Posted On: May 2, 2016

You are probably reading this on our website. Everybody nowadays seems to use the internet to look things up and research matters of interest to them. Insolvency solutions (bankruptcies and consumer proposals) are not an exception.

There are a thousand different things that could be said on a website or through social media about debt problems and the various solutions available to those in need of them. Information is information and the internet is wonderful at giving almost instant access to it. How many times have you been on Wikipedia this week?

However, the internet has its limitations, at least for now. The main thing it can do is provide objective information, facts, data. What it can’t do is provide diagnostic opinion in areas which are not confined to objective facts and figures. Let me give this example in our area of professional expertise.

We are often asked by folks who consult us about their debt problems whether or not they will lose their house if they go bankrupt or do a consumer proposal. (This is one of the primary concerns home owners in debt trouble have, as you can well imagine.) They looked it up on the internet and learned lot about the legal position of the Licensed Insolvency Trustee. In fact, the internet would likely be very black and white about the matter. What they will find out when they come in for a FREE consultation at Richard Killen & Associates is that the issue is much more grey than black and white.

The law provides the trustee with a fair amount of latitude in dealing with the disposition of property and should the debtor want to keep his house he most often does, albeit at a cost. Only the trustee can properly explain this and then only after he has properly assessed the debtor’s entire situation.

The objectives of the Bankruptcy and Insolvency Act are not one-sided. It seeks to provide an equitable justice for all the parties and this cannot be properly shown by a simple interpretation of a statute. That’s why no matter what data the internet might provide, explanations that truly matter to people can only be provided by a Licensed Insolvency Trustee – like Richard Killen & Associates.

So, if any of this has personal meaning for you, phone or email us now for a FREE consultation and get the full perspective and proper answers to all your questions. Remember, it may be the most stress-relieving call you ever make.

Richard Killen

Licensed Insolvency Trustee

Posted On: April 28, 2016

What is the difference between Bankruptcy and Consumer Proposal is a common question we hear all the time so today let’s do a comparison of consumer proposal vs bankruptcy.

I’ve been in the insolvency business discussing bankruptcy in Toronto for over 30 years and in all that time I don’t ever remember meeting anyone who wanted to actually go bankrupt. Let’s face it, who would? I have met an awful lot of people who did realize and accepted that bankruptcy was the solution they needed. But, going bankrupt had not been on their to-do list.

It is a common topic when choosing a debt relief solution. I know the vast majority of people who come to our office would greatly prefer to solve their debt problems in some way other than filing for bankruptcy. Many choose a consumer proposal or some other kind of debt consolidation versus personal bankruptcy. Ultimately, it boils down to finding out what options are available for you, what the consequences will be, and then deciding what is best for you and your family.

What is the difference between consumer proposal and bankruptcy?

A consumer proposal is a settlement made between you and the lender with the assistance of a Licensed Insolvency Trustee. The trustee will facilitate the negotiation between you and the creditor concerning the repayment terms. The agreement includes paying a reduced amount of your total debt owed within a certain period, usually five years. Once the agreement has been finalized, the creditors will not be able to take a portion of your income. Moreover, the interest on your debt will stop immediately.

On the other hand, bankruptcy involves taking over your assets to settle your debt with specific exemptions. Your Licensed Insolvency Trustee will work with you upon deciding to file bankruptcy, which is governed by the federal government. By declaring bankruptcy, your creditors can no longer go after you and you can have a fresh start in your financial goals upon relieving yourself from your debt. This is after completing your duties. However, no one wants to go bankrupt but depending on your financial struggles, this could also be the best solution to your debt problem.

Bankruptcy versus Consumer Proposal: How can you decide which best is for you?

A lot of things have to be considered when choosing between the two options. Do you want to keep most if not all your assets? If yes, you should consider going for a consumer proposal. There are also differences in the payment terms. A consumer proposal differs from bankruptcy in the sense that it requires a regular and fixed amount of payment based on what you agreed upon with your creditors. As with bankruptcy, you will be obligated to pay an amount based on your salary and other factors. A proposal will also have a lesser impact on your credit score but will still have an impact. Filing bankruptcy will make you debt-free faster than a consumer proposal.

