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Tag: trustee in bankruptcy

  • How is a Trustee in Bankruptcy Different from a Debt Counsellor?

    If you’ve been considering debt consolidation, you may have heard the terms “trustee in bankruptcy” and “debt counsellor.” But do you know the difference?

    They’re far from the same thing. Here’s what you need to know.

    Trustee in Bankruptcy

    Also known as a Bankruptcy Trustee or Licensed Insolvency Trustee (LIT).

    • Doesn’t represent you.
    • Has to act for the creditors.
    • If you reveal information to them, like an unclaimed asset in a bankruptcy, they are obligated to tell your creditors.
    • A trustee can only offer you a consumer proposal or bankruptcy, not other debt consolidation options, like a loan or home equity products.
    • They are paid based on the amount you declare in your bankruptcy or consumer proposal.

    Debt Counsellor

    • Is paid by you to present debt management options.
    • They will look at the whole picture and present all financial options —including loans, home equity products, consumer proposals, bankruptcy, and beyond.
    • They protect your information and answer your questions confidentially.
    • If you do need to file for a consumer proposal or bankruptcy, a debt counsellor will prepare, structure, and propose the best solution for you to your trustee on your behalf.

    If you decide to file for a consumer proposal or for bankruptcy, you will need to work with a trustee as they are the only professionals in Canada who can file for either one.

    However, even if you do decide to go for one of those options, it is still to your benefit to consult a debt counsellor first, and during, the process.

    A trustee is more like a referee — someone who is the middleman between you and your creditors. They are not necessarily on your creditors’ side, but they’re not on your side, either. They are obligated to follow the rules and report anything out of bounds that they discover.

    As we mentioned above, a trustee is also paid based on the amount that you file in your bankruptcy or consumer proposal so often it is in their interest to try to make that amount higher so they are paid more.

    A debt counsellor, on the other hand, is 100% in your corner. They will represent you and only you. You can count on them for confidential advice and to be your advocate when working with a trustee.

    At DebtCare Canada, our debt counsellors offer free consultations to help decide the best debt management plan for you. We will examine every option available and if it comes to filing for a consumer proposal or for bankruptcy, we are on your side.

    Contact us today. Call 1-888-890-0888 or visit www.debtcare.ca.

  • When Your Trustee in Bankruptcy is Pushing a Consumer Proposal…

    debt2So you’ve finally decided to get a handle on your debt. You’ve done some research, spoken to friends and family, and have decided to get in touch with a trustee. On the first consultation, that trustee in bankruptcy suggests a consumer proposal. Then continues to suggest it, making it seem as though it is your only option.

    If your trustee in bankruptcy is pushing a consumer proposal, beware!

    Don’t get us wrong. A consumer proposal is a great way to get out of debt, and thousands of

    When Your Trustee in Bankruptcy is Pushing a Consumer Proposal…

    Canadians are taking this appealing option for the number of benefits it presents. However, it is not the only way to get out of debt – and if your trustee is presenting it as such, they might have ulterior motives.

    Why should you proceed with caution? It is simple: a trustee administers proposals and bankruptcies – that being said, these individuals are not there to represent and act for you alone. Their role is to administer your estate for the benefit of you AND your creditors. Ok, that seems fair…

    The problem here is that in consumer proposals the trustee is compensated based on the amount of the proposal. That alone presents a conflict. Add to this the fact that they don’t represent you, and it, essentially, is the same as going to court with a lawyer who says that they also act for the prosecutor – not sounding like such a smart idea anymore, is it?

    If you are in debt and looking for a way out, the first thing you need to do is get an impartial opinion on the state of your credit and finances. This includes looking at ALL the ways that the debt could be addressed, including exploring consolidation options, not just a consumer proposal.

    If a proposal is the best answer, that is great – it could save you money on interest, bring down your total debt balance, and consolidate all of those debts into one tidy monthly payment. Just be sure to have your representative negotiate the proposal with the trustee – don’t go to the trustee on your own – then you get the best deal and the representation of a professional who is representing only your interests and goals!

    At DebtCare, we deal with debt every day, and we represent you and only you. If you are considering a consumer proposal or any other debt relief option, call us first. We will make sure that you are protected! 1-888-890-0888.

