Bank of Canada Poll – companies optimistic

Headline: Companies more optimistic, looking to hire and invest more: Bank of Canada poll. Poll suggest that overall business sentiment had almost bounced all the way back to its summertime high.

Via: CBC News

How Do I Go About Having My Bankruptcy Annulled?

There are three ways that a bankruptcy can be annulled.

Firstly, if you are able to pay your debts in full due to receiving a windfall, then your Licensed Insolvency Trustee can apply to the Court to have the bankruptcy annulled.  However, in our view, it is most likely that the bankruptcy would not be annulled but the LIT would apply to Court to have you discharged early.

In either case, you will have to pay enough of the windfall to the LIT to pay your creditors in full, plus the Trustees fees plus 5% interest from the date of bankruptcy.  If you don’t have enough to do this, then an annulment would not be granted.

Secondly, if your circumstances have changed for the positive during the bankruptcy, then you can file a proposal to your creditors.  Upon approval of the proposal by the Court, the legal effect of an accepted proposal, is to annul the bankruptcy.

Thirdly, the Court can annul a bankruptcy if the assignment or bankruptcy order ought not to have been made.  This would be in rare circumstances and where the bankruptcy has become an abuse of process, the debtor was not insolvent, or a fraud was committed against the creditors.

Contact Boale, Wood & Company Ltd. for more information on proposals, bankruptcy and debt solutions.

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.

 

Should I file a Consumer Proposal or proceed with a Debt Management Plan

A consumer proposal is often compared and contrasted with a program provided by credit counselling agencies known as a debt management plan. While both alternatives have some similarities and can help you reduce your debts, there are some very significant differences.

 Consumer Proposal under the Bankruptcy and Insolvency ActDebt Management Program
How do you start the process?Only a Licensed Insolvency Trustee can file a consumer proposal.

A Licensed Insolvency Trustee is regulated by the Office of the Superintendent of Bankruptcy
Typically administered by a credit counsellor.
Do I lose my assets?You do not lose your assets in either process. If you receive a tax refund or a raise, you may keep it in both procedures.
How much do you repay?How much do you repay?
Generally you pay much less than what creditors are owed.

The LIT will provide you with guidance on what may or may not be acceptable.
Debts are paid in full at little or no interest over 55 – 60 months.
Both options allow you to make payments for up to 5 years, only a consumer proposal allows you to repay less than the full principal outstanding.
What debts are included?All debts are included, including government debt, in a proposal. You cannot pick and choose who is in or out.

Secured creditors are usually paid outside the proposal.

Debts that would not be discharged in a bankruptcy (ie: student loans) would not be discharged in a proposal.
You can choose which creditors to include and which to leave out. Government debt cannot be included.

This is where it gets tricky. If you leave out certain debts, they still remain active and need to be paid. If the creditor takes action against you, then your DMP may come to a crashing end and your options are then limited.
How do creditors accept the planThe creditors have 45 days to approve your proposal. If the majority of your creditors agree, all creditors are bound by the agreementAll creditors must agree. Any creditor can opt out of the plan and pursue you individually.
Creditors rightsOnce a proposal is filed, creditors are stayed from starting or continuing any collection action. You are legally protected.There is no legal protection. Creditors might agree to a repayment program, but could change their mind.
Credit ReportA consumer proposal remains on your credit report for 3 years after your final paymentA debt management plan is purged two years after your final payment.
Credit ratingIn both cases your credit rating becomes an R7

Both processes can give you peace of mind, knowing that your debts are being dealt with, but there are so many more advantages to file a consumer proposal.  A consumer proposal works better if your debts are larger or complicated (you have tax debts or several debts).

At Boale, Wood and Company Ltd, we can help you understand the differences so you can make an informed decision.  Contact us today to discuss your options.

Call us. Its not too late.  (604) 605-3335.

A Closer Look at Insolvency Stats – Feb 2017

Consumer insolvencies in BC increased overall in February 2017 by 3.5 percent from January 2017.  Consumer proposals increased 8.5 percent while bankruptcies decrease 3.0 percent.

The proportion of proposals in consumer insolvencies in BC accounted for 59.25 percent during February while they account for 54.63 percent of all February 2017 insolvencies across Canada.

