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.

Trustee in Bankruptcy now known as Licensed Insolvency Trustee

David Wood, President of Boale, Wood & Company Ltd. explains the name change from “Trustee in Bankruptcy” to “Licensed Insolvency Trustee.”

On April 1, 2016, all Trustees with a valid license issued by the Superintendent of Bankruptcy (OSB) are required to use the professional designation “Licensed Insolvency Trustee“.  The objective of a name change is to make it easier for Canadians to recognize and identify professionals licensed by the OSB.

David Wood says, “There is an abundance of misleading information in the marketplace about who can actually help the Canadian Consumer restructure their debt. The changes implemented under the Directive will hopefully help reduce or eliminate this confusion so that consumers and businesses in financial trouble find the qualified licensed professional that best suits their needs.

The word bankruptcy is an uncomfortable word for many people. Too often people seek help from unqualified, unlicensed and unregulated people, only to be eventually referred to a Licensed Insolvency Trustee, for a fee.  A fee that they didn’t have to pay.  The average Canadian Consumer is unaware that only a Licensed Insolvency Trustee can settle debts through a proposal or file a bankruptcy.

The name change to Licensed Insolvency Trustee more accurately reflects the range of services we provide.”

LITs are the only professionals authorized to administer insolvency proceedings, such as consumer and commercial proposals and bankruptcies, under the Bankruptcy and Insolvency Act.  To read more about this, on the OSB website click here.

Any individual or company that it is financial difficulty should call us for a free consultation.

The Home Equity Loan/Line of Credit Savior or Curse?

Q.  I am thinking of mortgaging the equity in my home to pay debt.  Is this a wise choice or just robbing Peter to pay Paul?

It has been suggested that if you use your home equity to pay debt, then you are likely living beyond your means and spending far more than what you are taking in.

Home equity loans allow you to borrow against the value of your home. These loans appeal to borrowers who find that they can borrow relatively large amounts of money, and sometimes they are easier to qualify for than other types of loans because they are secured by your house.  But the effect is that you are trading an unsecured debt and making it secured, against your home.

A home equity loan is a type of second mortgage. Your “first” mortgage is the one you used to purchase your home, but you can add other loans to borrow against the property if you have built up enough equity.  But make no mistake that a home equity loan is a mortgage and that if you do not pay your mortgage, you run the risk of losing your home.

If you file a consumer proposal or a bankruptcy, you may be able to retain your assets and your equity while at the same time compromising your debts.


Ask a Trustee

If you have something you’d like to Ask a Trustee, use this form to submit your question.

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Avoiding Holiday Spending Woes

christms-bigsnit-x300Holiday over-spending is a hot media topic in the ramp-up to Christmas.

Winnipeg Free Press writer Geoff Kirbyson quotes me in his article published today.

Among the tips I passed along from the Canadian Association of Insolvency and Restructuring Professionals:

  • Make a budget
  • Make a list
  • Expect the unexpected
  • Do your research
  • Pay cash
  • Get help

Read the full article in the Winnipeg Free Press here.


Holiday Spending Tip – Make a List

santa-treeIt’s that time of year when spending can get totally out of hand.  I recently was asked to give some advice for a newspaper article on how to manage holiday spending.

The best advice:  make a list and check it carefully, to ensure you don’t end up over-spending over the holidays.

Here’s the article in the Toronto Sun.

How can I get a discharge when my trustee won’t help me get discharged?

I declared bankruptcy in 2007 and my discharge was adjourned generally by the Court because I didn’t do the things I was supposed to do.  How can I get a discharge when my trustee won’t help me get discharged?

There are a number of options available for you to deal with your discharge.

Firstly, to even get to the point where a discharge is possible, all the things you were required to do, must be done.  For example, if you didn’t attend a counseling session, you need to do so.  This can be done by any Trustee.

Once you are ready to proceed for a discharge you can do the following:

  1. Speak to your former Trustee.  Some firms will assist you in getting your discharge, others will not.  If the Trustee is discharged, it is up to you to apply for your own discharge from bankruptcy. However, if the Trustee is not discharged and the file is still open, the Trustee may make the second application for discharge on your behalf. However, they are not obligated to.
  2. If your Trustee is not in a position to help you, then you can retain an insolvency lawyer to seek your bankruptcy discharge.
  3. Failing this you can appear in court acting on your own behalf.  This is not an easy process and can be frustrating.  The Supreme Court of BC has published a guide for those who wish to represent themselves at their discharge hearing.  This guide can be accessed by contacting the Justice Education Society website.  Alternatively, you can find this on our website under Forms.