     

  • True or False: Your Canadian Trustee in Bankruptcy Represents YOUR Creditors in a Consumer Proposal?

    debt2Bankruptcy is often perceived as scary – a last resort option for those that are in dire financial straits. The truth, however, is far less terrifying. Average Canadians are turning to bankruptcy as a viable debt relief solution far more often, and for good reason: it can stop collection action and stop penalties and interest. The scary part though is not knowing who to turn to, and thinking that a Canadian trustee in bankruptcy is your only option.

    A Canadian trustee in bankruptcy is appointed by the Superintendent of Bankruptcy and is regulated by the government. They are a court officer and appear in court. They administer the Bankruptcy Act.

    However, when it comes to representation, they are not like a lawyer or accountant who represents you. A trustee represents your estate, so essentially, your money – but once you file for bankruptcy, that money is no longer yours, it becomes the estate itself.

    During the bankruptcy process, a trustee will attempt to administer the estate, acting for both you and your creditors. That being said, they have as much of an obligation to make a fair deal for your creditors as they do for you.

    Some additional catches:

    • In the case of consumer proposals, the more a trustee negotiates for your creditors, the more they earn – so it is in their best interests to negotiate a higher amount.
    • There is no confidentiality – if you tell them something that relates to your filing, it is the same as telling your creditors and could result in financial consequences.
    • If you earn more money or come into money – they will be the first ones to have their hands on it to the benefit of your creditors.

    Again, consumer proposals and bankruptcies may seem scary – we may not seem to be helping so far, but in reality they are great solutions – dealing with trustees is what can become problematic.

    What can you do to protect yourself and your assets with either of these scenarios? Be represented – choose a representative who knows bankruptcy and have an open and transparent conversation with them. Let them structure your bankruptcy or proposal, negotiate with the trustee on your behalf and manage the process for you – since they actually represent you, the only person they are concerned about is you! You’ll end up with less stress and the best deal in the circumstances.

    If you are considering filing for bankruptcy or filing a consumer proposal, don’t deal directly with a Canadian trustee in bankruptcy. Call DebtCare instead. We represent you. 1-888-890-0888.

  • Would You Go on Trial for Murder Without a Lawyer? Dealing with Debt

    Dealing with debtWould you go on trial for murder without a lawyer? We think it is safe to assume that the answer is no! Why? Because the stakes are high and the Crown attorney is a professional appointed by the Attorney General/Minister of Justice to enforce the law. Little old you can’t go up against a trained, seasoned trial lawyer!

    If you wouldn’t go on trial without a legal representative, why in the world would you ever go to a Trustee in Bankruptcy to seek help with your debt without financial representation?

    Like a Crown attorney, a Trustee in Bankruptcy is an officer appointed by a government official. Their duty is to administer bankruptcies and proposals under the Bankruptcy and Insolvency Act. Part of that duty is to ensure that your creditors get the fairest possible financial outcome.

    The law itself protects people when filing a bankruptcy or proposal, not the Trustee in Bankruptcy – they are simply administering legislation. While many advertise the benefits of contacting them about a bankruptcy or proposal, the law itself sets the stage for the benefits while the Trustee simply administers the process you are legally entitled to.

    Part of this process means evaluating your assets, investments, income and liabilities and determining how much money your creditors receive. In instances of consumer proposals, the Trustee receives payment based on a percentage of the proposal. Some have questioned whether this model poses a conflict of interest because a larger proposal = a larger fee.

    Also important is the fact that different Trustees administer files differently. While some deploy due diligence to verify the information in your application at the sign up stage, some have administration departments that do so after the fact. It is not uncommon, after a bankruptcy, for the bankrupt to receive communication from the Trustee that some information was incorrectly disclosed, meaning that you owe surplus income in your bankruptcy or that something that you thought would be protected won’t be!

    Where your financial future is concerned, the stakes are too high and that is why you should never go to a Trustee unrepresented. Do you need a lawyer? No, but you definitely need an experienced financial professional to guide you through the bankruptcy or consumer proposal process.

    Why is this different? Because you pay this professional directly! They are hired to represent and counsel you. Part of this counsel means working with you to structure your financial information and even bring it forward to a Trustee on your behalf. They will help you make sure that there are no holes in your application or unnecessary information that could cause you problems.

