Consumer proposal Ontario process:  Livan Hernandez now

Livan Hernandez made a lot of money as a pitcher in major league baseball yet, according to court documents, in July 2017 he has applied for Chapter 13 bankruptcy in Florida.  He filed in federal court at Fort Lauderdale.  The purpose of this blog is twofold:  1.  to show that even if you have made millions in your career, you can still get into debt trouble; and 2.  the consumer proposal Ontario process.which are similar to Chapter 13 US bankruptcy filings.

Hernandez, according to Baseball Reference, made more than $53 million in his job. He states that he owes up to 49 lenders between $500,000 and $1 million and he has $50,000 or less in assets.

The court documents show that most of the creditors he owes are banks and credit cards. He also owes the IRS.

Hernandez pitched for 17 years in the majors, on 9 teams. He played in 2 World Series, winning and making Series MVP honours with the Florida Marlins in 1997 and losing with the San Francisco Giants in 2002.

Consumer proposal Ontario process:  Chapter 13 trustee office

Mr. Hernandez would have attended at the Chapter 13 trustee office to file under the US Bankruptcy Code.  A chapter 13 bankruptcy is also called a wage earner’s plan. It enables people with regular income to develop a plan to repay all or part of their debts.  The Canadian equivalent is our consumer proposal Ontario process.

Consumer proposal Ontario process:  The rich and famous have problems too

We have written about the rich and famous having debt problems before.  Our previous blogs on this topic include:


Consumer proposal Ontario process:  Just what is a consumer proposal?

This vlog offers the answer to one of the most asked consumer proposal often asked questions. A consumer proposal is available to people under the Bankruptcy and Insolvency Act (BIA).  Teaming up with a licensed insolvency trustee (LIT) offering to administer your consumer proposal you make a proposal to:

  • pay your creditors part of what you owe them over a period not greater than 60 months;
  • lengthen the time you have to pay back your debts; as well as
  • stay free from bankruptcy

Payments are made to the LIT. The LIT uses that cash to pay each of your creditors. The consumer proposal must be finished within 5 years.

Consumer proposal Ontario process: Who qualifies?

To meet the BIA requirements for a consumer proposal, you need to be an individual, not a company. Your overall financial debts need to not exceed $250,000 (not consisting of debts from a home mortgage, home equity line of credit or line of credit, secured by your principal residence).

You should also meet the insolvency requirements. This implies that:

  • your debts are greater than the value of your assets;
  • if you sold your assets you would not have appropriate funds to repay your monetary commitments totally;
  • you are unable to pay your debts as they come due

Making simply the minimum monthly payment as disclosed on your credit card statements does not count as repaying your debts.

Consumer proposal Ontario process: What is the cost of a consumer proposal?

Your consumer proposal repayments cover the expense for the consumer proposal. There are no different prices either for doing a consumer proposal or fees paid to the LIT to administer your consumer proposal.  The fee the LIT earns is calculated per the BIA.

Consumer proposal Ontario process: How long will my consumer proposal take?

A consumer proposal can last for no more than 5 years. Nonetheless you can reduce the term either by:  1. increasing the amount of your month-to-month repayment agreed to with your creditors in your consumer proposal or; 2. by giving a round figure settlement all at once (if you could get an adequate amount from either a financial institution or family).

Consumer proposal Ontario process: What are the actions involved in a consumer proposal?

A consumer proposal allows you to pay all or part of your unsecured debt in regular monthly payments over an established period (again, not exceeding 60 months).

In composing your consumer proposal, the LIT has to make sure that your consumer proposal provides a better outcome for your creditors compared to what they could expect to receive in your personal bankruptcy.

The typical actions of a LIT assisting you in your consumer proposal are:

  • learn from you about your assets and liabilities;
  • work with you to create a strategy that you both believe will serve the requirements of both you and those you owe;
  • draft the consumer proposal;
  • send the consumer proposal to the Office of the Superintendent of Bankruptcy;
  • mail out the consumer proposal to your creditors who will have 45 days to accept or reject it.

The creditors can accept or reject your consumer proposal at a meeting of creditors, if such a meeting was held. Usually, in a consumer proposal, there is no need to hold a meeting.

Consumer proposal Ontario process: Can a consumer proposal stop debt collection agencies as well as prevent my wages from being seized?

Yes. As soon as the filing of a consumer proposal happens, all creditors must stop all legal action against you, including seizure activities (aside from any family law responsibilities under a proper settlement arrangement or court order).

Consumer proposal Ontario process: In a consumer proposal, will I turn over my residence as well as my auto?

Typically lending institutions who register a mortgage or various other security for a financing are outside the consumer proposal procedure. It is the equity you have in your residence or auto that must be considered when you initially work out a budget and what type of consumer proposal strategy you are going to make with your LIT.

If you have enough earnings to keep paying the mortgage against your home and/or your car loan as well as you wish to maintain the properties, you can do so. Again, your equity needs to be taken into consideration in the offer you make to your creditor.  Also, your income as well as costs need to be evaluated to make certain you can pay for all these expenditures plus the regular monthly payment under your consumer proposal.

