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June 2017 - Personal Bankruptcy & Consumer Proposal Statistics

2017-09-06

On August 31, 2017, the Office of the Superintendent of Bankruptcy released its most current statistics on personal bankruptcy and consumer proposal filings for Canadian debtors.  This article focuses on statistics for Personal Bankruptcy and Consumer Proposal filings in New Brunswick, Nova Scotia, and Prince Edward Island.

 

Canada

There were 60,459 personal bankruptcies and 62,718 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were down 5.8% and consumer proposal filings were up 2.6% as compared to the 12-months ended June 30, 2016.

 

New Brunswick

There were 2,742 personal bankruptcies and 1,722 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were down 7.1% and consumer proposal filings were up 14.4% as compared to the 12-months ended June 30, 2016.

 

Nova Scotia

There were 4,128 personal bankruptcies and 1,875 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were up 6.1% and consumer proposal filings were up 17.9% as compared to the 12-months ended June 30, 2016.

 

Prince Edward Island

There were 466 personal bankruptcies and 308 consumer proposals filed in the 12-months ended June 30, 2017. Bankruptcies were down 10.2% and consumer proposal filings were down 7.1% as compared to the 12-months ended June 30, 2016.

Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt settlement, consumer proposal and personal bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint JohnMonctonFrederictonCharlottetown or Dartmouth – it’s your choice.

Articles

Reset and Restart Personal Bankruptcy and the Relief from the Stress of Unmanageable Debt in Canada

il y a 6 mois

Bankruptcy is usually the last choice for most individuals.  It is good that this process is available because, without it, there might be no relief from the stress of unmanageable debt.

Personal bankruptcy provides a financial reset when other options are not practical.  Even if you don't want to use bankruptcy to resolve your situation, you should still understand how it works.  Don't ignore the option just because of the "B" word.

When assessing an individual's financial situation, we review all relevant facts about assets, liabilities, income, family situation, the cause of financial difficulty and outlook for the future. These are all considerations in determining what options are practically available so that you can choose the one that is best suited to you.

Will I Have to Give Up My Assets?

In most cases, you do not have to give up any assets (unless you want to) if you go through bankruptcy.  If there is equity in assets, you will have to pay the equity with the trustee.

If your income is above a certain threshold, you will have to make payments based on your income level.  How your assets will be dealt with and how much you will have to pay will be reviewed with you before you file for bankruptcy so you understand exactly how bankruptcy would work for you.

Counselling and Support For a Better Future

The bankruptcy process also provides individuals with two (2) mandatory counselling sessions to help you understand how you got into financial difficulty, improve your basic budgeting skills and provide you with information on understanding and starting to re-build your credit.

Sometimes, bankruptcy can actually be the most efficient way to get back on your financial feet and start to rebuild your credit.

Try not to be afraid of this or any other option.  Whether bankruptcy or another method is best for dealing with your debt, the goal for everyone involved is to give you a new beginning and a better future!

A Gentler Method Why a Negotiated Consumer Proposal Can Be A More Fair and Reasonable Debt Solution

il y a 6 mois

If you have debt problems you also have options. A Consumer Proposal is "an offer to pay creditors a percentage of what is owed to them or extend the time you have to pay off the debts, or both" and, for some people, it can be a much better and more manageable solution than bankruptcy to resolve your debts, particularly if:

  • You want to pay your creditors more than they would get in a bankruptcy.
  • You have high income and could not manage the surplus income payment required in a bankruptcy.
  • You have equity in assets that would take too long to pay within a bankruptcy.
  • You have been bankrupt previously.
  • You want to take advantage of a potentially shorter impact on your credit score.

 

Fair and Reasonable

You can be as creative as you want in determining the terms of a settlement put forth in a Consumer Proposal as long as it is fair and reasonable and you can get more than 50% of your unsecured creditors (by dollar-value of claims) to accept it. As long as you get over this 50% threshold, it will be binding on all unsecured creditors whether they like it or not. That sounds harsh but it's why this method works for some.

Most consumer proposals are structured as monthly payments over time at less than full payout. Generally, a consumer proposal should provide a higher return or recovery to the creditors than they would obtain in bankruptcy or there is no incentive for your creditors to vote in favour of it. Once the total amount of the settlement is determined and approved, you can pay it out early if you are able to do so and this would accelerate rebuilding your credit.

Also, the fact that you filed a Consumer Proposal will stay on your credit bureau report for 3 years after you have completed all of the terms of your Proposal, which is a shorter period than with bankruptcy.