    If you are thinking about a bankruptcy or consumer proposal, do your due diligence. Both are effective solutions for dealing with debt, you just want to ensure that you end up with the fairest possible terms.

    For more about effective representation in the bankruptcy or consumer proposal process please contact DebtCare Canada today by calling 1-888-890-0888.

  • Getting Out of Debt Blog Series #2: Bankruptcy

    Getting Out of Debt

    There are thousands of Canadians facing a mountain of debt that can seem impossible to overcome. For many individuals, it can often seem as though there is nowhere to turn as far as getting out of debt – but there is hope. It never helps to ignore the problem or let the stress of high debt levels control your life. The second blog in our back-to-basics ‘getting out of debt blog series’ looks at bankruptcy, and can help you better understand if this might be the best solution for your financial woes.

     

    What is bankruptcy?

    Bankruptcy in Canada is a legal process and is governed by federal law under the Bankruptcy and Insolvency Act. Like a consumer proposal, a bankruptcy must be conducted by a licensed trustee in bankruptcy – you cannot negotiate one on your own. The role of a trustee is to ensure that both you and your creditors are protected, so they will negotiate the terms of your bankruptcy and administer it accordingly.

    When you file for bankruptcy all of your assets, which include investments, property and your income, become the property of your trustee while you are “undischarged.” This means that if you have equity in your assets, or your income exceeds what is the allowable minimum, you will be subject to surplus income. Surplus income means that 50% of any income you earn over the prescribed minimum and 50% of any equity in assets will have to be paid to your estate to be distributed to your creditors by your trustee. During the undischarged period you will have reporting obligations to your trustee which includes reporting your income.

    In Canada, and in the case of a first time bankruptcy – if there is no surplus income you will only remain undischarged for 9 months (if you meet any additional terms in your bankruptcy); if you have surplus income you will remain undischarged for at least 21 months. If, at the end of 21 months, you have not re-paid your surplus income into your estate you will remain undischarged until you do.

    While bankrupt, additional terms in your bankruptcy will include not only disclosing income but also reporting on living arrangements, family situation, etc. You will also be required to attend credit counselling sessions and report any monies borrowed (over $500).

    To qualify for bankruptcy in Canada you must meet certain conditions, the foremost of which is that you must be insolvent. To be insolvent means that you owe at least $1000 and that you are unable to pay the debts as they are due.

    Will filing for bankruptcy affect your credit? Yes, since your credit report is the document which contains all of your borrowing activity and credit behaviour. When you file for bankruptcy your credit score will change from being a number to being an “R” reject score until you rebuild your credit. The bankruptcy will show on your credit report for 6 years following discharge. That being said, if you are seriously considering filing for bankruptcy your credit has most likely already suffered, and so cleaning it up will take time.

    Also, you can often qualify for credit within 2 years of being discharged from bankruptcy with up to 2 years of solid re-established credit.

    Contrary to popular belief you can file for bankruptcy and keep your home and vehicle. Because the trustee represents you and your creditor it is important to have your own representation through the bankruptcy process. Bankruptcy can be complicated and having an expert in your corner will ensure that you are prepared for all eventual outcomes and don’t go to the trustee without already having your plan in place.

    For more information about getting out of debt or to find out if you qualify to file for bankruptcy in Canada, please contact DebtCare Canada at 1-800-890-0888.

  • Getting Out of Debt Blog Series #1: Consumer Proposal

    Getting Out of DebtWith summer winding down and consumer debt levels remaining at all-time highs, we thought it was a good time for a back-to-basics ‘getting out of debt blog’ to help you ease into fall with less worries on your plate. This first blog in the series will talk about the consumer proposal, giving you the ins and outs to help you better understand your options for getting out of debt. Other blogs in this series will focus on debt consolidations, debt settlement and bankruptcy.

    What is a consumer proposal? In a nutshell, a consumer proposal is a proposal that is administered by a trustee where you offer your creditor(s) a sum of money to be repaid over a term of 5 years. This sum could be less than the total debt you owe. Also, a consumer proposal will stop legal action being taken against you by unsecured creditors who are included in the proposal, stop collection agency harassment and freeze the interest accumulating on your debt.