KEEP IN MIND: If you were to surrender your home or auto after declaring your consumer proposal, you will not be spared the responsibility for any shortfall on your mortgage or auto loan given that the surrender took place after the filing of your consumer proposal.

Make certain that if you are giving back your home or auto to your lender, you await the bank to acknowledge that you have turned them over. Additionally, wait till they have begun their enforcement, BEFORE you file your consumer proposal.  That way any shortfall they experience will be a debt caught in your consumer proposal

Consumer proposal Ontario process: Will I need to surrender my charge cards?

Typically, you must be prepared to give each of your charge cards to the LIT and you will not be able to ask for a brand-new credit card till after your consumer proposal is completed. You can take advantage of a guaranteed/secured charge card.

Consumer proposal Ontario process: If my creditors reject my consumer proposal or I fail to fully do it, will I automatically become bankrupt?

We highly recommend you to put your best foot forward when submitting your consumer proposal.  We also recommend that you make your payments constantly on time. If your consumer proposal is rejected by your creditors or you drop 3 payments behind, your consumer proposal will go into default. If that were to happen, you will no more have protection from your creditors and their collection initiatives.

Consumer proposal Ontario process: What should I do if I have too much debt?

If you’re thinking of a consumer proposal or are seeking methods to solve your debt problems and avoid bankruptcy, call Ira Smith Trustee & Receiver Inc. Our method is for every single person is to create an outcome where Starting Over, Starting Now comes true, starting the minute you walk in the door. You’re simply one call away from getting back on the road to leading a healthy, balanced and tension free life.


Delayed retirement a new trend:  Introduction

Parents never stop wanting to help their children but there is a growing trend which can compromise the retirement of some seniors. It seems that many adult children are still financially reliant on their parents and treating them like an ATM.  This makes delayed retirement a new trend.

Parents are paying for their adult children’s rent, cars, cell phones and even vacations, with money they often have to borrow. “There are quite a lot of our members, indeed, who have taken out loans to help their children and grandchildren because they have a better credit rating,” says CARP Vice President of Advocacy Susan Eng.

Delayed retirement a new trend:  Grown children have a message for parents

A report by CIBC demonstrates clearly how helping adult children financially can negatively impact retirement plans.

  • 66% of parents are dipping into their nest eggs to support their adult children
  • 47% of parents said they have had to cut into their personal savings to help their children
  • 44% said they have had to limit travel or spending on themselves
  • 25% of parents are giving their adult children $500 or more each month
  • 71% helped their children by offering free room and board in the family home
  • 47% helped with groceries and household expenses
  • 35% helped with cell phone bills
  • 20% have delayed retirement
  • 14% have delayed selling or downsizing their home

Delayed retirement a new trend:  Forget what the retirement savings calculator said!

Unfortunately, it seems that parents supporting adult children is becoming the new normal. But, how far should a parent go to financially support their adult children? Many are delaying retirement. Others are borrowing money and accumulating debt which will certainly compromise their retirement.

This is a problem that can’t be solved with a quick fix. As a first step we strongly recommend budgets for both the parents and the adult children. This may help to get the spending under control.

Delayed retirement a new trend:  What can you do if you have too much debt?

For parents that now find themselves getting deeper and deeper in debt our best advice is to contact a professional trustee. The Ira Smith Team can help. We have a cumulative 50+ years of experience dealing with diverse issues and complex files and we deliver the highest quality of professional service. There is a way out of debt and back to financial peace of mind Starting Over, Starting Now. Give us a call today.


Credit check failed reasons:  Introduction

Below is our list of 5 stupid credit check failed reasons stopping you from getting that loan you can repay.  You likely recognize that not paying your credit card on schedule or missing out on a settlement could harm your credit score. That is probably the most common credit check fail.  So, those reasons are not on our list of credit check failed reasons.  There are much less clear methods to sink your rating.  You could be doing some without understanding the influence you’re triggering.

Below are 5 unexpected methods you could be damaging your credit score:

  1. Credit check failed reasons: Decreasing your credit line

You might assume that you’re increasing your credit score by reducing your credit line on your credit card.  However that could be having the other impact. Credit score use is the second-most vital credit score aspect, after history of credit card repayments.

Your credit use is your compared with just how much you’re using. When you lower that proportion, that is a good thing. Many professionals suggest maintaining it around 30 to 35 percent.

By reducing your authorized credit amount, you’re really increasing your credit use proportion.

Toronto financial advisor Seun Adeyemi says that most people are not aware that cancelled credit lines, even after making full repayment, can hurt your credit score.

Here is an example.  Say you have 2 credit cards:

  1. a Visa with a $1,500 balance as well as a $4,000 credit limit;
  2. as well as a MasterCard with $1,500 outstanding and a $6,000 credit authorization.

Your credit usage is just 30 percent since you’re making use of $3,000 of your readily available $10,000.

If you reduced your credit limit to $4,000 on that MasterCard, you’re currently utilizing $3,000 of a readily available $8,000.  This presses your credit usage to over 35%.

