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Initial Consultation Booklet
With more than 35 years of experience, Smythe Insolvency is a dedicated team of Licensed Insolvency Trustees and qualified
insolvency counsellors serving you in twelve British Columbia locations.
smytheinsolvency.com
Initial Consultation
Your first visit will help you determine the proper course of action
given your present financial position. In this session we will:
1. Respond to your immediate problem (i.e. garnishments,
judgments, creditor harassment, etc.);
2. Assess your financial situation and your ability to pay;
3. Discuss the many options available to you to ensure that
you have a clear understanding of each one. We will also
explain why we recommend one option over another based
on your unique circumstances;
4. Review your rights and responsibilities and your creditors’
rights and responsibilities.
If you’re experiencing signs of financial difficulties and don’t
know where to turn, a consumer proposal or personal bankruptcy
may be the answer.
What is a Licensed Insolvency Trustee?
A Licensed Insolvency Trustee is an officer of the court whose
primary role is to ensure that your rights and your creditors’ rights
are maintained throughout the bankruptcy or consumer proposal
process. In Canada, trustees are licensed and regulated by the
federal government and will work with you to determine what the
best option is for your individual circumstance. Licensed Insolvency
Trustees abide by a strict code of conduct when advising you of your
debt-relief options, while other unlicensed debt consultants may not.
A Licensed Insolvency Trustee’s fees are regulated by the federal
government. There are no hidden costs. Furthermore, because
Licensed Insolvency Trustees are the only professionals authorized
to file a consumer proposal, they have extensive experience in
understanding the process and what creditors expect. When you
speak with a Licensed Insolvency Trustee you are dealing with
someone who has the knowledge, skills and expertise to solve the
problem.
What can a Licensed Insolvency Trustee do for you?
• Provide you with a free consultation to discuss your situation
• Deal with your creditors directly
• Stop the phone calls, wage garnishments and legal
proceedings, including debts to the Canada Revenue Agency
• Negotiate a settlement with your creditors (consumer
proposal)
• File a bankruptcy for you if a consumer proposal is not the
right option
• Provide counselling for a better financial future
Consumer Proposal Information
What is a consumer proposal?
A consumer proposal is a settlement offer to creditors available to
anyone owing under $250,000 (excluding your mortgage). It is a
legal way to settle your debts by freezing interest and paying only
a portion of your debts, either by making a lump sum payment or
several monthly payments over a period of time (usually between
three to five years). The settlement must provide your creditors
with a greater realization than what would be available to them
in a bankruptcy.
Filing a consumer proposal stops all garnishments, lawsuits or
other court proceedings initiated, or that may be initiated by your
unsecured creditors in respect of debts incurred prior to the date
of the consumer proposal.
What happens after you file a consumer proposal?
After you file, we will prepare the documents required, outlining
the terms of your offer which will be sent to all creditors. The
creditors have 45 days to accept or reject the terms of your
consumer proposal. The proposal requires only a majority of your
creditors (in dollars) to accept your offer. All other creditors are
bound by the terms.
Upon acceptance, you will start making payments to our office
and we will periodically distribute the proceeds to the proven
creditors. Upon fulfilling the terms of your consumer proposal you
will receive a certificate of full performance and the balance of
your debts will be extinguished.
How does a consumer proposal differ from an assignment
in bankruptcy?
In a consumer proposal there is no vesting of assets - your
property will remain in your possession. In addition, you will
file your own income-tax returns and be eligible to receive any
applicable refunds. You will not be required to report income and
expenses or be subject to surplus-income guidelines during the
consumer proposal period.
What should you know about filing a consumer proposal?
When filing a consumer proposal, you must provide full disclosure
of all your assets and liabilities, as well as real estate disposed of
in the past five years.
It is mandatory that you attend two counselling sessions
throughout the consumer proposal process.
You must stay current on the consumer proposal terms. If you are
unable to make payments for an amount that is equal to or more
than the amount of three payments, your consumer proposal will
be annulled and the administrator will inform the creditors. The
creditors’ rights will be revived and you will be unable to make a
subsequent consumer proposal.
Bankruptcy Information
What is bankruptcy?
Bankruptcy is an option for debtors that are unable to make
any other settlement arrangements with their creditors. It is a
legal process regulated by the Bankruptcy and Insolvency Act.
A bankruptcy provides immediate relief, freezing the collection
actions of all your creditors who may have a claim against you.
The idea behind personal bankruptcy is to permit an honest
person in an unfortunate situation the option to eliminate their
debts and focus on building a brighter financial future.
Who can go bankrupt?