Consumer insolvencies in BC for the 12-month period ending February, 2017, decreased by 8.5 percent compared with the 12-month period ending February 2016. Consumer bankruptcies decreased by 17.2 percent, while consumer proposals increased by 0.6 percent.

It is not unusual for insolvencies to be down at this time of year, but we expect that the March figures will be higher than the previous.

The consumer proposal filings show the increasing popularity of dealing with debt over bankruptcies and other non-legislated options. It also indicates that consumers are seeing the benefits of using a Licensed Insolvency Trustee over other service providers.

The proportion of proposals in consumer insolvencies in BC was 56.9 percent during the 12-month period ending February 2017, up from 52.4 percent during the 12-month period ending February 2016. Again, it indicates 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 providers.

See this article for other Canadian insolvency stats for February 2017.

File Your Income Tax Return, You Might Get Money Back

Did you know that just by filing your income tax return, you could receive more money from the federal and provincial governments through tax credits and benefits?  By simply filing your income tax return, a single person may receive approximately $585 more per year, a single parent with one child could receive $4,700 a year, and a two-parent family with two children may receive up to $8,600 more per year.

By filing your income tax return you could receive:

  • GST Credit
  • BC Low-Income Climate Action Tax Credit

You may also be eligible for other benefits such as:

  • Canada Child Benefit
  • National Child Benefit Supplement
  • Working Income Tax Benefit

Other government departments also rely on your tax assessment to determine whether you qualify for rent or medical service plan premium subsidies.  By not filing your return, they typically find it difficult to provide you that assistance.

It is not illegal to owe the government money on your tax return; however, the Income Tax Act requires that you file your return annually and on time.

Death and Financial Problems. What to do?

istock_72675891-600pxWhat do you get when you have the premature death of a spouse who leaves behind a substantial amount of debt?

There are several misconceptions about dealing with debt in times when emotions can be overwhelming.  Meeting with a Licensed Insolvency Trustee (“LIT”) can assist in overcoming those emotional and financial misconceptions.

Recently, we met with the Estate Lawyer whose client’s spouse had recently passed away.  He had a life insurance policy for $2 million dollars and some equity in their family home.  However, he also had a substantial amount of debt.  The plan was to pay it off long before he planned to retire, but his premature death derailed that plan.  The insurance policy was to be invested to provide his wife with a comfortable income in her later years.

The lawyer called me because he didn’t want his client to use all the money that was to be used for future living expense on debt payments for which she was not responsible.  He wondered if a bankruptcy of the estate might fix the problem and help the spouse protect her assets.

We were able to work with the widow’s estate lawyer to file an assignment in bankruptcy for the husband’s estate, preserving the proceeds of the insurance policy for investment and also protecting the matrimonial home from creditor claims.

When the subject of insolvency was first discussed with the lawyer and his client, the widow was very concerned about sullying her husband’s memory. The lawyer was also very concerned about the stigma of bankruptcy.

We explained that her husband had not planned to leave these bills unpaid, and that the bankruptcy would be known only to her insurance broker, her estate lawyer and the creditors.  She agreed to the estate insolvency.

This is a real-life example of how debt threw a speed bump into the path of what ought to have been a straightforward estate matter.  Second, it highlights the negative reaction that clients and their lawyers have to the “B” word.

Bankruptcy in some people’s minds, carries the stigma of failure, of financial mismanagement and of social disgrace. Lawyers may even consider themselves to have failed their client if bankruptcy becomes “the only way out.”  All too often, these emotional misconceptions could very well preclude legal counsel from consulting with an LIT in situations where debt is clearly a speed bump or even, in some cases, a deal breaker.  In reality, when the circumstances warrant, an insolvency proceeding can be a wise financial decision and in this case, it was a success story.

Insolvency proceedings consist essentially of either a proposal or bankruptcy. In a proposal, the debtor makes an offer to settle all unsecured debt for a percentage of the debt.   A proposal can be paid out in full at any time without penalty. Bankruptcy, on the other hand, assigns the debtor’s assets to the LIT, an objective independent third party who distributes the funds to creditors.

Only an LIT can file a bankruptcy or proposal under Bankruptcy and Insolvency Act (“BIA”) to stop creditor actions against unsecured debts, relieve wage and bank garnishments and Canada Revenue Agency (CRA) garnishments and negotiate a legally binding settlement of debt for cents on the dollar. Since the BIA exists to assist honest but unfortunate debtors make a fresh financial start, it makes good sense for legal counsel to consider consulting with a LIT when it’s clear that a client needs debt relief.

