When you file an assignment in bankruptcy, your assets that are not exempt from seizure or fully encumbered, vest in the trustee to realize on for the general benefit of your creditors.  This means that the trustee will cash in your TFSA, will sell your house or car to realize the equity or you can make an offer to purchase them back from the trustee.  If you do not have any assets, there is nothing for the trustee to take.

In the year of bankruptcy, your trustee will file your personal income tax return and any refund for the year of bankruptcy or any prior year will be forwarded directly to your trustee as property of your estate.

Depending on your net monthly income and family size, you may be obligated to make surplus income payments to your trustee.   The Superintendent of Bankruptcy has issued a directive as to what they think is necessary to cover reasonable living expenses, and if your income exceeds this threshold, you must make surplus income payments to your trustee for the benefit of your creditors.

When there are realizable assets, the trustee’s fees can be paid from the assets realized.  If you have no assets and are not required to make surplus income payments, then you will be obligated to pay the trustee a minimum fee for them to administer your estate.  The amount of the fee varies depending on if it is a first, second or third bankruptcy.  The minimum fee that Taylor Leibow charges for a first-time bankruptcy is 9 monthly payments of $200 per month.  We understand that if you are considering filing bankruptcy, the minimum fee may seem unmanageable, but you will no longer be making payments to your unsecured creditors.

You can also consider a proposal to your creditors if you have excess funds available monthly to offer a compromise to your creditors.

Stop struggling alone with overwhelming debt.  Reach out to our Licensed Insolvency Trustees today to explore all potential debt relief solutions at a free consultation.

There is no magic fix to rebuild your credit rating after filing bankruptcy. Slow and deliberate action must be taken to gain positive reportings on your credit report that will then improve your credit score. You must also be cautious about applying for credit if you have concerns about qualifying. Being rejected for credit will further negatively impact your credit score.

Several tips to improve your credit rating after filing for bankruptcy in St Catharines:

• Accumulate savings and then apply for a secured credit card. You will need to save $500 – $1,000 to provide as security and will then be granted a credit card with the same limit.
• If you made monthly payments to your trustee during your bankruptcy, set aside those excess funds in savings until you have the funds for the deposit.
• Invest the time in researching different secured credit cards that are available from your bank or other lending institutions. The annual fees and interest rates will fluctuate, and since you intend to pay the debt in full each month, I recommend the lower annual fee.
• Put your groceries and gas on your credit card every month and pay the balance in full by the due date. You should have developed a budget during your credit counselling sessions, so you are comfortable charging your groceries and knowing you have the funds to pay the balance when due.
• Utilize 30% of your credit limit. Do not max out your credit card every month.
• Pay your bills on time. Cell phone providers typically report to the credit bureaus, so make sure you pay on time every month.
• Once you have used a secured credit card for a year or so, talk to your bank about obtaining a traditional credit card with a low balance.
• Store credit cards like Canadian Tire and Home Depot are typically easier to qualify due to the very high interest rate charged on balances. If you pay the balance in full every month, the interest rate is irrelevant.

If you are struggling with debt, don’t let concerns about the impact on your credit report stop you from taking steps for a permanent solution. Reach out to the trustees at Taylor Leibow Inc. today.

The Office of the Superintendent of Bankruptcy has set guidelines as to what they feel is necessary to cover reasonable living expenses in a bankruptcy.  If income exceeds the threshold, then payment of 50% of the excess must be paid to the trustee as “surplus income payments”.

The purpose of the guideline is to ensure application across all personal bankruptcies on an equal basis.  The guideline anticipates that changes may have to be made in lifestyle to be able to afford the surplus income payment which is a tradeoff for discharging your debt.

The guideline is standard across Canada and based on your income, family size and certain non-discretionary expenses (spousal and child support payments per a Court order or written agreement, medical costs not covered, and childcare are the most common).  The actual funds left over at the end of the month do not impact on the calculation.

For a family of 1, the directive amount is currently $2,666.00.  Net take home income from all sources (employment, Ontario Works, support, etc.) less non-discretionary expenses is compared to the directive.  If the net exceeds the directive, then surplus income payments of 50% must be paid to the trustee and the bankruptcy will be extended by a further 12 months.  For example:

If you are seeking help for overwhelming debt, don’t let the surplus income requirement scare you from reaching out to a Licensed Insolvency Trustee.  Our trustees will review the above and explore all solutions, including a consumer proposal, to come up with a plan that works for you.

There is often a fear of reaching out to a Licensed Insolvency Trustee to explore bankruptcy due to the misconception that you lose all your assets.  The Execution Act in Ontario allows you to retain your household furnishings, a vehicle up to a set value, and most RRSPs are exempt from seizure in bankruptcy.

The purpose of filing an assignment in bankruptcy is to provide you with relief from your debt and allow you to move forward with a fresh start.  To assist in your rehabilitation to a fresh financial future, the following assets are exempt in a bankruptcy and are retained by you:

The Execution Act of Ontario

• Household furniture up to a liquidation value of $14,180;
• One personal automobile up to a value of $7,117;
• Tools of the trade required to operate your business up to $14,405; and 
• Your home if the equity is less than $10,783.  If the equity is higher than the exemption, then the exemption is lost.