The first step in making this work is to talk to a Licensed Insolvency Trustee. A trustee is licensed by the federal government with the duty to assess your situation for you and explain all the options and consequences. Once you know what paths are available and where they will lead, you can decide which one to take. Though the decision must be yours, their job is to make things as clear to you as possible so you can make the best choice for your financial situation.

Now here’s the neat part. That consultation with Richard Killen & Associates is FREE- no charge, no strings attached. Not a bad price for the kind of empowerment a person with debt problems wonders if she or he will ever find.

So don’t stew about those bills anymore. Call us or contact us by email and make an appointment for that free consultation. Remember, it may be the most stress-relieving call you ever make.

One of our Licensed Insolvency Trustees will explain the difference between bankruptcy and consumer proposal, and the pros and cons of each, however, ultimately, it’s up to you to decide on a bankruptcy vs consumer proposal to solve your debt problems.

Posted On: February 3, 2016

The bankruptcy and proposal business is going to have a new player – at least it will appear that way. Since 1920 Trustees have had the title “Trustee in Bankruptcy”. Effective April 1st, 2016, Trustees are going to have a new name. We will be called “Licensed Insolvency Trustees”.

Actually this change has been coming for some time. Over the past 25 years the insolvency business has changed considerably. Trustees, who used to primarily handle bankruptcies and some business receiverships, have gradually morphed into people who do a lot more than that.

On the corporate side we have become the go-to people for effective restructuring when a company gets into certain kinds of trouble, but does not want to close their doors. This might mean re-organizing via a corporate proposal, or the use of the Company Creditors Arrangement Act, or even informal restructuring and deal-making. In other words as expansive a menu of solutions as the imagination and skills of a Trustee can supply to try to save the business.

On the personal or human side, Trustees have become the go-to people to provide the kind of knowledge an insolvent individual needs to achieve financial rehabilitation.

An insolvent person is by definition a person who can no longer keep all his creditors happy all the time – can’t keep all his debt payments up to date. This is usually disastrous for that person. A Trustee is uniquely placed to be able to provide that person with the tools to solve his problems. These might involve a bankruptcy solution or a consumer proposal in Toronto, or a more informal option. But the real solution will be that the insolvent person will have the chance to re-take control over their affairs. Though a lot of work will still have to be done, at least they can be in charge of doing it.

So the new title, which will be in use immediately, will be Licensed Insolvency Trustee.

Licensed –  Because a Trustee must be licensed by the Federal Government, through the Office of The Superintendent of Bankruptcy, to have the authority to perform his duties.

Insolvency  – Because the problems facing people today are not those of the past and the solutions and consequences have to be seen in a much more contemporary context. We are no longer necessarily talking about bankruptcy. There is much more to what we do.

Trustee – That stays because it properly reflects what we are – people who act in trust for others. Unlike a lawyer or other professional a Trustee does not work for only one side. A Trustee acts impartially in the interests of all the parties involved. This operates strongly to maintain public confidence in the legal insolvency process.

Hooray for the move forward!

Posted On: May 22, 2015

While many people believe that declaring bankruptcy in Toronto is always a sign of financial mismanagement, this is not always the case. Misfortune and disaster can also lay low on someone who had been keeping their head above the financial waters. So here are five common reasons people become insolvent and may need a bankruptcy or a consumer proposal to solve their problem:

1. Losing their job

In an “iffy” economy, unexpected job loss is an increasingly common reason for people to get into financial trouble. Along with the serious blow to their self-esteem that accompanies being downsized, they could also be put in a precarious position with a sudden drop in income. If this is compounded by their spouse losing his/her job, or being laid low by illness disaster can really strike. Suddenly they find themselves coping with bills not covered by unemployment benefits or health insurance and begin the slippery slope of using credit to pay for everything.

2. Separation and Divorce

Not only does marital breakdown come with a high emotional toll, it can hit the pocketbook equally hard. Legal expenses can quickly mount up, especially in a contested divorce. And then living expenses are doubled as each ex-spouse sets up their own household. Everything can quickly get very expensive.

3. When Lighting Strikes

The nature of many disasters is that they come out of the blue. Your car suddenly breaks down and costs thousands to fix up. Your roof gets irreparably damaged and your insurance doesn’t cover it. No matter what the disaster is, it has to be met and savings can dry up almost overnight.