  1. Credit check failed reasons: Leasing an automobile with a debit card as opposed to a credit card

When you’re leasing, it’s a great deal less complicated when you make use of a credit card.

Utilizing your debit card will lead to a pull on your credit report.  While it could be a soft pull– implying it does not harm your debt– there’s a chance it might be a hard check.  A hard check does affect your credit rating.

The procedure changes slightly in the auto rental business. Making use of a debit card will certainly result in a soft credit inquiry. However, when using a debit card to rent a car, there will probably be a hard pull on your credit rating at the first time (when you check-in and get the car).

There would not be a credit check if you use of a credit card for renting a car.

An included incentive of renting your car with a credit card as opposed to debit: Many credit cards offer vehicle rental insurance coverage.  This saves you even thinking about taking the car rental company’s costly insurance package.

  1. Credit check failed reasons: Not paying your library fines (yes, libraries still exist!)

Not paying your penalties might lead the library to withdraw your privileges, as well sending your past due account to a collection company.  When a collection agency obtains your overdue account, if you don’t pay, it will be noted on your credit report that you are in collection and have not paid.  This will adversely influence your credit score.

Normally, you need to owe around $40 or more before the account being sent to collections. To prevent all this, check your public library’s plan on fines, as well as, obviously, paying your late charges in a prompt fashion.

  1. Credit check failed reasons: Not paying your parking tickets

When it concerns vehicle parking tickets, you have 2 choices:

  1. you could pay them; or
  2. go to Court and fight them.

Just what you do not want to do is disregard your parking tickets.

If you do choose to or forget to pay them, after a specific duration, your account will certainly go to collections. The policies on vehicle parking penalties differ by city.  For instance, in Toronto, the use of debt collectors starts when your vehicle remains in plate rejection.  This is when you could not restore your plate sticker label or acquire brand-new plates– for 2 years.  Also, your tickets outstanding balance is more than $300.

  1. Credit check failed reasons: Owing the taxman

If you have an outstanding amount payable on your income tax return, it’s important to settle that financial obligation to the Canada Revenue Agency (CRA). Overdue tax obligations could cost you in penalties and interest.  It will also make it more challenging to get loans.

When submitting your tax return, any amount owing is due on April 30th, or the next Monday if April 30 falls on a weekend.

Credit check failed reasons:  Not paying CRA is a self-inflicted indirect hit

Not paying your taxes does not directly hit your credit rating.  However, two standard questions on any loan application are:

  1. what is the last year you filed your income tax return for; and
  2. how much do you owe to CRA for personal tax.

Not being current in your filing, or having an amount owing to CRA, will limit your chances to get that loan you are applying for.

When applying for a mortgage or home equity line of credit, most lenders ask for a duplicate of your Notice of Assessment from the previous 2 years. If the potential lender sees that you owe the CRA a great deal of money, they might offer you a higher rate of interest than the posted rate or worse, refuse your application.

Credit check failed reasons:  What to do if you can’t repay your debts – even if you still have an OK credit score

Maintaining a good credit score is more than just paying your credit card on schedule, yet it does not need to be made complex. You should always aim to pay any type of arrears in a prompt style, as well as understand how every activity or transaction can affect your credit score.

If you are having problems repaying your debt, don’t be afraid to seek professional help. Don’t be enticed by the commercials for debt settlement.  A recent study by the federal government shows that people who first go to a debt settlement company, end up paying more to settle their debts than if they just went to see a .  That same study shows that ultimately, the debt settlement program alone does not work and the person ends up filing a consumer proposal with a licensed insolvency trustee.

The Ira Smith Team has helped many people in debt get back on track and living debt free lives Starting Over, Starting Now. Take the first step and give us a call today.


Financial security planning process:  Introduction

We can’t stress enough how important a household budget form is to your financial security planning process. Many Canadians are under the mistaken impression that budgets are only for people in debt.

Nothing could be farther from the truth. Everyone, regardless of your net worth or the amount of debt you’re carrying needs a budget. It’s the only way to control your money and make sure that you and your family are financially secure and achieving long-term financial security.

Financial security planning process:  6 great reasons why you need a household budget form

Still not convinced? Here are 6 great reasons why you need a household budget form:

  1. A budget gives you control over your money: A budget is a list of all revenues and expenses. It allows you to plan how you want to spend your money. Instead of money just flying out of your wallet, you make intentional decisions on where you want your money to go. You’ll never have to wonder at the end of the month where your money went or look for a hole in your wallet.
  2. A budget keeps you focused on your financial goals: Budgeting will allow you to meet your financial goals – paying down debt, funding a retirement savings plan, buying a house… – as long as you follow it religiously. With a budget you’ll know exactly what you can afford and you can divide your money appropriately. E.g. If your immediate goal is to save for the down payment of a house, then you may have to forgo that vacation you wanted to take. Your budget will tell you exactly what you can or can’t afford.
  3. A budget will make sure that you don’t spend what you don’t have: Credit cards are a great convenience but they also make it really easy to spend because there is no cash exchanged in the transaction. Many Canadians rack up serious credit card bills and land up deep in debt before they realize what’s happened. When you use and stick to your budget you have to account for everything you spend, even if it’s a credit card purchase. You won’t wake up deep in debt, wondering how you got there.
  4. A budget will prepare you for the unexpected: Every budget should have a rainy day fund for those unexpected expenses. It’s recommended that you should budget for three months worth of expenses for when there may be an unexpected lay off or other unplanned for major expense. Don’t be alarmed; you don’t have to put away all the money at once. Build your fund up slowly.
  5. A budget reduces stress: Many Canadians panic every month about where the money will come from to pay their bills. A budget will give you peace of mind. It shows you how much you earn and what your expenses are. If need be you can reduce unnecessary expenses or take on extra work to live within a balanced budget. No more panicking at the end of the month.
  6. A budget can help you afford the retirement you’ve been dreaming of: Saving for your retirement is very important and your budget can help you save for your future. Set aside part of your income every month for retirement savings. Start early and consistently stick to it. The money you save now will dictate the kind of retirement you can expect.

Financial security planning process:  What to do if you don’t have a household budget form and know you need one

A budget is your ticket to financial security. If you don’t have one yet, start budgeting today. Below you will see the link to download our free household budget form.

If you’re trying to get out of debt, contact Ira Smith Trustee & Receiver Inc. We can help you get out of debt and back on track to saving for your future. Make an appointment for a free, no obligation consultation today. You’ll be amazed at how bright the future can look Starting Over, Starting Now.


Bankruptcy blog Canada:  Introduction

Our bankruptcy blog Canada is designed to answer questions that you have about a bankruptcy or financial debt question.

Bankruptcy blog Canada:  Our often asked questions we try to answer in our Brandon’s Blog

Contact a Licensed Insolvency Trustee in your place currently with your inquiry, and receive an individualized answer.

Select a bankruptcy blog Canada site class to read concerns from other readers, as well as solutions from our trustees:

You could additionally send your personal confidential concern. One inquiry chosen each day for our experts to answer. To assure a solution to your question, please e-mail a trustee in your area.

For declaring bankruptcy inquiries as well as relevant subjects, depend on the professionals at Ira Smith Trustee & Receiver Inc.

Bankruptcy blog Canada:  Recent anonymous questions

Customer’s Guide to Credit Card Fraud

It’s not common, one of the things that could trigger people to file bankruptcy or a consumer proposal is if they’ve been the target of credit scores card scams. Here are some things you can do to secure on your own. Among one of the most common ways that people succumb to bank card fraud is simply […]

Can I declare bankruptcy while on Long Term Disability?

A couple of months ago I got a letter from Long Term Disability (LTD) to pay them back around $ 50,000.00. I am not able to pay this measure. I asked many various economic establishments to get a lending.

Considering bankruptcy blog Canada: minimal financial obligation

Looking to assert bankruptcy. Is his revenue considered my revenue if I send? The financial obligation is all my very own, none of it is joint with my spouse.

Just what occurs to money received after a bankruptcy or consumer proposal? If I were to file for bankruptcy, or a consumer proposal, in Quebec, and after a year or two I won a considerable quantity of money, exactly what would certainly occur to these funds in a court case?

Can I receive it without anybody being able to touch it?

Exactly how Does Consumer Proposal Affect Families?

Households, like people as well as pairs, have a vast array of expenses that draw on their financial resources. But also for family members with children, expenditures are often bigger as well as more diverse than expected. Youngsters Can Be Expensive! Children are the typical “wild cards” when it pertains to household costs. Parents supply well for their […]

Bankruptcy blog Canada:  Power of Attorney and financial responsibility

There are bank debts and credit card debt. Is it acceptable to negotiate with these borrowers to pay a percentage of the debt than the full amount?

Earnings residential or commercial property and Consumer Proposal

I have an inquiry about a rental residential property and home appliances inside it. If I were to give a consumer proposal as well as let the financial institution take back, my earnings home am I entitled to remove the machines before providing the residential or commercial property back?

Bankruptcy on mortgage with an ex lover spouse.

My ex-spouse. I can not pay the home loan as it is a high-interest rollover as well as if I go bankrupt am I responsible for any financial debt if he sold the house or goes insolvent himself.

Bankruptcy blog Canada:  Awaiting Trustee’s Discharge

After an individual obtains instantly released why do we have to wait for the Trustee to be discharged? My discharge was 2.5 years earlier, and the Trustee office states they are waiting to be discharged.

Secured financial obligation by another person and bankruptcy

Wondering just what happens if we file bankruptcy, as well as we have a protected credit line with my mother in law? We have a $30000 credit line that my mommy in regulation protected with her savings, however we must declare bankruptcy as well as would like to know just what will certainly happen to her as well as her […]

Bankruptcy blog Canada:  What to do if you have too much debt

I hope that you have found this vlog helpful.  If you’re looking for ways to end your financial debt call Ira Smith Trustee & Receiver Inc.  Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you stroll in the door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress free life.