There are many ways in which a client with debt can become a stumbling block during client representation. A family law matter can be derailed when one spouse’s debt precludes payout of a settlement, or even encumbers the other spouse’s equity in the matrimonial home or other property.

Tax owing to the CRA may be secured with a lien on a home, presenting a big hiccup to the real estate lawyer trying to close a simple home sale, especially when the tax liability exceeds the proceeds of the sale.

In all cases, debt can become a barrier to concluding a transaction.

Whatever your area of practice, when a client’s debt load becomes a problem, even if it’s not material to your representation, consider referring them to the professionals at Boale, Wood & Company Ltd. We can review the situation and provide clear objective advice suited for your situation. Call us today at (604) 605-3335.  Its not too late.

Economist Says Millennials Financial Future Threatened by High House Prices

re-address

Scottish professor and economist Duncan McLennan is one member of an international panel coming to Vancouver to speak at the re:address conference.

In a story in the Vancouver Sun today, he says Vancouver high housing prices could have consequences for into the future. Read the story here.

McLennan is a Professor of Public Policy statement at the University of Glasgow and of Strategic City Management at St Andrews. He is one of a 8 confirmed guest-speakers at the re:address conference.  The conference takes place Oct 24-29 in Vancouver.

Organized by the City of Vancouver, the conference

Will bring together 500 thought leaders and experts from around the world to explore ideas and solutions to accelerate housing affordability in cities. The full day of activities will include opening and closing keynotes, mayors’ roundtable, panel discussions and short presentations. Topics of discussion will include Indigenous housing innovation, new global economic models, shifting generational needs and wants and the growth of the non-profit sector.

Other guest speakers include:

  • Vicki Been, Commissioner, New York City Department of Housing Preservation and Development.
  • Sarah Hill, CEO of Greater Sydney Commission and Adjunct Professor at UTS: University of Technology, Sydney, Australia.
  • Vancouver based Paul Kershaw, Founder of Generation Squeeze, a campaign driven by the evidence of generational inequality in Canada.
  • Toronto’s  Paul Smetanin, resident and CEO at Canadian Centre for Economic Analysis and developer of the Shelter Consumption Affordability Ratio (SCAR) index.
  • Nathaniel Lauster, Associate Professor of Sociology at UBC. He is a specialist on housing, family formation, population, cultural change, and social inequality.
  • Phil Wihongi from New Zealand. Phile is  roof tiler, landscape architect and planner, recently engaged by Auckland Council as Māori Design Leader within Council’s Auckland Design Office.
  • William Azaroff, VP of Community Investment at VanCity, a values-based financial co-operative serving the needs of its half-million member-owners and their communities.

Canadians living pay cheque to pay cheque

Almost half of Canadians are living pay cheque to pay cheque, and residents of British Columbia are the most cash strapped in the country, according to a new survey from the Canadian Payroll Association.

The 8th annual research survey found almost half (48%) of Canadians say “it would be difficult to meet their financial obligations if their pay cheque was delayed by even a single week”.  The survey also found that “40% of employees say they spend all of or more than their net pay, and 47% are able to save just 5% or less of their earnings”.

In British Columbia, 53% say it would be difficult to meet their financial obligations if their pay cheque was delayed by a week.

Nationally, 24% say they probably couldn’t come up with $2,000 in the event of an emergency – compared to  27% in BC.

You can see the full report here, and find regional breakdowns here.

 

 

The Notice of Intention to Make a Proposal

The Bankruptcy and Insolvency Act (BIA) allows insolvent persons to benefit from a 30-day grace period to perform a financial restructuring.  This is commonly known as the “notice of intention to make a proposal” or “NOI”.  The filing of an NOI can only be done through a Licensed Insolvency Trustee (“LIT”).  An insolvent person can be an individual or a company.

Once the NOI has been filed, the insolvent person must immediately initiate a full analysis of their financial situation with an LIT. Usually before filing, the debtor has been in contact with the LIT to review their options.  A plan is then set up to enable them to offer a settlement for their creditors: the “proposal” as such.