4. Retiring With Debt

In an era where fewer people have adequate pensions, more and more people are retiring with serious debt loads, and reduced income to meet the payments and little prospect of increasing that income. Or, they may go into debt helping out their children or grandchildren who find themselves in financial straits. Statistics show that the number of seniors claiming bankruptcy is greatly on the rise.

5. Financial Mismanagement

OK, this one has to be said. This may come as a shock, but people are human. With the modern reality of easy access to credit, anything from a shopping spree to a vacation, to a house purchase can be a mistake, although it doesn’t appear to be at the time. So people take the risk and later live to regret it.

These five are among the most common reasons for declaring bankruptcy. Every one of us makes mistakes daily. This does not define us. What we do about them is what defines us.

So misspending can get people into trouble. But this is a human mistake that many of us make. They just need to learn to forgive themselves, take the necessary steps to address the situation, and then get on with their life.

However, the last paragraph is easier said than done for most people. We can help by showing what the options are for dealing with debt crises in Canada.

If you are considering declaring bankruptcy in Toronto call Richard Killen & Associates for a free assessment and a chance for a new start.

Posted On: March 3, 2015

There are numerous alternatives to bankruptcy if you do not want to go through the process. People who have difficult debt problems may think of it first, but bankruptcy is not the only feasible option. Your debt relief solution depends on your situation and some alternatives may work better than the others.

What is bankruptcy?

The legal process of seeking relief from your debts is called bankruptcy. You can consider declaring bankruptcy if the financial institutions you owed money from have started to sue you for failing to make payments. This is also applicable for those whose properties are at risk of foreclosure and if you are using a credit card to pay for your other debts. Other less compelling circumstances are when you must get a significant amount of money to pay your bills or you are getting a divorce.

The first determination really is that a person is or is not insolvent. To be insolvent means to be unable to pay your creditors and to meet your obligations in the way that the obligations are supposed to be met.

You must remember that it’s not up to anybody else to tell somebody that they are insolvent. That is something a person must realize and come to that determination themselves or with the assistance of a Licensed Insolvency Trustee.

Now if they are insolvent, then really one of the things they can do is to keep some form of control over their financial existence.

You also need to know that there are certain debts eligible for bankruptcy such as credit card debts, personal loans, CRA debt, or contractual obligations.

Bankruptcy alternatives for individuals in Ontario

As an alternative to bankruptcy, consider one of these debt relief options.

Consumer Proposal In Ontario
This is done by making a “proposal” to your creditors to lower your monthly payments or extend the period of payment. A consumer proposal also works by negotiating to pay only a portion and not the full value of the money you borrowed. This is administered by a Licensed Insolvency Trustee. A consumer proposal is one, if not the best alternative to bankruptcy. If you can strike an agreement with your creditors, you can settle your debt in a few years without filing bankruptcy.

Debt Consolidation Loan
Acquiring a debt consolidation loan is the process in which you take on a new loan to pay off all your existing debts. It is a way to save money from high-interest credit cards or Payday loans by allowing you to consolidate your debt into a convenient monthly payment with ideally a lower interest rate. It will also allow you to have an ample amount of time to pay all your debt. However, you need to talk to a Licensed Insolvency Trustee first before deciding to make sure this is the right alternative for you as sometimes the loan ends up costing you more.

Sell Your Assets
Gain money to pay your debts by selling some of your properties especially if you think your income could not keep up with the bills. Nevertheless, you need to consider if this is the best strategy. If you are a business owner, keep those assets that are necessary for the company operations. Liquidating your assets is the quickest way to get the cash to pay off your debts.

Debt Management and Debt Counselling
Look for a reputable debt counsellor or credit counsellor who can help you get a debt management plan. This is a good option especially if the negotiation with your creditors failed. Instead of paying directly to your creditors, you can pay through your credit counselling company with lowered interest rates and payment terms that you can afford. There are a lot of questionable companies in this industry, so beware.

Even though there are alternatives to bankruptcy available for you, you should be ready to make important changes in your lifestyle and financial attitude including tracking your expenses, living within your means, and creating a budget you can stick with.

Posted On: February 19, 2015

Divorce in Canada can be complicated when it comes to debt. Divorce can cause bankruptcy and bankruptcy can cause divorce. Study after study show that financial problems can lead to marital breakdown.

Filing for bankruptcy as you go through a divorce, or after, can make both processes more difficult and stressful.