In order to declare bankruptcy, you must meet certain conditions:
• Owe at least $1,000; and,
• Be unable to meet regular payments as they fall due, or
• The realizable value of your property is insufficient to pay
all of your debts.
Stay of proceedings
The filing of a bankruptcy halts all garnishments, lawsuits or
other court proceedings initiated, or that may be initiated by your
unsecured creditors in respect to debts incurred prior to the date
of bankruptcy.
Only the court can grant permission to unsecured creditors to
continue actions against you once you are bankrupt.
Surplus income
When filing a bankruptcy, payments will depend on how much
you earn and your family size. The Superintendent of Bankruptcy
sets out income standards each year, and if your earnings exceed
the standard, you will have to pay a portion of your earnings into
the bankruptcy estate for either 21 months (first-time bankrupt)
or 36 months (second-time bankrupt). The Trustee will be able
to estimate these payments for you if you bring current pay
information to your free consultation. In certain circumstances,
the surplus-income payment or terms can be modified by
mediation or by the Court.
Discharge from bankruptcy
A first-time bankrupt without surplus income
You will be automatically discharged from bankruptcy nine
months plus one day after the bankruptcy filing date.
A second-time bankrupt without surplus income
You will be automatically discharged from bankruptcy 24 months
plus one day after the bankruptcy filing date.
A first-time bankrupt with surplus income
You will be automatically discharged from bankruptcy 21 months
plus one day after the bankruptcy filing date.
A second-time bankrupt with surplus income
You will be automatically discharged from bankruptcy 36 months
plus one day after the bankruptcy filing date.
In all these cases you are eligible for an automatic discharge from
bankruptcy provided:
• Your discharge from bankruptcy was not opposed by either a
creditor, the Licensed Insolvency Trustee, or the Superintendent
of Bankruptcy
• Your duties have been properly complied with. These duties
include, but are not limited to:
• Full disclosure of all assets and liabilities and details of
property disposed of in the past five years
• Timely reporting of monthly income and expenses
• Payments to the trustee in accordance with the surplus
income guidelines
• Attending the two counselling sessions
• Surrendering all credit cards
• Providing the trustee with all the necessary tax information
to file your tax returns
• Keeping the trustee informed of any change in residence,
employer, marital status, etc.
• Keeping the trustee informed of any change in your assets or
income
High Income Tax Debt – A debtor will not be eligible for an
automatic discharge. A bankrupt with personal income tax debt
exceeding $200,000 (representing at least 75% of total unsecured
proven claims) will require a court order to be discharged from their
debts.
If your discharge is opposed by a creditor or by the trustee, we
will arrange for your application for discharge to be heard by the
Bankruptcy Court. After hearing our report on your conduct
throughout the bankruptcy, your present economic situation, and
the opposing creditors’ arguments, the court may issue any of the
following orders:
(a) Absolute: Applies immediately and means that you are
no longer responsible for your debts, except for those listed
in Section 178 (see next page);
(b) Adjourned: This will postpone the hearing either
indefinitely or to a later date;
(c) Conditional: You may be required to pay a certain sum of
money for distribution to your creditors. If subsequent
circumstances do not permit compliance with the
conditions, the court has the authority to modify the Order.
(d) Suspended: Same as absolute but with a delay before
coming into effect;
(e) Refused: The court has the right to refuse discharge, but
it rarely exercises this power.
Upon obtaining your discharge you will be released from all debts
except for those listed in Section 178, as noted below:
• Fines or penalties imposed by a court or default on bail bond;
• Student loans - if you are a student at the date of bankruptcy, or
if you go bankrupt within seven years after ceasing to be a full or
part-time student;
• Alimony or child support;
• An award of damages by a court in civil proceedings relating to
assault, sexual assault or wrongful death resulting from same;
• Debts arising from fraud, embezzlement or misappropriation of funds;
• Debts not disclosed to the trustee (these creditors will be entitled
to the dividend that would have been paid if a claim had been
submitted in the bankruptcy);
• Employment Insurance overpayment of benefits.
A first bankruptcy will be noted on your credit bureau for six years
after obtaining your discharge. A second bankruptcy will be noted
on your credit bureau for fourteen years after obtaining your
discharge.
Property of the Bankrupt (Sections 67)
Your assets, whether in your possession or in the possession of a third
party, will vest with the trustee for the general benefit of creditors.
Secured loans cannot be terminated when personal bankruptcy is
filed. You may also have the option to continue to pay the
secured loan and keep the asset if payments are up to date and
absent of any other defaults.
Where a creditor holds security against any asset, he will normally
be allowed to exercise his rights to realize on his security after
receiving permission from the trustee.