During this period, apart from a few exceptions, all legal proceedings that have already been initiated against the debtor are automatically suspended and all legal proceedings even contemplated by the creditors cannot commence.

Within the first 10 days following the filing of the NOI, the debtor must file a projected cash-flow statement that needs to be signed off by the LIT. These projections will enable the LIT to assess the viability of the debtor and to determine whether a proposal is indeed the right course of action.

Should they consider that the restructuring will require more time than expected, the debtor may request one or more extension(s) from the Court. This application must be supported by the LIT.

The LIT’s main role is to monitor the debtors operations during this period. He is also charged to provide his help and expertise to avoid their bankruptcy.

The BIA allows insolvent persons to have access to useful and necessary means to help companies survive.

  • First-ranking interim financing (DIP financing)This solution may be considered by insolvent persons who are experiencing an immediate lack of cash. Debtor-in-possession (DIP) financing can be provided with Court approval. Typically, the interim financing would have priority over any secured creditor’s claims.
  • Disclaimer of agreementsIt is possible, with the agreement of the Licensed Insolvency Trustee to disclaim agreements signed before the filing of the NOI. This notice must have been filed to the concerned parties in the prescribed form.
  • Disclaimer of a commercial leaseAt any time between the filing of the NOI and the filing of a proposal, the insolvent persons who is a party to a commercial lease may disclaim the lease. A 30-day notice will have to be given to the lessor in the prescribed form.

Even though the disclaiming of agreements and commercial leases is authorized under the BIA, insolvent persons may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a Court.

It sometimes appears during a restructuring that a part of the company’s assets must be sold to maximize their realizable value. A request to do so must then be made to the court, which will accept it if the conditions specified in the BIA are met.

The restructuring of a company’s operations is essential to ensure its survival. The LIT and the insolvent person will work together as soon as the NOI has been filed.

The Proposal itself

The proposal represents an offer made by the debtor to their creditors in order to settle the amounts they owe them.  The BIA is fairly flexible as to how a proposal is structured and it leaves room for negotiation between the parties. It may consist of a lump sum, or of monthly payments spread over a long period or a combination of both.

The proposal can also protect company Directors and Officers regarding some of their obligations that may arise as a result of the filing of the NOI.  It is however worth mentioning that nothing protects them in the case of a secured creditor.

A proposal must always include some essential elements:

  • The full amount of the deductions at source that are owed must be paid within the 6-month period following the acceptance of the proposal by the Court.
  • The payment, immediately after the acceptance of the proposal, of the wages of the employees, including their vacation pay, to the extent of $2 000 per employee.

Vote on the Proposal

A meeting of creditors is held within the 21-day period following the filing of the proposal. The creditors then indicate their preference by voting either in person or by letter.

To be approved, the proposal must be accepted by the majority of the creditors (50% + 1) and the voting creditors must additionally hold 2/3 of the total value of the amounts due.  In order for the proposal to be accepted, both voting thresholds must be attained.

Upon the acceptance of the proposal by the creditors, it must, as a final step, be approved by the Court. On the other hand, if it has been refused, the insolvent persons are deemed to have made an assignment in bankruptcy.

It is never too late to meet with an LIT in order to make some arrangement to pay back your debt.

If you are at the head of a company facing financial difficulties, you should know that you have many options to deal with debt. The notice of intention and the proposal represent only two of the numerous solutions we can offer you. So do not hesitate to contact John McEown at Boale, Wood & Company Ltd., Licensed Insolvency Trustee. (604) 605-3335 or jmceown@boalewood.ca.

Join our newsletter mailing list

news-iStock_000067507755_-500

My name is David Wood and I am a Licensed Insolvency Trustee.

I’d like to personally invite you to subscribe to the Boale, Wood and Company Ltd. email newsletter.

The newsletter is free, and it just takes a few seconds to sign up.  In our inaugural edition you’ll read about:

  • Insolvency and Taxes
  • Average Consumer Debt Levels
  • What to do if CRA garnishes your paycheck
  • and more.

Once you’ve subscribed, we’ll send your periodic newsletters via email with information we think you’ll find both useful and interesting about insolvency related issues.  You may have a client who needs to use our services.

Please sign up here.

Thanks.

David Wood,  President
Boale, Wood and Company Ltd.
Licensed Insolvency Trustee