protects the debtor from any collection activity by his unsecured creditors and allows the LIT to administer the estate without creditor interference.  When the debtor is discharged all his unsecured debts, with a few exceptions, are erased.

In some cases the debtor does not obtain a discharge from their bankruptcy.  This is usually due to the debtor failing to perform the duties imposed upon them, or hasn’t paid the estate pursuant to a Mediation Agreement or Court Order.

Once the LIT is certain the debtor is not going to honour his obligations, the LIT would typically proceed to close its file and seek their own discharge from the bankruptcy.

At this point the Stay of Proceedings is lifted and the debtor’s creditors can pursue him for debt collection just as though he was never in bankruptcy.  However, there is nothing stopping the debtor from then going back to the LIT to comply with their duties and seek their discharge.

This is why it is so important for debtors to obtain their discharge.  It’s not about getting onto bankruptcy, it’s about getting out.

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

 

 

 

 

 

Half of British Columbians need raise to pay off debt

Headline: Half of British Columbians will need a pay raise to help pay off debt.

Via: The Vancouver Sun

 

 

BOC progress report

Headline: Bank of Canada deputy governor’s “Progress Report on the Economy”.

Via: Bank of Canada

 

IMF flags housing at economy risk in Canada

Headline: IMF Flags Housing, Competitiveness as Canada Economy Risks.

Via: Bloomberg

 

 

Media Covers Lawsuit Aimed at Son of Ponzi Schemer

The popular online publication Vancouver Is Awesome, and the North Shore News have published a new article on the latest development in the on-going story regarding Virginia Tan.

Last year, Tan admitted to fraudulently raising at least $30 million from investors as part of a Ponzi scheme. The admission was part of a settlement with the BC Securities Commission.

This latest story covers details of a lawsuit aimed at Tan’s son.  The story, by reporter Jane Seyde, explains:

Bankruptcy trustee Boale, Wood and Co. filed a notice of claim against Marcus Soon-Keen Tan of North Vancouver, alleging six properties he acquired in connection with a real estate development in Surrey since 2011 were bought with funds his mother defrauded from investors.

The bankruptcy trustee is asking the court to transfer ownership of the properties to the trustee for the creditors’ benefit or for Marcus Tan to pay back investors whose funds were allegedly used to buy or make payments on the properties.

The trustee has also asked the court for records tracing money received by Marcus Tan from either of his parents and for assets bought by him with funds from either of them.

No statement of defence has been filed and none of the claims have been proven in court.

You can read the story in Vancouver is Awesome,  or on the North Shore News online.

 

Breaking Down BC’s Reliance on Real Estate

Headline: Breaking down the B.C. economy’s risky reliance on real estate: Experts say a market crash could have serious consequences and something needs to change.

Via: CBC News

How Money Affects Health

Headline: How money affects health — what you can do to stay in control.

Via: Global News

 

Home Sales Fall

Headline: Canada home resales fall in April, lowest in over 5 yrs-CREA

Via: Reuters

Will Bankruptcy Affect My Employment?

If I declare bankruptcy, will it affect my employment?  This is a fairly common question that a Licensed Insolvency Trustee (“LIT”) gets asked at the initial interview stage.

You may be wondering if your current or future employer will discover a bankruptcy filing and whether that impacts your ability to obtain work or keep your job.

In a typical bankruptcy, the LIT doesn’t need to notify your employer.  However, there may be situations when filing bankruptcy may affect your application to take on a new job.  Below we answered some of the most common questions around bankruptcy and employment issues.

Will My Current Employer Find out I’ve Filed for Bankruptcy?

As part of the usual bankruptcy process, your employer is not told that you’ve filed a bankruptcy.

The only time an LIT will notify your employer that you have filed a bankruptcy or consumer proposal is in cases where there may be a garnishee in place or where the LIT needs payroll information to determine surplus income or prepare tax returns.  In most cases where the LIT requires information from the employer, we request the debtor to obtain it for us so we don’t have to contact the employer directly for it.

Can I Lose My Job if I File for Bankruptcy?

It is illegal in Canada for an employer to fire someone because they filed for bankruptcy.

Certain professional associations have professional conduct standards that require an individual to disclose if they are bankrupt.  Often these are professions that involve the handling of money and/or trust accounts.  Examples are insurance/investment broker, real estate agent, lawyer or accountant.

Professionals often file a consumer proposal as an alternative to bankruptcy.  Since someone who has entered into a repayment arrangement through a consumer proposal is not a bankrupt, they are generally excluded from these professional guidelines. However, any professional should first check any regulations with their professional association or society before filing.

In general, if the debts you owe are personal in nature and not the result of fraudulent or poor business practices, an insolvency filing shouldn’t impact you professionally.  However, if you are considering an insolvency filing, it’s still important to satisfy yourself of the disclosure requirements to your professional association.

If I File for Bankruptcy, Will I be Able to Get a Job?

