How Moving Will Affect Consumer Proposal
A consumer proposal is an alternative to bankruptcy. If a consumer proposal is approved by a debtors creditors, the debtor pays a reduced, agreed upon, portion of their debts over an agreed ;period of time . You can move to another country if you file a consumer proposal but, as with bankruptcy, you will be required to fulfill your statutory duties, as outlined by your LIT.
Does Bankruptcy Take Care Of Any Tax Money I Owe To The Canadian Revenue Agency
Many people assume that income tax debt is not dischargeable in bankruptcy. However, in a bankruptcy, your debt to the CRA is treated the same as any other unsecured debt, such as credit cards or lines of credit. After filing for bankruptcy, all interest and collection activity by the CRA will stop. Additionally, your trustee will communicate directly with the CRA on your behalf.
How To Claim Bankruptcy In Ontario
Bankruptcy in Ontario can only be filed through a Licensed Insolvency Trustee. The process is not difficult:
The act of filing bankruptcy in Ontario is not without some short and long term negative effects. Hoyes, Michalos & Associates trustees are happy to offer everyone a FREE, no obligation, professional consultation. We will review the details of your individual situation and help you decide if claiming bankruptcy is indeed the correct debt management option for you.
There is no reason to continue living in the downward spiral of overwhelming debts. You do have options, and we are here to help. Simply contact us today.
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Bankruptcy Exemptions In Manitoba
- Furniture and household appliances up to $4,500
- No limit on clothing for you and your family
- Food and fuel necessary for you and your family for six months, or the cash equivalent
- Tools of your trade up to $7,500
- One motor vehicle up to $3,000 when used for business or transportation to work
- Articles and furniture necessary to perform religious services
- No limit on health aids for you or your family
- If you are the sole owner of your home, up to $2,500 in equity is protected; if you co-own your home, the limit is $1,500
You May Make Surplus Income Payments
When you file for bankruptcy, you must do the following:
- disclose to the LIT information about all of your assets and liabilities ;
- advise the LIT of any property that was sold or transferred in the past few years;
- surrender all your credit cards to the LIT;
- attend the first meeting of creditors ;
- attend two counselling sessions;
- advise the LIT in writing of any address changes;
- if required, attend an examination at the Office of the Superintendent of Bankruptcy; and
- assist the LIT as needed in administering your estate.
You may be required to make additional payments to your LIT for distribution to your creditors.
In addition to paying the LIT’s fees, you may be required to make additional payments to your LIT for distribution to your creditors. These are called surplus income payments.
Each month during the bankruptcy process, you must submit a copy of your pay stubs and proof of other income to the LIT. The LIT then calculates your surplus income.
Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. This amount is set by the OSB annually. The larger your family, the more you are allowed to keep; the more you earn, the more you are required to contribute.
In other words, if your household income exceeds the level set by the OSB, then you must make additional payments to your LIT during your bankruptcy.
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Second Time Bankruptcy What Rules Apply
In Canada, about 15% of people that have filed for bankruptcy end up declaring bankruptcy a second time.; Since approximately 60,000 Canadians will be declaring bankruptcy this year that means 9,000 of them likely have done so before.
The number of people filing second bankruptcies is large enough that in 2009 the federal government brought into effect new to deal with repeat filers.
Second Bankruptcy Filing Canada
Yes, it is possible to file bankruptcy twice in Canada provided that you have received your bankruptcy discharge from the first bankruptcy filing.
If you have not been discharged from your first bankruptcy you will have to petition the Bankruptcy Court for your discharge in order to file a second bankruptcy.
Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation
In fact, you can even file for bankruptcy a third time in Canada.
Fortunately, for most individuals filing for bankruptcy only happens once in their lifetime.
When you file bankruptcy you will be given the skills needed to manage your finances successfully.
However, things can happen and if you are facing money problems again our trustees have helped many people like you file bankruptcy a second time.
About 10% of personal bankruptcies are a second time filing.
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Preferences Or Transfers At Undervalue
A transfer of property can be set aside if, in the three months prior to the date of the initial bankruptcy event, the debtor made a payment to one creditor that favored the creditor over others. .
A disposition of property or provision of service for which no consideration is received by the debtor or the consideration received is less than the fair market value of the consideration by the debtor can be set aside if made in the one year before the initial bankruptcy event. If the creditor is not at arms length from the debtor, the disposition of property can be reviewed by up to 5 years before the initial bankruptcy event if the debtor was insolvent or was rendered insolvent by the transaction or the debtor intended to defraud, defeat or delay a creditor.