As an alternative, an undischarged bankrupt can also file a consumer proposal.  To determine whether or not this is a feasible option, you need to meet with a Trustee.  And, it does not have to be the same Trustee you used for your bankruptcy.  You can use someone else.  The acceptance of a consumer proposal has the effect of annulling the bankruptcy.  The annulment would also negate the need for a discharge hearing.

Ask a Trustee

If you have something you’d like to Ask a Trustee, use this form to submit your question.

And follow @askatrustee on Twitter

Can I be bonded after filing for bankruptcy?

I have declared bankruptcy and I am applying for a job that may require me to be bonded.  Can I be bonded after filing for bankruptcy?

The short answer is yes.  However, an explanation about bonding is required.

If you are not yet bonded and are applying for a job that requires bonding, most bonding agencies will ask to see your credit report.  Your credit report will contain a notation that you have filed for bankruptcy.

Generally, filing for bankruptcy does not affect your employment. Unless you ask for your employer to be notified (for example you would like to have a wage garnishment stopped) your employer will not know that you have filed for bankruptcy.

If you are applying for a new job, your potential employer will not know that you have declared bankruptcy unless you are asked to disclose that information as a condition of your employment.  Even if you are not required to be bonded, some companies (such as financial institutions) may ask to see your credit report if you are dealing with money on a regular basis.

Ask a Trustee

If you have something you’d like to Ask a Trustee, use this form to submit your question.

And follow @askatrustee on Twitter

Receivership – What are my rights as a creditor?

My customer has told me his company has gone into receivership – not bankruptcy.  They owe me money.  I have not received any formal notification of this.  What are my rights as a creditor?

As a creditor, you have the right to be notified of the receivership.  That is provided the Receiver knows about you.  You should ask your customer who the Receiver is and obtain their contact information.  Contact the Receiver to be added to the creditor list.

If your customer doesn’t know or won’t divulge who the Receiver is, you can contact the Office of the Superintendent of Bankruptcy to find out.

If you have delivered product or goods to your customer, you may have certain rights of reclamation to retrieve those goods or get paid for them.  That is something the Receiver should discuss with you.

Ask a Trustee

If you have something you’d like to Ask a Trustee, use this form to submit your question.

And follow @askatrustee on Twitter

What about tax returns in bankruptcy?

Who prepare the tax return?

A bankrupt’s tax year is divided into two parts.  This is commonly referred to as the pre and post-bankruptcy periods.  If a consumer debtor files an assignment in bankruptcy, for example on May 1, then the tax year is divided into the period between January 1 – April 30 (pre-bankruptcy period) and May 1 – December 31 (post-bankruptcy period).  Even though there are two returns, it encompasses the entire taxation year.

In most cases, the Trustee prepares the income tax returns for both periods of time as it is fairly expedient to do so.  However, in the case of individuals who are self-employed or who have complicated tax matters, there is nothing in the Bankruptcy and Insolvency Act or the Income tax Act that requires the Trustee to actually prepare the returns.  The Trustee is responsible for ensuring that the returns for the year of bankruptcy and the prior year are done and filed, but that does not necessarily mean the preparation of those returns.

Who gets the refunds?

Any refunds that arise from the filing of the returns are automatically paid to the Trustee as property for the estate.  That would be any refund for outstanding years prior to the bankruptcy (assuming refunds are outstanding) and for the pre and post-bankruptcy return.  If there is a debt owing to the tax department and a return is filed that results in a refund, the tax department has the right to offset and debt owing against the refund.

What happens if there is a debt owing?

Any debt that is due for the pre-bankruptcy period and/or prior year’s returns is included in the bankruptcy.  It is a myth that taxes cannot be included in bankruptcy.

If a bankrupt has a debt owing to Canada Revenue Agency on the post-bankruptcy return, the bankrupt is responsible to pay that debt.  That is because the debt is based on earnings made after the date of bankruptcy.
In cases where the debtor is being deducted at source by their employer, any debt due on the post-bankruptcy return is typically very small.  However, in the case of self-employed debtors, sometimes the debt can be large.  In our practice, we encourage debtors to make monthly installment payments to the tax department to ensure that when their taxes are filed, there is no big surprise about owing a large debt.  As well, self-employed debtors are responsible to pay their own CPP.  So even if a self-employed debtor has not made a lot of money, they could still very well owe the tax department something on account of CPP on their self-employed earnings.

Ask a Trustee

If you have something you’d like to Ask a Trustee, use this form to submit your question.

And follow @askatrustee on Twitter