You are not required to disclose that you have filed for bankruptcy or a consumer proposal when applying for a job. Potential employers may ask if you are currently bankrupt as part of the application process. They may also choose to conduct an insolvency search or credit check as part of hiring process. This is more common if you are applying for a position that involves significant financial trust.  If you think that an employer is going to ask or perform a background check, it is always better to be up front about it.

Some positions require employees to be bonded by the firm’s insurance company to protect against employee theft and dishonesty.  Bonding provides the firm with compensation in the case of a loss.  It’s a protective measure for the employer. In reality, a bankruptcy on your credit report is not necessarily a bad thing.  It shows that you have dealt with your debt.  If you are undischarged, then you only have one obligation and that is to your LIT.  Unfortunately, if you are unable to be bonded, an employer may choose not to hire you for these types of positions.

As an undischarged bankrupt, you can also be precluded from holding certain roles such as a director of a company, a society or other similar type position until such time as you are discharged from bankruptcy.

Consider filing a Proposal

Many concerns regarding the impact of a bankruptcy on employment do not apply in the case of a proposal. A proposal is a repayment arrangement made with your creditors, to repay a portion of what you owe.  While a proposal is still a legal process administered under Insolvency legislation that can only be filed through an LIT, you’re not a bankrupt when you’re in a proposal.  As such, a proposal can often solve some of the situations that arise in terms of your employment and looking for debt relief solutions.

A Licensed Insolvency Trustee will carefully review your financial situation and provide you with the best course of action without unduly affecting your employment.

Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.  

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

 

 

 

Office of the Superintendent of Bankruptcy Issues Directive on Counselling

In previous newsletters, we addressed the issue of possible changes being proposed to the counselling directive by the Office of the Superintendent of Bankruptcy (“OSB”).  The OSB issued its draft directive in October 2017 and commenced public consultations, inviting comments from stakeholders.

On January 29, 2018, the OSB issued its final Directive relating to the qualifications of Insolvency Counsellors, referral arrangements and debt advisors, along with the transition phases and its plan to revamp the entire counselling curriculum. The Directive can be found here.

The OSB has stated that the first phase of amendments will contribute to a level playing field for all LITs and reduce risks to the integrity of the consumer insolvency process related to:

  • LIT involvement in prohibited referral arrangements; and,
  • reliance on intermediaries whose activities are incompatible with an LIT’s legal and professional responsibilities.

It will also provide LITs with flexibility to accommodate debtor circumstances in the delivery of insolvency counselling, and by ensuring insolvent Canadians continue to benefit from:

  • Access to insolvency proceedings at regulated rates;
  • Open choice of an LIT; and,
  • Protection from unnecessary costs and predatory activities.

The second phase of the counselling amendments, including on line modules, will de developed in 2018 and beyond.  No timetable for the implementation has been set.

Improved protections

The aim of the Directive is to ensure that:

  • consumers are not charged more for the insolvency process than is allowed under the BIA. This will be accomplished by having the counsellor registered against the LITs license and not be involved in any unregulated and unnecessary services or predatory activities.
  • consumer debtors and bankrupts are free to choose whatever LIT they want and make an open choice of an LIT, rather than being directed to a specific LIT chosen for them under an arrangement negotiated by the person who will then provide their BIA insolvency counselling.
  • consumer debtors and bankrupts receive clear and accurate information, regarding responsibility for insolvency counselling, related fees, and the roles and responsibilities of debtors, LITs and registered BIA Insolvency Counsellors.
  • consumer debtor’s or bankrupt’s informed consent to the LIT is now required prior to the sharing of that debtor’s insolvency information with ahird-party BIA Insolvency Counsellor.

Additional delivery flexibility

  • Directive No. 1R4 provides flexibility to accommodate an insolvent person’s circumstances related to participation in insolvency counselling by video conference in order to avoid significant inconvenience; or at the third-party location of a registered BIA Insolvency.
  • Upcoming renewal of the BIA insolvency counselling curriculum will provide further delivery enhancements, such as the addition of on-line learning modules at no cost to the debtor.

LITs relying on third-party BIA Insolvency Counsellors

There is no restriction from LITs relying on third-party BIA Insolvency Counsellors.  However, these counsellors must meet registration requirements under the Directive and adhere to the same professional standards as LITs themselves are required to follow including adherence to all relevant provisions of the BIA, its Rules — including the LIT Code of Ethics – and Directives from the OSB.

The Directive applies only to LITs.  It does not restrict a third party to provide unregulated products and services to Canadians outside the scope and parameters of federal insolvency legislation.

Conclusion

It is our view that the changes to the Directive will enhance the counselling process for consumers and provide delivery flexibility for LITs where the debtor is in a remote location or where there are other circumstances where a face to face meeting would be inconvenient. The Directive comes into force on October 1, 2018.  Until that time, the previous Directive applies. Details regarding this Directive can be found here.

Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.  

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