Not off the Hook

If you are separated or divorced and have joint debt, you’re not let off the hook. Both of you are still liable for the money owed. If one of you files for bankruptcy, the creditors can go to the other ex-spouse and try to collect.

If you are in the process of going through a separation, one way of dealing with this is to have both of you take out new loans to pay off your old debt, so each of you know what you owe and aren’t affected by how your ex-spouse deals with the problem.

Of course, if you can’t get the loan and the two of you are overwhelmed by the debt, then you both may be forced to file for bankruptcy or a consumer proposal.

And Even if You Agree . .  .
Your ex might play nice and stipulate in  the separation agreement that he/she will be responsible for the joint debt. Problem solved? Not necessarily.

This agreement  is not binding on the creditor who gave the money in the first place. Unless the creditor actually signs the agreement, too, the court can’t give you a pass on debt that was jointly signed.

So to get such an agreement written into your separation requires the cooperation of your ex and creditor, as well as help from a lawyer.

Courts Like to Play Nice With Each Other
Family and bankruptcy courts tend to respect each other’s decisions and one won’t usually overrule the other. So if a family court order decrees that you sign over your share of the matrimonial home to your ex, the equity transfer isn’t likely to be attacked in bankruptcy court.

Conversely, if you file for bankruptcy, then your non-exempt assets, such as your equity in the house, are vested with the trustee. It is generally taken off the table and not considered in a divorce.

Trust Your Trustee
If you are dealing with joint debts and only one of you is declaring bankruptcy, it’s best to let the trustee know which ones are held in common. If you aren’t sure, get  a copy of your credit report or check with each of your creditors. If you situation is complicated, the trustee may also refer you to a lawyer to help you sort out the legal aspects.

The point is, when divorce and bankruptcy come together, there are a lot of thorny issues you must address. Come in for a free consultation at Richard Killen & Associates, and we’ll set you on the path to emotional and financial healing.

Posted On: December 24, 2014

The OSB’s Bankruptcy Assistance Program is a special program created by the Office of the Superintendent of Bankruptcy (OSB) for low-income bankruptcy help in Ontario for people who are unable to afford the normal costs of filing a bankruptcy.

Greater Toronto is an expensive place to live in. Sometimes it’s too expensive to even go bankrupt.

No, we’re not pulling your leg. With court costs, filing fees, and trustee services, it can cost between $1,500 and $2,500 to go bankrupt. The financial plight of some people can be so severe that it may seem on the face of things that they cannot afford to go bankrupt.

To address this situation, in 1993, the Federal Government created a special program,  called the Bankruptcy Assistance Program. Under BAP, a person unable to afford the normal costs of filing a personal bankruptcy is able to secure the services of a trustee – the first necessary step in going bankrupt.

More on the process later.  To be eligible for BAP, a person must not:

• Be in prison.
• Be involved in a commercial activity. Business filings can be complicated, costly, and time-consuming, so they are not included under BAP.
• Have what is called “surplus income.” This is the amount of money you earn that is over a pre-defined limit. What constitutes the limit is complicated and must be explained by a trustee such as Richard Killen & Associates.

If none of these things apply to you, how can you take advantage of BAP?

Well, you start by contacting the Office of the Superintendent of Bankruptcy (OSB). Tell them your problem and they will send you a list of participating Licensed Insolvency Trustees. Not every trustee participates in this voluntary program.

The idea is, that you are not eligible for the Bankruptcy Assistance Program until you have done your best to secure the services of a trustee the normal way. But the truth is, the program is often not needed. Bankruptcy trustees are used to dealing with people in financial straits. Many trustees, such as Richard Killen & Associates, are prepared to work with people and come to an arrangement that suits their circumstances and means.

In any event, under OSB, you visit a trustee on the list given to you. If, after the normal consultation (most trustees offer this for free), you cannot reach an arrangement to handle your bankruptcy, you ask the trustee to sign a paper and put down the reason why you couldn’t reach an arrangement.

Then you have to try the same thing with another trustee on the list. If again, you cannot reach an arrangement with that trustee and they sign the same paper as the first, you can go back to the government, and then, and only then, will they find you a third trustee under BAP. This third trustee is duty-bound to do your bankruptcy for “costs” – a term that means different things to different people but will vary in price from $400 to $800.