    A consumer proposal has to be conducted by a licensed trustee in bankruptcy – you cannot negotiate one on your own. A financial consultant can consult with you on your financial options and if a consumer proposal is the solution you elect, he or she can co-ordinate a fair deal for you with a trustee.

    Unlike bankruptcy, once a consumer proposal is in place you have no ongoing obligation to the trustee whatsoever – you simply have to make your monthly payment. Consumer proposals can be repaid in full at any time. This is a major plus for folks who want to rebuild their credit quickly. A consumer proposal will be completely removed from your credit report 3 years from the date it has been paid in full. Beginning with a secured credit card or RRSP loan, those who make consumer proposals have many options available to them for rebuilding credit.

    With anything there are caveats. A consumer proposal must be accepted by your majority creditor. Because trustees represent you and your creditors it is important to understand how consumer proposals work and to have your own representation through the process. Negotiating a proposal that is accepted by your creditor(s) and that is the best deal for you is key. Having representation ensures that you have someone who has expertise in this area to ensure that you do get the best deal and that all aspects of your financial situation have been considered.

    Filing a consumer proposal is, for many people, a smart solution for getting out of debt. That being said, it needs to be approached correctly, and you will need the help of a professional to carry it out.

    For more information about consumer proposals or other ways of getting out of debt, please contact DebtCare Canada by calling 1-800-890-0888.

  • Why an Ontario Trustee in Bankruptcy May Not be the Best Choice

    Traditionally when people think of an Ontario trustee in bankruptcy they think of bankruptcy. The fact is that the Ontario trustee in bankruptcy has changed in recent years. In the past, if you had severe financial problems, you may have thought that bankruptcy was the only way out and so you would seek out an Ontario trustee in bankruptcy.

    So what has changed? In recent years, the bankruptcy laws have changed making it more difficult to file for bankruptcy and making consumer proposals a much more attractive option for people who struggle with debt. Also, Ontario trustees in bankruptcy have begun advertising much more aggressively. If you don’t know what an Ontario trustee in bankruptcy is then you may misunderstand this advertising and think that when you are calling you are going to have some other financial options. However, generally speaking, the only two programs that bankruptcy trustees offer are bankruptcies and consumer proposals.

    So what’s the big deal if you end up at an Ontario bankruptcy trustee’s office? Maybe a consumer proposal or bankruptcy was what you had in mind anyway. Going to an Ontario bankruptcy trustee may in fact be a big deal because if you buy into the debt solutions offered, a trustee does not in fact represent you and you alone through the process.

    An Ontario bankruptcy trustee has a responsibility to represent both you and your creditors. This means that if you want to file a bankruptcy or consumer proposal it is the trustee’s job to ensure that your creditors get a fair deal and that they are able to get as much money out of you as possible. Here is a really great example:

    1. Suzy goes to an Ontario trustee in bankruptcy and decides that bankruptcy is the only option for her. The Ontario trustee in bankruptcy asks Suzy to complete a long document where she has to provide detailed financial information.
    2. Suzy owns a home that she bought 5 years ago for $300,000 and assumes that it is worth about the same amount of money, so she indicates on the form that the home’s value is $300,000.
    3. The Ontario bankruptcy trustee allows her to file for bankruptcy based on the financial disclosure that Suzy has made.
    4. Based on this approval, Suzy is told what her monthly payment will be over a prescribed time period.
    5. The Ontario trustee in bankruptcy has a team inside his or her firm which reviews the bankrupt’s assets, and without provocation from creditors, the Ontario trustee in bankruptcy later deems that Suzy’s house is worth $400,000, not $300,000.
    6. The Ontario trustee in bankruptcy writes to Suzy and advises her that she owes thousands of dollars in surplus income that will have to be paid to her creditors or else the Ontario trustee in bankruptcy will oppose her discharge.