Additionally:

• Life insurance policies with a designated beneficiary of a spouse or child are exempt
• Registered Retirement Savings Plan and Registered Disability Savings Plan, other than contributions in the 12 months preceding your bankruptcy, are exempt

We refer you to  https://freshstartnow.ca/the-process/personal-bankruptcy/ on our website for further details on assets you can keep in a bankruptcy.  

The trustees at Taylor Leibow Inc. would be happy to set up a free consultation in Burlington to review your personal situation in detail and explore if a bankruptcy can provide you with relief from overwhelming debt.   Reach out to us today to discuss what assets you can retain while eliminating your debt. 

Only a Licensed Insolvency Trustee (“LIT”) can file an assignment in bankruptcy for an individual in Canada.   The steps to file an assignment in bankruptcy are as follows:

1. Reach out to a LIT to schedule an in-person or virtual consultation to review your assets, liabilities, income and expenses, co-signors of your debt, and any transfer of your assets.
2. The trustee explains solutions for debt relief, and you decide which solution is best for your circumstances.
3. Statutory documents are prepared by the trustee and signed under oath as being a true statement of your affairs.
4. Documents are filed with the Office of the Superintendent of Bankruptcy (“OSB”), which issues a Certificate of Appointment confirming your bankruptcy, and a stay of proceedings is implemented, which stops your unsecured creditors from taking legal action against you. The bankruptcy filing can stop a garnishment of your wages by an unsecured creditor.
5. Assets that have a realizable value vest in the trustee to realize for the benefit of your creditors. This means the trustee will collapse any non-exempt investments (TFSA, GIC, etc.), collect amounts owing to you from any other party, and realize on equity in your house or other assets.
6. Monthly Income and Expense forms must be submitted to determine if you are required to pay surplus income payments. If your income exceeds a threshold set by the OSB, 50% of any surplus must be paid to the trustee for the benefit of your creditors.
7. Tax returns for the year of bankruptcy will be prepared by the trustee, and any refund will go to your trustee.
8. Creditors could request a meeting of creditors to ask you questions on your financial situation and disposition of assets.
9. You must attend 2 counselling sessions on budgeting, money management and rebuilding credit.
10. A first time bankrupt will be discharged (relieved from their debt) in 9 months if you are not obligated to pay surplus income payments. The discharge is extended to 21 months if you are obligated to make surplus payments and 24 months if you were bankrupt before (36 months if you are obligated to make surplus income payments).
11. The bankruptcy will be reported on your credit rating for 7 years from your discharge (14 years for a second bankruptcy).
12. You will move forward free from your unsecured debt with financial tools to provide your future financial success.

If you are struggling with debt and considering bankruptcy, reach out to our trustees for a free consultation.  We are ready to walk you through the above steps to a fresh start.

If you are struggling with your debt and asking the above question, you should seek the advice of a Licensed Insolvency Trustee (“LIT”) to review your financial situation in detail and explore all solutions.  Your RRSPs may be protected from your creditors and retained for your future retirement.

A couple of important items to consider:

• RRSPs that are held with a life insurance company and have a designated beneficiary of a parent, child, or spouse are exempt in a bankruptcy, and thus you would be able to keep them.
• All other RRSPs are exempt in a bankruptcy, other than contributions in the last 12 months. Thus, if you file an assignment in bankruptcy, the trustee will only be looking to realize on the contributions in the 12 months preceding your bankruptcy.
• On a withdrawal of an RRSP, the financial institution will withhold some tax at source. You will be obligated to report the income on your personal income tax return, and depending on your other income, you may owe more personal income tax.
• An insolvency is the filing of a bankruptcy or consumer proposal to deal with your unsecured debt.
• An insolvency will stop a garnishment of your wages and legal action by an unsecured creditor.

Free consultation and solutions analysis

A free consultation with a LIT will review your realizable assets, exempt assets, liabilities, income and expenses. The trustee will review your assets that must be realized in a bankruptcy, potential surplus income payments that may be required, and tax refunds that will be distributed to the trustee.  They will explain how much you could offer to your creditors to settle your debt with one monthly payment over a maximum 5-year time period in a consumer proposal. They will compare bankruptcy and consumer proposals to the do-it-yourself options of paying off your debt on your own or attempting to obtain a consolidation loan.

If you can cash in some of your RRSPs, afford to pay any tax liability that may arise, and pay down your debt in full, this may be a viable solution for you.  You will eliminate the future interest on the debt and hopefully be able to save to re-contribute to your RRSP in the future.

If you are cashing in exempt RRSPs to pay down some of your debt without a permanent solution to eliminate all of your debt, an insolvency may be a better solution for you.  A bankruptcy or consumer proposal will allow you to retain your RRSP for future retirement while having a plan for a debt-free future.

Seeking help when you are struggling with debt is a hard step to take.  The trustees at Taylor Leibow Inc. have been helping individuals find permanent debt relief solutions for over 35 years.  Reach out to us today for a free consultation to help you achieve your fresh start.