Borrowing in retirement:  Introduction

At a time when Canadian seniors should be living a carefree life, they’re unfortunately borrowing in retirement.  Retired people are accumulating non-mortgage debt at the fastest rate of any age group in the last 12 months.

Borrowing in retirement:  Seniors rely upon debt

Equifax data on this subject is nothing short of alarming:

  • The average amount of debt held by those over 65 is $15,244
  • Those 65+ owe on average 6.1% more than they did a year ago—the Canadian average increase was 3.1%
  • 15% of seniors still carry a mortgage and rely upon mortgages borrowing in retirement
  • 30% of seniors carry unsecured lines of credit
  • 10% of seniors have a home equity line of credit

Borrowing in retirement:  The Broadbent Institute study

To add insult to injury a report by the Broadbent Institute paints a very bleak picture of the financial situations of many Canadian seniors who now rely very heavily or entirely on government and other retirement benefits.

  • 28% per cent of single women and 24% of single male seniors are living in poverty in this country
  • Canadians in the majority are retiring without an employer pension plan have totally inadequate retirement savings — the median value of their retirement assets is just over $3,000
  • 55% have savings that represent less than one year’s worth of the resources they need to supplement government programs like OAS/GIS and CPP/QPP
  • Fewer than 20% have enough savings to support the supplemented resources required for at least five years
  • For those with annual incomes in the range of $25,000–$50,000, the median value of their retirement assets is close to just $250
  • For those with incomes in the $50,000–$100,000 range, the median value is only $21,000
  • Less than 20% of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for retirement
  • Only 28% of Canadian seniors without employer pensions have five years’ worth of replacement income saved

Borrowing in retirement:  There is a need for seniors debt relief

Borrowing money in retirement is not a way out; it’s the fast lane to debt that you can’t hope to repay. With a greatly reduced income or no income at all beyond government benefits and programs, many are in need of seniors debt relief.

It’s so easy to use that line of credit or rack up high interest debt on credit cards. Larry Moser, a divisional manager at BMO InvestorLine, says it’s important for retirees thinking about borrowing money to understand how they’re going to pay it back or if they’re going to let their estate repay the money after they die.

Don’t be embarrassed to seek professional help. Don’t be enticed by the commercials for senior debt consolidation also.  Debt consolidation works when you are working and have enough income to reserve a part for debt repayment.  It doesn’t work on a reduced retirement income.

The Ira Smith Team has helped many seniors in debt get back on track and living debt free lives Starting Over, Starting Now. Take the first step and give us a call today.


Bankruptcy protection meaning:  Introduction

The Cambridge English Dictionary gives us the bankruptcy protection meaning as follows:

bankruptcy protection noun [ U ]

UK ​ US ​ also bankruptcy-law protection

​LAW, FINANCE laws that limit the amount of money a bankrupt company (= one that owes more money than it can pay) must pay to those it owes money to:

The firm filed for bankruptcy protection after a massive accounting scandal.

We have filed for bankruptcy protection from creditors.

It’s the second time the company has sought bankruptcy protection in 25 months.

The Chicago-based business, already forced into Chapter 11 bankruptcy protection, said that a complete collapse is now a “distinct possibility”.

 See also

Chapter 11

Bankruptcy protection meaning:  Bankruptcy protection meaning

The above definition is helpful, but, I would make one small change to it.  There is a difference between a company that does not have enough cash to meet its expenses, or whose assets are worth less than the value of its liabilities.  Such a company is insolvent.  Such a company is only bankrupt if it has filed an assignment in bankruptcy or a Court has issued a Bankruptcy Order against it.  Insolvency is the financial condition; bankruptcy is a legal state.

So, I will give you my bankruptcy protection Canada definition:

Bankruptcy protection is a legal state where the insolvent company (or person) has filed under the country’s bankruptcy laws to restructure and avoid becoming a bankrupt.

Bankruptcy protection meaning:  How does it begin?

A company starts to go into “bankruptcy protection” by putting together its motion to the Court to tell that:

  1. they are admitting that they cannot pay their debts generally as they come due;
  2. their assets are worth less than the amount of their liabilities;
  3. they cannot continue in business in their current financial and business condition;
  4. there may be come calamity about to befall them if they do not have the time and breathing space to focus only on a restructuring and running of their business to regain profitability;
  5. and they’re asking for the Court’s help and protection while they formulate a proposal or a plan of arrangement to present to the creditors.

The company is not seeking “bankruptcy protection”.  Rather, it is seeking protection from its creditors.  It is seeking a “time out” from the Court so that the company’s creditors cannot begin or continue legal action against the company.  It wishes to be protected from such outside influences so that nobody can tip it over.

Management is saying that if given time, it believes that it can come up with a plan to restructure the company so that it can emerge a better and financially healthy company.  It wishes to take the opportunity to see if its creditors, and the Court, will agree to a restructuring plan.  It wishes to continue in business to continue to buy and sell goods and services and to continue to be an employer.

