| |
SITE SPONSOR |
|
|
 |
|
|
This site is sponsored by Hoyes Michalos
& Associates Inc.
If you're having financial difficulties and live in the Mississauga area, call (905) 848-3649 today to meet with one of our experts, or complete the ask a question form to send us a message and we'll get in contact with you. |
|
|
|
|
|
|
.gif) |
Welcome to Bankruptcy Mississauga Ontario
|
|
|
| |
Most of us have a car that we require to get back and forth to work. We consider it a necessity in order to make a living. I find this to be the case for many of the people that I meet with in our Mississauga and Brampton offices.
When making an assignment into bankruptcy you are required by law to surrender all your assets to your trustee who will distribute proceeds from the sale of the assets to your creditors. There are some assets that are exempt from seizure. Each province has different exemptions.
In Ontario, the exemptions are governed by the Ontario Execution Act (the "Act"). The Act has changed over the years regarding how a motor vehicle will be treated in a bankruptcy situation and also the amount of the exemption.
Presently, a motor vehicle worth up to $5,650 is exempt from seizure in a bankruptcy. This change in the exemption amount occurred on December 14, 2005.
Up until June 22, 2006, the problem that arose was if the motor vehicle was worth more then the exemption amount, by even one dollar, it was no longer exempt property. Thus, you were required to turn the asset over to the trustee for the benefit of your creditors or you had to pay the full value of the vehicle to the trustee to keep it. For most individuals thinking of filing for bankruptcy, this seemed very unfair.
On June 22, 2006, the Ontario government saw the error of this law and revised the Act. The Act now allows a car to be exempt from seizure provided it is worth less than $5,650. This has not changed. However, if the car is appraised or valued at an amount higher then the exemption amount, it no longer losses its exemption status completely. Now the trustee can sell its "interest" in the car which is the amount over the exemption less any selling costs or the bankrupt can buy back the trustee's interest so that he or she can keep the car. For example, if the car is appraised or valued at $6,650 at the time of bankruptcy, the trustee's interest for the creditors is the difference between the appraised value of $6,650 and the exemption amount of $5,650, which is $1,000. The bankrupt can repurchase the trustee's interest of $1,000 in order to retain the car. Or the trustee can sell the car and will only keep the amount over the exemption amount. The bankrupt will get up to the exemption amount $5,650.
Often times I meet with people in our Mississauga or Brampton offices who want options regarding their debts. Many times these options are not only with respect to personal debts but with debts that relate to a business they have or once had. This usually leads to the question; what debts from a business will you be personally responsible for?
The answer depends on what type of business you had. Was it a sole proprietorship or an incorporated company where you were an officer and director? In the case of a sole proprietorship, there is no distinction between your personal debts and those of the business. The debts are all yours personally and you will have to deal with them along with your personal debts. In the case of an incorporated company, the debts from the business are the company’s debts and not yours personally unless you personally guaranteed the debt for the company. For instance, a lease for a location the business operates from. The other exception is debts of the company that officers and directors of the company are responsible for. For instance, employee claims for wages and also certain government taxes such as, GST and PST. Generally, as an officer and director of a company you will be responsible for these debts personally and will need to include them with your personal debts when making a plan for dealing with all your debts. If you find yourself with business debts and personal debts that are overwhelming and are uncertain about your financial options and want advice on dealing with your debts, please contact the Hoyes Michalos office near you, and one of our professionals will meet with you personally to help you make a plan to deal with your debts.
Often, when I am meeting people to discuss their money problems, I find out that we are the last place they come to for help. This is not really surprising as coming to a trustee to get help to resolve your debts is pretty much the final solution to money problems. Most people are confused about what their options are and what makes sense for them.
In order to come to some plan to resolve your problems there are certain factors that have to be considered. How these factors relate to each other will determine your best course of action. The factors are.
1.How much you owe, and to whom and for what?
2.What you own that could be turned into money, and how much money it could be turned into, and do you want to keep some or all of this stuff?
3.How much income comes into the household every month?
4.How much do you spend each month just to pay your living expenses?
The first factor is important because not all debts can be resolved by bankruptcy. Student loans less than 10 years old, Co-signed debts, fines and restitution orders for example can’t be discharged in most cases.
The second factor indicates what you own, if you own little but can’t pay your debts, then likely bankruptcy is an option worth looking at. If you own a house, cars and investments like RRSPs that you want to keep then perhaps a Proposal would be a better option. Often filing a proposal will allow you to keep your house and the other things you own while still resolving your debt problems.
The third factor is important in that the amount that a bankruptcy will cost you is tied to the amount of money coming into the household. If you have a good income coming in then bankruptcy may be expensive, again a proposal may be a better option. A proposal will cost you more in the long run, but you can pay the proposal amount out over a longer term, allowing it to fit in the budget better.
The final factor indicates how much money is available to put towards resolving your problems. If you are spending more than you make just paying for your basic expenses before servicing you debts, a proposal won’t work for you, you have to show how you can afford to pay for it before the people you owe money to will accept the deal. In this case filing bankruptcy combined with tough budgeting will enable you to get your fresh start.
If you have questions about what you should do call 310-PLAN and one of our trustees will review your situation and help you come up with a plan.
When meeting with clients I have often found that the solution to their problem is very clear to me, being on the outside looking in. However for our clients, deeply involved in the day to day struggle with their debt, there seems to be no solution. Managing money is not a skill we are born with, we have to learn, and often we have to learn the hard way, by making mistakes and recovering from them. Everyone deals with money problems at some point in their life. Taking action and making a plan to deal with the problem early is critical.
In many cases the financial trouble can be weathered with a combination of "belt tightening" and effective budgeting, sometimes this may be accompanied with re-financing and consolidation of your debt through your bank. This is where the solution to any financial problem should start, with you taking control and making a plan. If this does not work then you may need some help to recover.
Sometimes all you need is a little help getting your budget under control. In these cases a credit counselor can help, if necessary they can negotiate with your creditors and arrange payment terms that you can handle typically with interest relief and extended payment terms. Such schemes are known as Debt Management Plans and are very helpful for clearing away smaller accumulated debts. In addition you can select which debts you want to make part of the plan allowing for much greater flexibility than a formal filing with a Trustee.
If you have tried both of these approaches, and you are still in trouble, then you may need the help of a Trustee to get things back under control.
If you are dealing with money problems and don't know what to do call us at 310-PLAN to speak to a Trustee today. Even if it turns out you don't need a trustee, we can help you figure out a solution to your money problems.
|
|
|
|
|
|