Unfortunate circumstances can impact anyone.  A separation of marriage, loss of income, helping children or lack of financial education can leave a middle-aged woman struggling with debt.  Being unable to handle your own finances can be overwhelming and impact your health.  Don’t struggle alone.  The Licensed Insolvency Trustees at Taylor Leibow Inc. will review your financial situation in a non-judgmental, compassionate manner and discuss the following solutions:

1. Budget to pay down your debt
   Are you aware of your monthly expenditures? Do you track all of your spending to analyze where you could cut back to put more money towards your debt payments?  Can you reduce your non-discretionary spending (entertainment, clothes) and concentrate on paying down your debt?  If you are able, pay down the highest interest-bearing loans first to minimize the interest cost.
2. Debt consolidation loan
   You may be finding it difficult to juggle numerous loan and credit card payments at very high interest rates. Talk to your bank to see if you qualify for a consolidation loan.  This will leave you with one monthly payment at a lower interest rate.
3. Consumer Proposal
   You can make an offer to settle your debts with one monthly payment over a maximum of 5 years. No further interest is charged and the trustee’s fees are included in the proposal payment.  A proposal stops a garnishment of wages and creditor phone calls.
4. Bankruptcy
   The purpose of a bankruptcy is to provide relief to an honest but unfortunate debtor. If none of the above solutions work for you, a bankruptcy will eliminate the majority of your unsecured debt and allow you to rebuild moving forward.

For more information, check out the resources on the Financial Consumer Affairs of Canada website at  https://www.canada.ca/en/services/finance/debt.html.

Take the first step to a financial fresh start today and reach out to me, Kathy Lenart, for a free consultation on the best solution for you.

I have been helping debtors who are struggling with overwhelming debt for over 30 years.  I understand that reaching out to a Trustee is a really difficult step to take and that everyone’s circumstances are different and very personal to them.  I thought it might be easier to explore solutions with me if you knew a bit about me.

I am a born and raised Hamiltonian.  From early on in high school, numbers have always been “my thing”.  I worked numerous jobs in retail (McDonalds, Towers and The Beer Store) and thus learned the importance of customer service and a courteous disposition very early.

I joined Taylor Leibow in 1989 after graduating from the University of Waterloo and started as a junior providing accounting services.  Many people in my profession change employers multiple times in order to progress, but Taylor Leibow has a great reputation, acknowledges hard work and the culture is unbeatable.

After obtaining my Chartered Accountant designation in 1991, I went on to obtain my Chartered Insolvency and Restructuring Professional designation and became a Licensed Insolvency Trustee in 1996.  This is when I found the ultimate satisfaction in helping people find a path forward to a brighter financial future.  Most people I meet find themselves unable to pay their debt due to life circumstances.  The fact that I have the training and experience to help them find a financial fresh start is very rewarding.

Maintaining the integrity of my profession is important to me and I currently stand on the Professional Conduct Committee for the Canadian Association of Insolvency and Restructuring Professionals.

Outside of Taylor Leibow, I enjoy the outdoors, staying active, travelling and spending time with my adult children.

Take the first step to a financial fresh start and reach out to me today.

The best solution for you will depend on your individual circumstances and personal morals.  Both a bankruptcy and a consumer proposal are formal filings pursuant to the Bankruptcy and Insolvency Act and both provide you protection from your unsecured creditors.  They both impact your credit rating and stop a garnishment of your wages by Canada Revenue Agency and other creditors.  You must attend two credit counselling sessions in either solution.  The similarities end there.

Bankruptcy

• Assets with a value that exceeds a secured loan and are not exempt from seizure (e.g. furniture, vehicle up to $7,117) must be realized by your trustee for the benefit of your creditors. You can offer to buy the assets back from your trustee, but they must be paid for over a shorter period of time.
• Income tax refunds, GST and some other benefits are assets the trustee will directly receive.
• Surplus income payments may have to be paid to your trustee if your income exceeds a threshold based on your family size.
• You will be required to submit monthly income and expense statements and your surplus income payment may increase if your income increases during your bankruptcy.
• The trustee has the right to realize on after acquired assets which consist of inheritances, lottery winnings, etc.

Consumer Proposal

• An offer is made to your creditors to compromise your debt over a maximum of 5 years.
• The proposal must offer more to your creditors more than they would receive in a bankruptcy but because you are extending the payments over 5 years, the monthly payment is lower and more affordable.
• Future increases in income will not impact your creditor and Court approved proposal.
• Receipt of a future asset (inheritance) will not impact your creditor and Court approved proposal.
• You can always pay the proposal off sooner which removes the reporting from your credit report sooner.

Based on my experience, individuals with significant assets, the potential to receive an inheritance from a sick family member, high surplus income payments or the potential for their income to increase significantly typically prefer a consumer proposal.  I have also filed consumer proposals for individuals who have no assets and minimal income because they felt “it was the right thing for them”.

Taylor Leibow Inc. will review your financial situation in detail at a free consultation to educate you on solutions so you can make the right decision for you.