Bankruptcy protection meaning:  We have all heard about Chapter 11 bankruptcy protection

We have all heard about Chapter 11 bankruptcy protection proceedings.  This refers to the restructuring provisions of the United States Bankruptcy Code.  A case filed under chapter 11 of the United States Bankruptcy Code is often called a “reorganization” bankruptcy.

The Chapter 11 filing provides bankruptcy protection to the company and allows it to restructure itself and its assets to attempt to maximize creditor and shareholder value and avoid bankruptcy.  A Chapter 11 case begins with the petition being filed with the bankruptcy court serving the area where the debtor can show a domicile or residence. A petition may be a voluntary petition,  a debtor filing, or it may be an involuntary petition, a filing by creditors that meet certain requirements.

You have probably just heard about Chapter 11 this week, as Takata Corp., the Japanese company that made faulty airbag inflators and is now the subject of many lawsuits in the United States and elsewhere just filed Chapter 11 bankruptcy protection proceedings this week.

Bankruptcy protection meaning:  Does Chapter 11 exist in Canada?

Chapter 11 is not a Canadian term or provision.  In Canada, there are two federal statutes that a company wishing to reorganize can rely upon.  Because they are federal statutes, they apply across the country.  So, it does not matter if you are applying for bankruptcy protection Ontario Canada or in any other province.

The first statute is the Part III Division I Proposal restructuring provisions of the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA).  The second, and today more common statute large companies file under, is, the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (CCAA).  

There is no such thing as a bankruptcy protection act Canada. The BIA and CCAA are also not new bankruptcy laws in Canada.  They have been on the books for some time and form part of the corporate bankruptcy laws in Canada . This vlog does attempt to give a bankruptcy protection Canada definition.

Both companies and people can file under the restructuring provisions of the BIA.  Only companies that meet the test can file under the CCAA.  The CCAA is a relatively brief statute which allows a company the time for them to restructure their affairs.  The CCAA is more flexible than the BIA and that is why it is the restructuring statute of choice for large and complex Canadian corporations.  It has often been called the Canadian Chapter 11.

The reason for filing under the restructuring provisions of either the BIA or CCAA, is for the company to avoid bankruptcy.  So there is a big difference when considering bankruptcy protection vs bankruptcy.  That will be a topic for another blog or vlog.

A company would file for restructuring if management believes there is a viable business to be saved.  Management believes that it has a viable business within the corporation and the corporation can be nursed back to good health by taking certain steps, including:

  1. reducing debt;
  2. preparing and implementing a new business plan;
  3. reducing expenses; and
  4. perhaps shedding redundant assets and/or unsuccessful business units.

Bankruptcy protection meaning:  What happens to the company when it is in restructuring mode?

The premise is that management remains in control of the business, its assets and operations while restructuring.  As part of the plan, there may be senior management changes if confidence has been lost in the old management.  However, management remains in control and the company continues to run.

The further assumption is that the company has enough cash flow, and/or enough lines of credit while in reorganization mode, to run and ultimately emerge from its restructuring proceedings.  The Court needs to know that there will not be prejudice to any creditor by providing the bankruptcy protection to the company.  Ultimately, the creditors and the Court will consider the company’s restructuring plan and decide whether to approve it.

Bankruptcy protection meaning:  Some examples please

There have been many CCAA filings over the last few years.  Some very well-known household names in fact, such as:

  1. Sears Canada Inc. – June 22, 2017
  2. Express Fashion Apparel Canada Inc. and Express Canada GC GP, Inc. – May 04, 2017
  3. Grafton-Fraser Inc. – January 25, 2017
  4. Performance Sports Group Ltd., Bauer Hockey Corp. – October 31, 2016
  5. Urbancorp Group of companies – May 18, 2016 and October 6 and 18, 2016
  6. Golf Town Canada – September 14, 2016
  7. Victorian Order of Nurses for Canada – November 25, 2015
  8. Verity Energy Ltd. – May 1, 2015
  9. Target Canada Co., et al – January 15, 2015 (this was just a liquidation, not a restructuring, but they used the CCAA)
  10. U.S. Steel Canada Inc. – September 16, 2014

Bankruptcy protection meaning:  What to do if your company cannot carry on because of too much debt

If your company has too much debt and insufficient cash flow, you need your plan and strategy in place NOW.  Contact us now.  The Ira Smith Team is here to solve your debt problems and help you carry out that winning strategy, no matter the reason. We’re here to help and get you back on solid financial footing Starting Over, Starting Now. We’re just a phone call away.


I want to save money but how? Introduction

Many Canadians struggle with saving money. When people come to see us, they always say “I want to save money but how?”.  They live from paycheque to paycheque and have no rainy day fund. This is a recipe for financial disaster, akin to walking a tightrope without a net.

I want to save money but how? How can you start saving money?

Before you can save money you need to know what you’re spending on. Make a list of everything that you spend money on – even small things. You may be shocked to learn where your money’s going. Then go on a shopping diet.

I want to save money but how? What is a shopping diet?