    Can you imagine how you would feel if this happened to you? Filing for bankruptcy or filing a consumer proposal unrepresented is much like being accused of a crime and defending yourself without representation. If you were being charged with a crime it would not be wise to go to court without a lawyer. Where an Ontario trustee in bankruptcy is concerned, it may not be a good choice to go to them directly without seeking independent financial advice. Instead, visit a financial consultant 1) to ensure that you have explored all of your financial options; 2) to ensure that you make complete disclosure and to determine your personal exposure so that nothing comes up later; and 3) to ensure that the best possible deal is negotiated with the Ontario trustee in bankruptcy.

    If you have a financial problem and need help, please contact DebtCare Canada at 888-890-0888 or visit www.debtcare.ca.

  • Debt Relief in Canada Blog Series Part 3 – Are There Consequences to Filing for Bankruptcy?

    There are many options for debt relief in Canada, and one of the most common is bankruptcy. If you have financial problems, bankruptcy may seem like a scary option because of the consequences that many people associate with filing for bankruptcy. Hopefully this article will help you to understand bankruptcy better and determine if in fact it could be an option for debt relief that you should consider.

    Bankruptcy is generally filed by people who have limited income or significant debt in relation to their income. Most first-time bankruptcies last either 9 or 21 months. When an individual files for bankruptcy, a trustee in bankruptcy will assess the bankrupt’s household income, assets, liabilities and personal circumstances. Personal circumstances include the number of people in the household and the number of dependents that the bankrupt has. Based on bankruptcy guidelines, if your income, once all factors are considered, is below a specified threshold, then the monthly payments in bankruptcy will last for 9 months. If the income is above a specified threshold, then it will be determined that the bankrupt has surplus income. This will result in higher payments in bankruptcy over a specified period of time, in most cases 21 months.

    Some of the pros of filing for bankruptcy are:

    • Immediate relief from collection action from unsecured creditors (such as wage garnishments).
    • A monthly payment that is less than what you are likely contractually obliged to pay to your creditors now.
    • The opportunity for a fresh start to get out of debt in a short period of time, enabling you to rebuild your credit and finances.

    Many people don’t know that, in many cases, when you file for bankruptcy you are able to keep your home and vehicle.

    Some of the cons of filing for bankruptcy include:

    • If your financial situation improves during your bankruptcy you could be subject to additional surplus income. If there was no surplus income when you filed for bankruptcy and your bankruptcy repayment is over 9 months, surplus income during bankruptcy could result in your monthly payment in bankruptcy being extended to 21 months.
    • The bankruptcy will remain on your credit report for 6 years from the date it is discharged. With that said, most financial institutions will do business with a bankrupt individual who has 2 years of re-established credit after bankruptcy.
    • Having a number of assets with equity in them will complicate things. In this case, a consumer proposal may be a better option than bankruptcy.

    Bankruptcy is a very viable debt relief option in Canada, and while there are some consequences of filing for bankruptcy, in many cases there are many more benefits. Bankruptcy is an option for debt relief in Canada that can provide you with immediate relief, not only from collection action, but also the stress that accompanies a financial problem. If you have creditors that are currently after you, perhaps even suing you, this is relief that can provide you with a breath of fresh air, enabling you to think clearly again and get your personal and financial situation back on track.

    For more information about options for debt relief in Canada or to see if you are a candidate for bankruptcy please call DebtCare at 416-903-4000 or visit www.debtcare.ca.

  • What Does A Trustee Do?

    If you have financial problems and have thought about consulting a trustee in bankruptcy, you may be curious about the role that they play in helping you deal with your financial problems, and may be asking yourself “what does a trustee do anyway?”

    The first thing to know is that a trustee in bankruptcy does not represent you. You may have seen advertisements by trustees that make it seem as though they want to help you. What does a trustee do? Well, they are a court appointed officer that administers bankruptcies and consumer proposals. They have an obligation to act in the best interest of both you and your creditors.

    Let’s look at a bankruptcy as an example. When you visit a trustee to file for bankruptcy they review all of your household income, debt and other financial details and then advise you on what your monthly payment in bankruptcy will be. You make your monthly payment to the trustee in bankruptcy each month. If you have assets or surplus income for example, what does the trustee do? They will ensure that they collect equity in those assets or surplus income for the benefit of your creditors. They are not there to protect your income and assets, they are simply administrators of the bankruptcy process. If they can collect more money through your estate for your creditors, they will.