Exempt property
The trustee will not take possession of certain assets if they are
exempt from seizure. Exempt property will vary from one province to
another. In BC, an individual may claim the following assets as exempt:
Household furnishings and appliances $ 4,000
Tools of the trade $10,000
Motor vehicle (1) $ 5,000
Equity in a home $12,000 in the Capital
Regional District & Metro
Vancouver
$ 9,000 elsewhere in the
Province
Registered retirment savings plan (RRSP) less the value of
contributions made in the year preceding bankruptcy.
All necessary clothing and all required medical aids (of a debtor or
a dependent).
Non-exempt property
Any RRSP contributions made within one year prior to your
bankruptcy, guaranteed investment certificate (GIC), term deposits,
savings, life insurance cash surrender value (in certain circumstances),
stocks, bonds, etc. must be turned over to the trustee. Personal
effects such as jewellery, collectables, recreational equipment, etc.
are not exempt and must be turned over to the trustee, or you
may elect to purchase the value of these assets from the trustee if
you wish to keep them.
Other assets
Any property acquired by you, such as lottery winnings, inheritance,
gifts or a lump sum settlement such as certain Insurance Corporation
of British Columbia (ICBC) awards, Worker’s Compensation Board
(WCB) settlements, superannuation, Canada Pension Plan (CPP)
benefits, etc. for which you may become eligible for prior to your
discharge, must be disclosed to the trustee as it normally is an asset
of the estate divisible amongst your creditors.
Tax refunds
A tax return for the period of January 1st to the date of bankruptcy
will be prepared by the trustee (pre-bankruptcy return). Any tax
refund for that period, as well as refunds of previous years not yet
received will be remitted to the trustee. Another tax return will be
prepared for the period from the date of bankruptcy to December
31st (post-bankruptcy return). A refund from that tax return will
also be paid in to the bankruptcy estate, as well as any GST credits.
If there is a balance owing to the Canada Revenue Agency on the
post-bankruptcy return you are responsible for payment.
Settlement of property (Sections 91 and 95)
Gifts or transfers of property at less than full-market value during the
12 months prior to bankruptcy (five years in certain circumstances) are
subject to review and may be recovered by the trustee.
If during the three months prior to bankruptcy (12 months if
a related person), a creditor received preferential or special
treatment, such as being paid while others were not, the trustee
may demand reimbursement from these creditors. The trustee
must be informed of these payments.
Duties imposed upon the Bankrupt (Section 158)
You must also fulfill all of the following duties while you are an
undischarged bankrupt:
• Reveal and turn over to the trustee all non-exempt assets in your
possession or control;
• Make available to the trustee all books and records relating to
assets or your affairs;
• Attend at the Office of the Official Receiver (Bankruptcy
Administration), if and when required, to be examined under
oath as to the facts relating to the bankruptcy;
• Provide a complete statement of assets and liabilities, including
creditors’ names, addresses, account numbers, invoices, and
amounts. Where additional bills or legal documents are received
by you, they should be forwarded to the trustee. If assets or
debts were accidentally omitted, the trustee must be informed
promptly;
• Inform the trustee of the details of all property disposed of
during the 12 months prior to the bankruptcy;
• Inform the trustee of the details of all property disposed of by
gift during the five years prior to the bankruptcy;
• Inform the trustee of any material change in your financial
situation.
Cost of Bankruptcy
Surplus Income x =+
The more assets you have or the more income you make, the more
you pay into your bankruptcy, and vice versa.
Breakdown
Now it’s your turn
Months in Bankruptcy
Asset Buyback
Payments into Estate
x =+
Notes
smytheinsolvency.com
Our Locations
BURNABY501 – 3292 Production WayBurnaby, BC V5A 4R4
CAMPBELL RIVER590 – 11th AvenueCampbell River, BC V9W 4G4
COURTENAY250 – 470 Puntledge RoadCourtenay, BC V9N 3R1
DUNCAN103-222 Ingram StreetDuncan BC V9L 1P3
LANGLEY305 – 9440 202 StLangley, BC V1M 4A6
NANAIMO201 – 1825 Bowen RoadNanaimo, BC V9S 1H1
NORTH VANCOUVER305 – 221 Esplanade WestNorth Vancouver, BC V7M 3J3
PORT ALBERNI4855 Johnson RoadPort Alberni, BC V9Y 5M2
SQUAMISH37897 2 AvenueSquamish, BC V8B 0R2
SURREY200 – 7404 King George Blvd.Surrey, BC V3W 1N6
VANCOUVER700 – 355 Burrard StreetVancouver, BC V6C 2G8
VICTORIA301 – 1321 Blanshard StreetVictoria, BC V8W 0B6
1 888 751 2668 1 855 382 2660