A shopping diet is no different from going on a food diet. Determining what to cut out or cut back on is tricky business. You need to reduce spending significantly to save, but still leave yourself a little money to buy some extras or you’ll never stick to it. It takes willpower and self-control. Dieting is not fun, but it beats the alternative.

I want to save money but how? 12 tips for going on a shopping diet:

  1. If you’re still smoking, stop now! In addition to the serious health ramifications, a pack a day habit/month can cost as much as a car lease, all of your utilities or a large part of your rent.
  2. Cut out or drastically cut back on designer coffee/tea. Did you know that a latte a day can set you back as much as $1,500/year?
  3. Swap department store face products for drug store face products. They’re just as good and you can save thousands.
  4. Review your plans – cell phone, cable TV, internet… and make sure you’re getting the best deals.
  5. Don’t automatically renew your car insurance and/or house insurance. Call around different to companies and brokers to make sure you’re getting the best prices.
  6. Go to a supermarket that offers the best deals or allows you to price match. Shopping at the most convenient place may add up to 25% to your grocery bills.
  7. Try a no-frills hair salon instead of a fancy salon. You’ll be shocked at how much you can save.
  8. Take public transit where possible instead of paying for gas and expensive parking.
  9. Cut back on your bar bills. Sharing a bottle of wine with dinner can cost more than the dinner. A few beers with your mates after work on a regular basis can add up to a pretty penny.
  10. Do you really need a new wardrobe? A few new pieces on sale may do the trick.
  11. Stay away from the make-up counter. How many lipsticks and eye shadows do you really need?
  12. Stop impulse shopping! Shop with a list and a purpose.

I want to save money but how? Do you need an experienced trainer to help you go on your shopping diet?

A shopping diet goes hand in hand with a budget. Now that you realize how much you can save by going on a shopping diet, you’ll be able to live within your means and save money.

If you feel like an out of control spender and are in serious financial trouble, or heading there, contact Ira Smith Trustee & Receiver Inc. today. We can help get you out of debt Starting Over, Starting Now. With immediate action and the right plan you’ll be on your way to debt free living and saving for the future.


Sears Canada closing down:  Introduction

On May 24, 2017, we released our vlog RETAIL BANKRUPTCY WATCH LIST: WHAT THIS 102 YEAR OLD TEACHES US ABOUT RETAILING. We discussed and analyzed the state of retail in 2017 in North America. At that time, there was no announcement about Sears Canada closing down.

Shortly afterwards, Hudson’s Bay Company announced massive job cuts.  We had just uploaded our vlog HUDSON’S BAY COMPANY NEWS 2017: JOB CUTS for publication on June 14, 2017 when Sears Canada Inc. (Sears Canada) dropped a bombshell.

Sears Canada closing down:  Sears Canada today

Sears Canada is an independent Canadian online and brick and mortar store merchant whose head workplace is in Toronto. Sears Canada’s special positioning is that it provides customers Sears tagged items, developed and straight sourced by Sears Canada.

It additionally is a leading rated mattress retailer in Canada, as well as the leading home appliance company in Canada. Sears Canada is undertaking a reinvention.  It consists of brand-new consumer experiences at every touchpoint, a brand-new e-commerce system, as well as a brand-new collection of customer care principles developed to supply special experiences to consumers.

Sears Canada closing down:  Sears Canada news release

It is a case of too little too late.  The market is not responsive to Sears Canada’s efforts to rejuvenate its company. On June 13, 2017, Sears Canada revealed financial news for the 1st quarter of the financial 2017 year. Sears Canada divulged that:

  1. earnings was $505.5 million in the first quarter, a decrease of 15.2% as compared to the same quarter the year earlier;
  1. the gross margin was 22.6% in the first quarter of 2017, as compared to 28.2% for the very same quarter in 2016;
  1. EBITDA was a loss of $133.9 million in the first quarter compared with a loss of $75.4 million for the same quarter in 2016;
  1. the bottom line for the very first quarter was a loss of $144.4 million or $1.42 each share compared with a bottom line loss of $63.6 million or 62 cents each share in the very same quarter the year earlier; and most notably

Sears Canada divulged it requires either a financial restructuring or sale of the company.  It also stated it does not have enough money to last through the current year.

The Toronto Star reported that Sears Canada attempted to soothe customer fears despite advising it has ‘substantial doubt’ regarding its future. The article quoted several insolvency lawyers and our Ira Smith in this write-up.

Since Sears Canada has made this statement:

  1. customers will certainly be worried about getting products paid for however not in supply at the time of payment;
  1. consumers will certainly be worried about any kind of service warranty Sears Canada offers; and
  1. vendors will certainly be worried that they will not be paid for items delivered to Sears Canada.

Sears Canada closing down:  How did we get to this point?

Sears Canada started in 1952 as a mail-order collaboration between Sears Roebuck Co. in the United States and Toronto’s Robert Simpson Company.  They opened the very first Simpsons-Sears shop in Stratford, ON, in 1953. The mail-order as well as outlet store version was effective, for a long time.

In 1994, Wal-Mart introduced itself in Canada.  It brought deep price cuts to we the north. They took control of the reduced as well as discount rate valued market.

