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Messages - NotATrust-E

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The terms of your proposal determine when your payment dates are.

Typically, there is at least a small window between the date of filling and first payment. For example, the proposal terms could say that payments are to begin on August 1st, 2017, with all payments to be made on the 1st of the month. If your proposal stated that the date of first payment is July 1st, 2017, you must make a payment (or preauthorized debit) on that date, or it will be considered a late payment.

Once you enter into the a proposal agreement, even if it is not yet agreed to by the creditors, you must abide by all of the proposal terms until your proposal is completed, amended, or annulled.

My question is once the LIT files the papers, do I make any sort of payments? obviously I do not pay my creditors but do I make the monthly proposed payment to the LIT while in the 45 day waiting period?
of course this is on my list of questions for Monday however thought probably get my answer here.

another question I do have debt outstanding to the BNS and I am listed on a joint account with my father, I am guessing I should visit the bank of nova scotia and have myself removed from that account in the event they decide to cover my debts with money from his account.

Consumer Proposals / Re: CRA & Consumer Proposal
« on: May 31, 2017, 07:26:59 PM »
Did your proposal pay 100 cents on the dollar, either generally or to CRA?

If your proposal paid 100 cents to all proven creditors, (net of trustee fees, etc.), then CRA should return the excess funds to the trustee, and the remaining money will be returned to you.

If your proposal paid 100 cents on the dollar (or more) to CRA, but not to your creditors generally, CRA should return any amount over 100 cents on the dollar to be redistributed to your other creditors. Your trustee will handle that process.

Consumer Proposals / Re: Joint Consumer Proposal
« on: May 14, 2017, 09:16:50 AM »
Two individuals can file a joint proposal, “Where the debts of the individuals making the joint consumer proposal are substantially the same and the administrator of consumer proposals is of the opinion that it is in the best interest of the debtors and creditors”. It is up to your trustee to determine if this is the case.

If they do not believe the above paragraph applies, you can file two separate proposals or two separate bankruptcies. To my knowledge, there is nothing in the act that speaks to how exactly the LOC debt would be handled, but I presume both of you would have to list this debt.

In Ontario, there is now a $10,000 exemption for real property. What this means is that if you have $9,999 in equity in your primary residence, it is exempt and does not get distributed to your creditors. However, if you have $10,001, none is exempt. This is due to changes in the Execution Act.

When you file for bankruptcy, your property vests in the trustee. If you had less than $10,000 in equity in your house in Ontario, it would not be liquidated for distribution. However, I suspect (but do that know) that the moment you sold your house  (or gave it up and there was a surplus from the bank's sale), this is no longer exempt because it goes from being an exempt asset to an un-exempt asset (cash).

I'll assume that you have not been previously bankrupt.

The trustee is required to determine if you have surplus income at the outset of your bankruptcy. If the trustee "Becomes aware of a material change in the bankrupt's situation", they are required to make a determination of the amount of surplus income owing, as well as in both the 8th and 20th months of bankruptcy.

If by "surrender your house" you mean return it to the mortgage lender as part of a bankruptcy process, the answer is no, you do not get to keep the equity. 

Consumer Proposals / Re: Secured Debt
« on: April 12, 2017, 07:38:35 PM »
It depends on what you mean by ‘include’. ‘A consumer proposal must be made to your creditors generally’ under Section 66.12(3). This means that you must make the proposal to all of your creditors, both secured and unsecured.

Secured debts cannot be included in a proposal in the same way that unsecured debts are – you can’t pay off a car loan via a consumer proposal. However, you can include debt that was previously secured.

Let’s say that you had $50,000 in credit card debt and were proposing to pay $25,000 over 5 years, or $416 per month. This would be a gross payment of 50%, which is very good. You also owned a car with $10,000 left on the loan, but was only worth $5,000 resale, and had monthly payments of $400.

What you CAN do in this scenario is return the car and instead pay the shortfall – in this case, $5,000. You would still be offering the same $25,000, but on $55,000 of debt, which is still a very solid 46%. This would mean that you would save $400 per month in payments, which would be basically your entire monthly payment.

The bottom line: You can’t include secured debt in your proposal, but if you return your trailer, you can include the shortfall after the sale.

1)   50% in number of voting creditors and 66.6% in “voting dollars” must vote yes. This could be one creditor owed $1,000.

2)   Unless you live in PEI, more than one LIT firm operates in your province. See for details. This is not an exhaustive list.

3)   If you cannot afford surplus income payments, there is mandatory mediation. See Subsection 170.1(1) for details. This means that you would come to an agreement to pay over time.