Many people misunderstand the BAP system. Explanations from the government often add to the confusion. A lot of people think that all they have to do is go to two Licensed Insolvency Trustees, get the form signed, and then go back to the government to get a free – or low-cost – bankruptcy. They don’t understand that they are supposed to try to make a deal with the first trustee. If they can’t, then they are supposed to try to make a deal with the second. If they still can’t, then the government will appoint a third.

Depending on who you see first, you may find that you don’t even need to see a second trustee, because the first trustee may accept your financial limitations and give you the same rate they would if the government had appointed them through BAP. We at Richard Killen & Associates do this all the time.

If you feel your financial circumstances are particularly dire and wonder whether you qualify for reduced fees in bankruptcy, come to Richard Killen & Associates for a free consultation. Lack of financial resources should not bar you from getting the help you need. We will make sure you understand all your options and will help you find a solution that best suits your circumstances.

Talk to a Licensed Insolvency Trustee for a free consultation if you feel your financial circumstances are particularly dire and you need low-income bankruptcy help, then the  Bankruptcy Assistance Program from OSB may be a great fit for you.

Posted On: December 11, 2014

As the outlook gets rosier for the Canadian economy, those in deep dept may pay the price with bankruptcy.

With the U.S. economy expected to undergo a widespread recovery next year, Canada will likely fall suit, with rising interest rates as well. Normally this would be good news. However, Canadians are going into the biggest shopping season of the year staggering under the load of a record $1.51 trillion in debt.

Our debt levels significantly outstrip those of American consumers. Excluding mortgages, our average debt has increased 2.7 per cent to $20,891, a recent article in the Globe and Mail points out.

On the tipping point
Lulled by five years of rock-bottom interest rates, we have taken on mountains of debt. While an improvement in the economy would normally be accompanied by a fall in the number of bankruptcies, our financial situations are so precarious that a small rise in interest rates could have disastrous consequences.

“We might see bankruptcies rising alongside interest rates,” affirms CIBC economist Benjamin Tal in a Huffington Post article.

Holiday hangover
With a frenzied beginning to the holiday buying season – seen in the Canadian embrace of America’s Black Friday madness – all indications are that household debt will go even higher, as December’s credit card bills become due in January.

Homes and cars
Many Canadians have been lured into the housing market with low interest rates, even though house prices have soared in key markets. In Vancouver, for example, the average price of a single-family detached home is now close to, gulp!, $1 million.

Overall there has been a marked increase in mortgage debt that puts many at risk if we see an increase in interest rates.

Auto loans and installment loans have been responsible most of the debt increases, up 6.8 per cent and 5.8 per cent respectively, Equifax Canada points out. Installment loans are loans with fixed monthly payments, which can include loans us for cars, furniture or home renovations.

Not all bad news
While our debt levels have come up, delinquencies and bankruptcies have actually gone down in recent quarters. Perhaps people are more determined to live within their means, or they have become aware of how precarious their situation is.

If after the turkey leftovers are gone, and the bill statement begin to fill your mailbox and email inbox, you feel that your debt situation is getting out of hand, call us at Richard Killen & Associates.

As one of Toronto’s friendliest and most respected Licensed Insolvency Trustees, we’ll sit down with you for a free assessment. We will lay out your options, whether it is taking an amalgamation loan, negotiating with creditors, offering a consumer proposal or going into bankruptcy and starting again with a clean slate.

Let it be a very Happy New Year for everyone.

Posted On: December 3, 2014

So the consumer proposal that you’ve filed in Ontario will soon be presented to your creditors. You’ve worked with a Licensed Insolvency Trustee, such as Richard Killen & Associates, to come up with a reasonable payment plan for your debts They helped you fill out the necessary forms and filed them for you with the Official Receiver.

Protections are in place
As soon as the consumer proposal is filed a legal protection goes into place – automatically. This means that none of your creditors can start, or continue, any collection effort against either you, or your property. In other words, all your creditors must direct their attention to your proposal, through the trustee. (In a consumer proposal the trustee’s title becomes “administrator.”)

Like most things in the law, there is an exception to this general principle. In this case a secured creditor, like a mortgage holder, can enforce his security rights under his contract with you. So if you wanted to keep your house or car, you would have to keep up your payments, or the creditor would have the right to repossess it from you. So that creditor can’t be included in your proposal.