Shops like Sears Canada as well as Hudson’s Bay, reacted by going towards a medium to higher-priced service version. At some point, over years, that business was “picked off” by specialized merchants.

Sears Canada after that missed its possibility to become an on the internet company.  It should have known that it had to take on the likes of Amazon.  E-commerce sites have created the death of lots of traditional sellers, like Sears.

Sears Canada closing down:  Sears Holdings senior management

The C suite in both Canada as well as the United States has had a revolving door on it for several years. No person has existed enough time for Sears to carry out a well-planned and implemented survival strategy as the markets changed.

Sears in the United States, and for that reason Sears Canada, is managed by hedge fund manager Edward Lampert. In real hedge fund design, Sears Holdings as well as Sears Canada has sold off assets to raise cash for many years.   It has cannibalized itself.

Sears Canada closing down:  My personal assessment

In my viewpoint, Sears Holdings as well as Sears Canada are as good as finished.  It is just currently an issue of time before the last pieces are marketed and sold.

Sears Canada has currently employed BMO Capital Markets to discover sale alternatives.  It has also retained law firm Osler, Hoskin & Harcourt LLP for legal guidance. My hunch is that Sears Canada this year will certainly be put under court protection from creditors.  Assets representing a business unit that can be sold off will be.  The rest will be liquidated.

This is already a familiar tale for Canadians; Target Canada comes to mind.  You can revisit its liquidation story in our previous blogs:

Sears Canada closing down:  What about you and your company?

You or your business possibly does not have any kind of other assets to offer to raise cash. Even if you did, the Sears Canada tale reveals that over time, it does not work out. What every person and business needs is a proven strategy and a plan to go forward with.

If you have too much debt and insufficient cash flow, you need your plan and strategy in place NOW.  Contact us now.  The Ira Smith Team is here to solve your debt problems and help you carry out that winning strategy, no matter the reason. We’re here to help and get you back on solid financial footing Starting Over, Starting Now. We’re just a phone call away.



Types of Internet Scams:  Introduction

Technology has opened the door to increasingly new and somewhat complex types of internet scams which rob us of billions every year. We all know that millennials are the most avid users of mobile and internet technology, but does that make them tech savvy? Well, the truth is that millennials are tech dependent, not necessarily tech savvy. This leaves them vulnerable to internet money scams.

Types of Internet Scams: Why are millennials so vulnerable to internet money scams?

According to a survey by Capital One, millennials:

  • Have grown up in the sharing economy so they’re just so used to sharing information about their personal lives and their details with friends and people on social media
  • Are more likely than other generations to admit they share their PINs with family and friends
  • Use their personal information such as their birthday as their PIN
  • Share their credit card number over the phone or email

Types of Internet Scams: Millennials are the most vulnerable

Although we can all be suckered in by these types of internet scams, millennials are the most vulnerable because they “live” online. However, the more economically challenging times become, the more vulnerable we all are.

Types of Internet Scams: The 5 internet scams that are the most dangerous to millennials, and the rest of us too!

  1. Fake job offers: The classic job scams have headlines like “I make thousands of dollars working from home and so can you. All you need is a computer and an internet connection”. “Start your own business from home with no investment. Sign up for training”. When it sounds too good to be true, it generally is. Never send anyone money upfront. Never give out sensitive, personal information.
  2. Become a mystery shopper: Most mystery shopper scams are cheque scams in disguise. Although there are certainly legitimate jobs for mystery shoppers, beware! Remember, if the opportunity is legitimate you won’t have to pay an application fee or deposit a cheque and wire money on to someone else. Always do your homework and check for a list of legitimate companies.
  3. Shopping online: Although many of us do some of our shopping online, millennials are true online shoppers. The problem is that millennials are so used to shopping online that they don’t look for danger; but the reality is that danger is lurking around the corner of every transaction. Many e-commerce sites look legitimate but are really fake stores.Always check online reviews before doing business with a new company. Otherwise you’ll give scammers your credit card information that can be used to make fraudulent purchases and/or resold. Check your account statements for any errors or fraudulent activity and check your credit score at least once a year.
  4. Crowd funding: There are so many scams out there about people claiming to be dying of cancer and needing money for treatment, medication or money for their kids, that it’s hard not to be a cynic. Before giving money to any crowd funding campaign, make sure you really check out the people soliciting funds.
  5. Online demands: Blackmail has found its way into the online world. Millennials are used to using email or text and posting the minutiae of their lives to social medial sites.

Types of Internet Scams: Report internet scams to the police?

All of these online channels are insecure. Remember those sexual images you sent to your boyfriend or girlfriend? They can be used against you and used to extort money from you. As embarrassed as you may be, go to the police to report internet scams. Extortion and blackmail are crimes.

Types of Internet Scams: Have you been a victim of an internet scam?

Have you been a victim of an internet scam and are now experience financial hardship? The Ira Smith Team is here to solve your debt problems no matter the reason. We’re here to help and get you back on solid financial footing Starting Over, Starting Now. We’re just a phone call away.