4)   A small point: A rejection by creditors is called a ‘Deemed Assignment’. A default is entirely different and, for a Division I proposal, is covered by Section 62.1. See Section 57 for details of what happens after a Division I proposal is rejected.

5)   If you do make a Division I proposal, once it is accepted, and approved by the court, the terms cannot be changed unless you request an amendment. This means that you can take on another job subsequent to the acceptance of your proposal and it will not affect your payment.

6)   It is possible to include a term in the proposal that indicates that the net proceeds of the house would go towards satisfying the terms of the proposal.

7)   Regarding Joint Division II proposals: Section 66.12(1.1) says that “Two or more consumer proposals may… be dealt with as one”. The ordinary reading of this phrase suggests that the combined limit is $250,000, as the two are being combined into one proposal. Directive 2R has more information regarding joint administrations.

Consumer Proposals / Re: Harm in applying for credit card during cp
« on: March 14, 2017, 10:27:37 PM »
It's possible for you to receive a credit card while in a proposal. I assume you will have a difficult time getting approved.

So far as I know, there is nothing in the Bankruptcy Act that stops you from getting a new credit card or otherwise penalizes you for doing so. The point I was trying to make earlier is that if you do not successfully complete your proposal AND you got a card during the proposal, that could look bad.

Consumer Proposals / Re: Consumer proposal cost?
« on: March 14, 2017, 08:35:58 PM »
A few considerations:

The fees for consumer proposals are set out by federal legislation. Trustees receive 20% of all funds distributed to creditors, plus they receive the first $1,500. So, $4,500-$5,000 is fairly accurate.

Vehicle exemptions vary by province based on the province’s Executions Act. Generally, you get around 5K-6K of vehicle exemption in one vehicle. Assuming that you do not have surplus income, the net value of the vehicles, minus any exemptions, sets the minimum amount for the proposal to make it better than a bankruptcy.

Consumer Proposals / Re: Harm in applying for credit card during cp
« on: March 14, 2017, 08:25:31 PM »
As long as you successfully complete your proposal, I don't see a particular harm to acquiring an unsecured card. However, the effect of a rejection may be magnified for a future lender.

Consumer Proposals / Re: Student Loan /CP question
« on: March 14, 2017, 08:23:43 PM »
There are a few things to consider here.

Firstly, the Bankruptcy Act brings in a stay of proceedings against creditors, which stops them from trying to collect. Creditors can begin collection once:

A)   You have defaulted on or withdrawn your proposal or
B)   The trustee has been discharged.

The sooner you pay off your proposal, the sooner your trustee is discharged, which means that the student loans people can try to collect again.

See section 69.2(1) for more information.

Secondly, interest on student loans accrues as your proposal is ongoing.

There are no time limits for negotiations. If RBC has 25% by value of your proven debt, they can request a meeting. The negotiations can continue infinitely if there is no definitive yes or no vote.

Let's say you filed a CP on March 1st, 2017 for $100,000.
You owe TD $25,000, RBC $20,000, BMO $25,000 and CIBC $30,000.
Let's say that CIBC and BMO say yes, RBC says No, and they want a meeting, and TD doesn't vote.
A creditors' meeting must happen if, on April 15, 2017 (45 days after filing), 25% of ]proven[/b claims request one.
In this case, $20,000 of $75,000 say they want a meeting, so a meeting must be called, as 27% (by value) voted for a meeting.

The first $1,800 goes to the trustee, the next $200 goes to the government in a bankruptcy. If extended to 21 months it could be much higher, but that doesn't apply to your situation given your income level. If you pay $2,000, RBC will get zero.

I've heard that banks (even RBC) will be reasonable. If your proposal is for 80% - even if it's for a small amount - they will accept it.
Having said that, I would be surprised to see a proposal at 20%-25% of total debt if RBC is involved.

You can offer and counter-offer as many times as you like, there's no legal maximum.

Consumer Proposals / Re: Loans from Family Members Included?
« on: February 15, 2017, 08:17:24 PM »
There are a few issues with loans between parties that aren't at arm's length.

The first is that your parents will have to file a valid proof of claim. They will have to prove that the debt exists, wasn't meant to be a gift, etc. They may have a hard time coming up with this documentation.

The second issue is that your parents cannot vote on your proposal. The law is a bit more complicated than that, but that's probably a good enough explanation before you talk to your trustee.

During Bankruptcy / Re: Missed Counselling
« on: February 10, 2017, 10:41:49 PM »
The short answer is yes, it could be a problem, as you have neglected a duty of a bankrupt under Section 158.

However, the trustee won't want to spent the time and money to oppose your automatic discharge if they can possibly avoid it.

You can still do the counseling, but you will want to make sure it gets done as soon as possible, especially if you are eligible for a 9-month auto discharge.

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