If you have reasonable grounds to believe that the bankrupt or someone else is guilty of an offence under the BIA or any other statute, you should contact the LIT in charge of the estate or the OSB.
How To Apply For Bankruptcy
Declaring bankruptcy in Canada requires the help of a;Licensed Insolvency Trustee;or their qualified staff. Only a Licensed Insolvency Trustee can help assist you with a bankruptcy claim because they are the only people licensed by the Canadian Superintendent of Bankruptcy to administer consumer proposals and bankruptcies.The government requires them to perform an assessment of your financial situation in order to determine if bankruptcy is the best option.
Generally, they will look at your assets, income and expenses, and debt level to make sure bankruptcy is a good option. At this meeting they explain all of your debt options. They will also make sure you are given a full explanation of the bankruptcy process so you can decide if you should declare bankruptcy.
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What Happens When You Need To Declare Bankruptcy In Canada
The reasons for declaring bankruptcy in Canada vary by household. Job loss, divorce, economic fallout from the pandemic, and simply not following a budget can all lead to bankruptcy. Bad things happen to good people, and events during the past two years have certainly been challenging.
While there was a sharp drop in filings for bankruptcy in 2020, there were still nearly 33,000 bankruptcies last year. Expect This number to rise again after COVID, as 2021 filings are slowly returning to higher levels, according to Bloomberg news.
This guide can help you understand how bankruptcy works in Canada, what you can expect when you file, and what will happen once your filing is complete. In this guide, well focus on personal bankruptcy, however, there are other types of bankruptcies for small businesses and corporations.
Consumer Proposals Vs Bankruptcy And Cra Debt
A consumer proposal is a popular alternative to bankruptcy because it provides debt relief from unsecured creditors, including debt forgiveness from CRA. When you file a consumer proposal with a licensed insolvency trustee you are not required to sell any of your assets to repay your debts or pay any surplus income.
To start the consumer proposal process, you will first need to schedule a consultation with a licensed insolvency trustee where you will review your finances. After reviewing your income, expenses, and total debts, the two of you will find a fair amount that you can pay each month to all of your creditors. These payments can last up to five years after which, you will be discharged from all debts covered by the proposal, including CRA debts.
Tax debt in Canada can be included in a consumer proposal and the CRA will often accept less than your full amount owing, though how much they will settle for will depend on the situation. In order to get the CRA to accept your proposal, you will have to file any and all outstanding tax returns. If you want CRA debt relief and 50% or more of your total unsecured debts are owed to the agency, you will have to get them to accept the proposal.
If a consumer proposal is not a viable option for you, then filing for bankruptcy may be your next solution. With this, your trustee would be required to file a pre-bankruptcy tax return and a post-bankruptcy tax return.
Criminal/penal Caseosb No: 41
Having already accumulated debts of $2,000, a man incurred additional debts prior to losing his job. He continued to take on debts, knowing that he could not pay his creditors. He applied to increase his credit limits, which he very quickly reached. Ten months later, he had about 30;credit cards or lines of credit, and debts exceeding $196,000. He declared bankruptcy, attributing his financial problems to the fact that he was unemployed.
Summary of offences of the bankruptFootnote 2
- Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.
The bankrupt pleaded guilty to one count of fraud covering all of his offences. He was sentenced to 18;months, to be served in the community, with a number of conditions.
Bankruptcy Exemptions In Nova Scotia
- No limit on clothes for you and your family
- No limit on fuel and food for your family
- Up to $5,000 in household furniture and appliances
- One motor vehicle up to $6,500
- All medical and health aids for you and your family
- Farm equipment, fishing nets, or other tools of your trade up to $7,500
- No limit on grain and seeds or livestock for domestic use by you and your family
For more information on bankruptcy exemptions in Nova Scotia, contact a local a BDO trustee near you.
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Surplus Income And Bankruptcy In Canada: Is A Consumer Proposal The Better Option
One of the most important concepts to understand before you file bankruptcy in Canada is surplus income. Heres the concept:
The more you earn, the more you are required to pay while you are bankrupt.
The concept makes sense. If you are a doctor earning $200,000 per year and you went bankrupt because you had bad investments and got stuck with $1 million in debts, its only fair that you contribute more to your creditors during your bankruptcy than someone who earns minimum wage.
Proof Of Claim Bankruptcy Canada: The Robo
Between 2012 and 2015, tens of thousands of proofs of claim were filed in bankruptcy files throughout the USA for DSNB. These proofs of claim were incorrectly signed, under the penalty of perjury, by employees of an outside vendor who had not reviewed the respective file and proof of claim and/or lacked knowledge of the contents of the proof of claim.
