RESOURCES
FORMS
- Monthly statement of income & expenses (PDF format)
- Interview Checklist Feb 2007 (PDF format)
LINKS
- Early warning signs of financial distress
NEWS AND INFORMATION
April 3, 2006 - CKTB Radio interview with Diane Hessel - Tax Debt
Listen to the interview now
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Office Updates in British Columbia
As of December 31, 2005, A. Farber & Partners Ltd ceased filing new estates in British Columbia. All estates open before this date will continue to be managed by either Judy Scott or Ken Rowan, depending on with whom you have dealt. Please contact Judy Scott at: 604-468-1335 or Ken Rowan at: 604-430-4188. Except for the above, all other aspects of the administration remain unchanged, including the rights and obligations of each stakeholder.
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The Debts that Don't Go Away - Surviving Debts under the BIA
Many people believe that filing a bankruptcy or a proposal wipes out debts to all creditors. However, according to the federal Bankruptcy and Insolvency Act (BIA), certain debts actually remain owing, even after insolvency proceedings. That's because the BIA is designed to relieve debtors from crippling debt; it's not meant to help them avoid their social responsibilities or obtain relief from breaking the law. By providing debtors with some breathing room, however, bankruptcy can hopefully help them pay the debts they continue to owe.
It's in that spirit that debtors must continue to pay the following debts, even after a bankruptcy or proposal:
- fines, penalties, or bail
- court-ordered awards to compensate for bodily harm intentionally inflicted, sexual assault, or wrongful death resulting from those acts
- support, alimony, and maintenance arrears (including interest accumulated)
- liabilities for fraud, embezzlement, or misappropriation committed while acting in a fiduciary capacity
- liabilities for dividends to creditors in bankruptcy not disclosed to the Trustee
- student loans incurred in the ten years prior to bankruptcy
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What Can I Keep?
One of the most common questions asked by those considering filing an assignment in bankruptcy is, "What assets can I keep?"
The bankrupt can keep anything that is exempt from seizure or execution under provincial statutes. The current exemptions in Ontario, as of December 14, 2005, are as follows:
| Exemptions |
Ontario |
| Personal effects |
$5,650 |
| Household furnishings |
$11,300 |
| Tools of the trade |
$11,300 |
| Automobile |
$5,650 |
| Principal residence |
$0 |
Other items that are exempt from seizure are pension benefits locked in under the Pensions Benefits Act and the cash surrender value of life insurance policies, where the designated beneficiary is a parent, child, grandparent or spouse.
It should also be noted that the bankrupt may make arrangements with the secured creditors to continue to make payments to them as an alternative to returning any items pledged as security. The only proviso is that the creditor has a validly preferred security interest enforceable ahead of the Trustee in Bankruptcy. This is often the case with residential mortgages and car loans or leases. In situations where the value of the assets exceeds the secured debt, an amount equivalent to the "equity" in the asset will have to be paid to the Trustee if the Bankrupt wishes to retain the asset.
Where the assets pledged as security are wholly exempt (e.g. household goods worth less than $11,300), the secured creditor remains secured regardless of whether they registered their security interest or not. In these circumstances, the Bankrupt will have to make arrangements with the secured creditor as detailed above, if they wish to retain the assets.
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Getting Help For Your Financial Stresses
Life is full of pitfalls and loaded with unexpected events. And while we'd all like to think we know what is going to happen to us in life, we honestly have no idea of what really lies ahead. That's why, despite our best intentions, many of us experience financial difficulties at some point in our adult lives.
The flashpoint that causes such difficulties to occur might be a sudden job loss or a marital separation. It could be a chronic illness, unexpected financial support for an aging family member or even an automobile accident. Happy events can also lead to financial chaos (for example: Unexpected wedding expenses or the premature birth of twins). In many cases, it could be a combination of two or more of the above scenarios.
The Warning Signs Of Financial Difficulty:
- You receive post-due notices on household bills
- You rely on automatic draft protection to cover your chequing account
- You take out new loans just to cover monthly payments on existing loans
- You use available credit on your cards to cover daily household expenses
- You borrow from one credit card to cover the minimum balance on another
- You continually miss payments on your mortgage or property taxes
- You are slipping behind on your rent or utility payments
- You are being harassed or sued by creditors
Any of these danger signs are indications of financial difficulty.
Myths & Truths About Insolvency
Let's take a look at some of the myths surrounding the insolvency process, as well as the reality:
| Myth: |
Truth: |
| "My neighbour & my boss will know" |
FALSE! In reality, only the federal government, your creditors and the Trustee are involved |
| "I will lose everything" |
FALSE! Many assets are exempt from seizure (e.g. some vehicles, clothing, household goods, tools of your trade) |
| "The newspaper notice of my insolvency will be seen by everyone I know" |
FALSE! Most forms of protection do not require a public advertisement |
| "By filing I am admitting failure" |
FALSE! You are actually showing courage by taking control of the situation and using the rights given to honest people |
| "Bankruptcy is my only option" |
FALSE! The professional will talk to you about how you can reorganize, refinance, budget, make a settlement offer or consumer proposal, and other choices. |
| "I will never get credit again" |
FALSE! Now that you are debt free you are more capable than ever of handling appropriate amounts of debt. The lender knows this. |
| "If I have little money I cannot afford to get help" |
FALSE! We offer free initial consultations. In most cases a trustee will allow you very affordable terms to pay the modest costs. |
If you fail to take prompt action you risk the following painful consequences:
- garnishment of wages
- court action
- collection agency harassment
- seizure of assets
- ongoing family stress
The Sooner You Act, The Better
When someone is confronted with a scary, once-in-a-lifetime situation the first impulse is often to ignore the problem in the hope that it will go away. The fear is often based on some myth that was repeated so often that they believe it. By seeing a licensed professional you will learn all about
- your rights to protection from your creditors
- how to get a clean start to your financial future
Solving your debt worries is the process that begins the rebuilding of your life and doing so is
in your control and as simple as a telephone call away.
Concerned? Have Questions?
Get the facts from professionals who know. Call one of our qualified managers who will spend the time to discuss your situation with you on a confidential basis. If, after a discussion by telephone, it appears you could use our services then a face-to-face meeting will be arranged. This meeting can be held at any of our twenty offices across Southern Ontario and there is no
cost to you. It is our service to the community.
You can expect a private and confidential meeting. After a careful review of your individual financial situation you will be well informed as to the options available to you, how they work and how they will impact on your life.
For more information and to find solutions to your money problems today, please feel free to email us at info@afarber.com, call us toll-free at 1-877-327-2372 or within Toronto at 416-496-3740. After hours and Saturday information calls and meetings are always available. Our web site is also an excellent source of information: http://www.afarber.com
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National Creditor Debtor Review
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What to do if Things go Wrong by Mario Morataya
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Copyright © 2004 A. Farber & Partners Inc. All rights reserved.
A member of The Farber Group of financial services.
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