    Consumer proposals are also administered by trustees in bankruptcy. When you visit a bankruptcy trustee directly to discuss a consumer proposal, they will assess your income, debt, assets and other personal household and financial information. What does a trustee do next? They will suggest an amount of a consumer proposal that they believe will be accepted by your creditors. This does not always result in the best deal for you, and if you visit a trustee directly you will have little to no negotiating power because they are simply administering your consumer proposal, so what they present to you is what they will be prepared to go forward with. They are not there to get you the best deal.

    Do you do your taxes without the help of an accountant? Not likely. If you were charged with a crime would you defend yourself without a lawyer? Probably not. Dealing with a trustee in bankruptcy is no different; you should not do so unrepresented.

    Having independent financial representation when considering a consumer proposal or bankruptcy is crucial because it enables you to have your personal and financial information reviewed by a professional who represents and is hired by you and who understands bankruptcies and consumer proposals. They can vet your personal and financial information, identify any issues before a trustee is made aware of them, and help you come up with a proposal to present to the trustee that you can live with.

    Do not answer the question “what does a trustee do” the hard way. Filing a bankruptcy or consumer proposal is an official process. Once you have committed to either one of these processes there is no turning back, so it is important to do everything in your power to ensure that you enter into the process with all of the necessary information. The more informed you are, the better financial arrangements you will be able to make, which will save you thousands.

    If you have more questions about this article “What does a trustee do?” or if you need representation in a consumer proposal or a bankruptcy please visit www.debtcare.ca or call 416-907-2582.

  • Credit Counselling Canada – How Does It Work and Who Qualifies

    If you are having challenges managing your debt there are many solutions available. The solution you choose will largely depend on your personal and financial circumstances. The amount of debt that you have, for example, will change the financial solutions available to you.

    Credit counselling Canada is a service that helps many Canadians deal with financial challenges. Credit counselling Canada, like any other financial solution, has its pros and its cons. While Credit counselling Canada can help Canadians with any amount of debt, you are best suited to consider it as an option if you owe $7,000 or less in total debt.

    Credit counselling Canada is largely funded by creditors and is not for profit. The credit counselling agency will make a proposal to your creditors that allows you to make a reduced, fixed monthly payment each month. This proposal is not a consumer proposal and this proposal will not reduce your overall debt. It simply provides for a reduced monthly payment.

    The main benefit here is that if you cannot manage your current monthly payments, this will enable you to do so. People who have payday loans and only payday loans are best suited to consider credit counselling Canada. Generally people who have multiple payday loans and no other debt only owe a small amount of money, so other financial options, such as a consumer proposal, are not available to them. Credit counselling Canada will enable someone who has expensive payday loans to make a single reduced monthly payment that they can afford.

    The cons of a credit counselling program include:

    • Damage to credit (likely damage to credit has already occurred though if you are not managing your monthly payments)
    • Overall amount of debt is not reduced
    • Depending on the repayment plan you negotiate, it could extend over many, many years

    The cons that exist with Credit counselling Canada are the primary reasons why an individual who owes more than $7000 should consider other financial options rather than jumping into a credit counselling program.

    A consumer proposal is often a better option than a credit counselling program. When a consumer proposal is arranged, it is formal and final. If your creditors accept a consumer proposal you have the option to pay it off in full at any time. While a consumer proposal can also have some negative impacts on your credit, your credit can often be repaired faster with a consumer proposal when compared to a credit counselling program. Evidence of a consumer proposal will be removed from your credit report three years from the date it is paid in full.

    A consumer proposal may reduce the overall amount of your debt, and because you can pay it off in full, the ball is in your court as far as how long it takes for you to pay it off in full.

    Generally speaking, if you have a financial problem that is resulting in an inability for you to make your monthly payments, or if you have too much debt, you should seek financial guidance. It is advisable to seek this guidance from an independent financial professional who you can hire to help you make the best financial decision and who does not work for the company that is providing you the services. For example, if you are considering a credit counselling program, do not go directly to the credit counselling agency because they will advise you based on the programs they have available, or if you are considering a consumer proposal, do not go directly to the trustee in bankruptcy or you may not get the best deal.

    For more information about credit counselling Canada or to see if you qualify please visit www.debtcare.ca or call 416-907-2582.