 

How a Consumer Proposal Works In Canada

In order to qualify to file a Consumer Proposal, you must have debts of less than $250,000, excluding the mortgage on your principal residence. If you are over this limit, there is another form of proposal that can be filed.

When we review your individual situation, we will consider whether or not a Consumer Proposal (or other forms of proposal) makes sense for you and review the pros and cons of a proposal as compared to bankruptcy and other non-legislated options.

The Government of Canada provides a great explanation of how Consumer Proposals work here. A Consumer Proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). Once you understand how this method works, an LIT can look at your personal situation and help you decide if this gentler method of dealing with your debts can work for you.

How Interest Rate Increases Effect our Budget

2017-08-31

I’m 53. My wife and I bought our first house in 1988. The interest rate on the first mortgage was 8% and we had a second mortgage at 12%. I do chuckle at current interest rates and particularly with all the reaction to a one-qu

 

arter percentage point increase in the Bank of Canada Rate. But, I have experienced higher (or closer to normal) interest rates and many people have only experienced the crazy low interest rates that we have had for the last 7 years. I count myself lucky; my parents had an 18% mortgage rate locked-in for 5 years starting in 1982.

On July 12, 2017, the Bank of Canada raised their rate from 0.50% to 0.75%. The chartered banks then increased their Prime rate from 2.7% to 2.95%. Consumers will now experience an increase in their debt costs. For example: National Student Loans are a floating rate of Prime + 2.5% fixed rate. Those who live paycheque to paycheque will be affected first.

With mortgages, hose with a fixed rate will see no immediate change in monthly payments or how much is allocated to interest and principal; the impact will occur at renewal time. However, those with variable rate mortgages will feel this increase immediately – while the monthly payment might not change, the amount going to interest will go up and the amount going to reduce your principal payment will be less.

I don’t have a crystal ball and no one does. However, consensus seems to be that we are heading into a higher interest rate environment and interest rates will continue to rise. This means that, for those carrying significant debt, the amount of your disposable income going to non-productive interest expense will increase leaving less money for the necessaries of life or discretionary expenditures. Now is the time to consider this. Think about the debts you are carrying and the cost of that debt. Think about how much a 1% interest rate increase will affect your debt costs and whether you can sustain that increase. Think about whether the savings by having a variable rate mortgage, as compared to fixed rate, is worth the risk. If you own a house now, start to think about how you are going to afford a higher mortgage payment in the future. If you are just looking to buy a house, make sure you leave some room for higher payments.

On the positive side of the equation, the savers among us have been craving higher interest rates to provide more income and lower risk investment growth.

It seems that, although interest rates will be increasing, they will rise slowly as opposed to a significant spike. This will give people time to consider the effects but they do need to be considered. Getting “nickled and dimed to death” can occur with a slow but steady increase in interest rates. Each little increase can seem insignificant but, over time, these increases can turn out to be quite significant. If your debt payments are going to be higher in the future, now is the time to start making adjustments or looking at your options .

Article written by Robert Powell, CPA CA CIRP LIT, was published in the August 2017 issue of the District News.

Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt solutions, consumer proposal and personal bankruptcy solutions for individuals and businesses.  We offer free consultations to review your personal financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint JohnMonctonFrederictonCharlottetown or Dartmouth – it’s your choice.

The New Debtor Prison

2017-06-22

Even though Debtor Prison was abolished in Canada in the mid 1800’s, some consumers still fear they will be sent to jail if they can’t pay their debts.

However we have found that a new form of debtor prison exists and this is due to excessive phone calls, emails, text messages and mail from creditors and collection agencies.   These tactics can leave a person feeling afraid to answer their own phone and for some it can cause undue stress and anxiety which can negatively affect their everyday life and ability to function at work.

Each Province in Canada has laws in place that deal with the collection of debt and creditors do have some legal recourse to recover monies owed to them such as Court judgments, wage garnishments and the seizure and sale of assets.  There are also laws to protect debtors from unscrupulous collection tactics, however, most people do not know their rights when dealing with collectors.

A Licensed Insolvency Trustee (LIT) can review your financial situation and help you file a bankruptcy or consumer proposal.  Both options are legal proceedings and will help you resolve your debt issues and will protect you from further legal or collection activities taken by your creditors.

For a free consultation you can contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Cornwall or Dartmouth – it’s your choice.