In some cases, the electronic credentials of the vendors staff were used to file proofs of claim without being reviewed by that or any other person. These improper practices were identified when Citibank took over the servicing of the accounts in late 2015 from the third parties. Citi self-reported the errors to the USTP.
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Proof Of Claim Bankruptcy Canada: Are Claims Being Made Against You Or Your Company
Are you or your company experiencing financial difficulties? If yes, call the Ira Smith Team. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are in the door.
The earlier you contact us, the more options we will have to implement. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.
Youre simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity.
Laws Governing Bankruptcy In Canada
Federal;bankruptcy laws;are set out in the;Bankruptcy & Insolvency Act.
The BIA defines three types of insolvency proceedings available to individuals seeking a resolution to their debts:
- personal bankruptcy,
- consumer proposal,
- and a Division I proposal.;
Bankruptcy can only be filed with a Licensed Insolvency Trustee. The role of the bankruptcy trustee is to ensure that the rules and laws around the bankruptcy process are applied fairly to both the debtor and creditors.
Bankruptcy legislation is what provides immediate protection from creditor actions, known as an automatic stay of proceedings. It is the stay that ensures collection agencies and creditors stop calling and allows your trustee to stop a wage garnishment.
Provincial laws also impact your bankruptcy, including legislation that defines what assets are exempt from seizure when you declare bankruptcy.
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What Happens To Assets In Bankruptcy Will I Lose Everything
Bankruptcy offers you a fresh start. You are able to keep basic possessions and there are options to keep other assets.
Once you are legally bankrupt, bankruptcy law requires you to surrender your assets to a Licensed Insolvency Trustee. These assets will then be sold and the money earned will be distributed among your creditors.
You dont lose everything. Under Ontario bankruptcy law there is a list of items which are exempt from seizure, when going bankrupt in Ontario. These bankruptcy exempt assets include most of your personal and household belongings and tools used to earn a living and protection in the event your home equity falls below the set threshold .
The Truth Behind Bankruptcy
Bankruptcy cannot get rid of your entire debt as much as you want. Besides, it does not wipe out your secured debts; you will still be obliged to pay off your mortgage or car loan if you have one. Moreover, bankruptcy does not excuse you from paying child support or other legal fines that you are imposed.
In the case of personal bankruptcy, you will have to surrender your assets to compensate for your debts. By doing so, you are no longer accountable for either your unsecured or secured debts. Although they may sound compelling, the reason why your payment for secured debts is no longer needed is that the bank or the lending institution has repossessed your property.
Thus, before taking a big step in filing for bankruptcy, it makes sense to get a clear view of what will happen to your debt upon your discharge. Besides, knowing its pros and cons will give you an idea of the massive cost of bankruptcy in Canada. Moreover, it is better to weigh things first before stepping into a big decision in your life. Granted the awareness about your debts during bankruptcy, you may then pursue filing if you feel that your situation best suits the idea.
On the contrary, knowing the pros and cons of bankruptcy, you may consider pursuing other debt-relief alternatives; the impact of a consumer proposal, debt consolidation, consumer credit counseling, or debt settlement are way acceptable to bear than bankruptcy.
Debts Discharged in Bankruptcy
Debts are NOT Discharged in Bankruptcy
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Criminal/penal Case Court/osbnos: 31
A husband sold the family home to his wife. The wife immediately remortgaged that home. After four months, she stopped making mortgage payments on it. Soon after that, the family moved to a new home that they bought in their daughter’s name. The daughter made a $228,000 down payment on the home using money her father gave her. When the wife filed for bankruptcy, she reported her previous house as an asset. In addition to the mortgage debt on that previous house, she owed $169,000 in other debts. The husband filed for bankruptcy 10 months after the wife, declaring debts of $270,000. The husband said that he had given the house to his wife as part of their separation agreement, along with $100,000. Then the husband changed his account of the events and said that he had sold the house to someone else and given $100,000 of the proceeds to his wife as part of a separation agreement. An investigation concluded that the down payment on the second home likely came from the wife’s purchase and remortgaging of the first home in an attempt to shield that money from bankruptcy proceedings. The investigation also found that both spouses accumulated most of their debt in the seven months before they filed for bankruptcy. Each had obtained more than $130,000 in cash advances, as well as bought goods on credit.
Summary of offences of the bankruptsFootnote 2