But, as far as regular, unsecured creditors, you don’t make any more payments towards those debts because they will get paid through your consumer proposal. There is no point in their continuing to write to you, call you, demand payments from you, put the account in collection, garnishee your wages and so on, because the proposal has taken over your obligations to them.

So you’ve filed. What happens next?
Once the proposal is filed, the administrator must tell your creditors about it. A copy is sent to all of them and they are invited to file a claim to let you know, within 45 days, whether they are in favour of your offer or not. If they are, which is what normally happens, then you’ve got a deal. If not, we will have to have a meeting with the creditors, where everything can be discussed and eventually voted on.

To be approved at a vote, all it takes is a simple majority. The creditors get one vote for every dollar you owe them. That means the larger creditors are more important than the little ones. To be accepted your proposal must get 50% plus one vote.

Wondering what your chances are that the creditors will accept the proposal?

Your chances are good
While we cannot guarantee that any proposal offer will be successful, the vast majority of these legally binding settlements that we negotiate are accepted. The trustees at Richard Killen & Associates take a lot of time and effort to understand your situation – including what level of payments you can afford  – and have a lot of experience in dealing with creditors. We generally know what they are likely to accept. In short, we listen to them and we listen to you, and then help you craft a compromise that both you and your creditors can live with.

Why not handle it yourself?
The big advantages of doing a consumer proposal instead of handling negotiations with creditors yourself are:

• The filing of the proposal takes away the creditors’ other options; they must come to the table.
• You don’t have to get everybody to agree. The majority rules.
• A proposal works with all your creditors collectively.
• You don’t have to pay 100% of the debt. You can reach a compromise amount.

If the creditors representing the majority of the dollar value of your debt vote to accept the proposal, then it will become legally binding on all the creditors (and you).

Initial rejection is not the end
Though it is not a great sign, a rejection of your proposal, along with a subsequent meeting, is just part of the process. It usually means the creditors want you to offer more money, but this amount is still under negotiation. You still have the opportunity to make a deal. The trustee will continue to work with both sides to come up with an acceptable compromise. Often by adding a few dollars to the monthly payments, or by extending the payment period by a few months, the creditors will be satisfied.

So, is a proposal better than bankruptcy?
That is a good question. We get asked it a lot.

Very few people want to go bankrupt. They do so because they have to. Doing a proposal avoids bankruptcy, but whether it is the right move depends on individual circumstances. Only you can really answer that question.

For the creditors, it usually boils down to how much money they will receive. Creditors are keenly aware that what’s been offered them is better than what they’d receive in a bankruptcy. They know that if they come back and ask for too much more money that they may make you believe that a bankruptcy is the better way to go. They don’t want that either.   

Whether a proposal or a bankruptcy is the right way for you, is something you need to discuss with the trustee. That’s what we at Richard Killen & Associates are here for. Call us.

And again, don’t worry too much. At the end of the day, most reasonable consumer proposals in Ontario are accepted.

Posted On: November 17, 2014

We’re often asked by people who consult us: “Whom do you work for, the creditors or me?” The answer is: neither and both. To do our job properly, we need to work with both parties.

To be clear, a bankruptcy trustee is an officer of the court. We are licensed by the the Superintendent of Bankruptcy to act in a fiduciary capacity for all the participants, whether in a bankruptcy or a proposal. Fancy words, but what it means is that we are there to protect the interests and legal rights of both the debtor and the creditors.

So while we don’t in fact work for you, we do work with you to ensure that you can find the best solution for your circumstances.

When we first get together, during a free consultation at Richard Killen & Associates, we will ensure that you understand all your options. The most important thing we can do here is explain what the probable consequences will be for each of the options available to you. Only a trustee can do this comprehensively and effectively – probably because the trustee is the one who will be doing the actual work involved.

If you decide things will go forward after the free consultation, we’ll do all the necessary paperwork to get things started. After that, we will work with you and your creditors to administer the process in a way that is fully compliant with the law, so that you – and the creditors – get the full protection of that law.

So, even though the trustee doesn’t actually represent you the same way a lawyer or other professional does, he provides you with the best protection the law can supply and ultimately gets you to the destination you were seeking when you made your decision in the first place. That’s a lot to pack into a free consultation, isn’t it? Call Richard Killen & Associates and find out more.