Red Deer Bankruptcy Information: Bankruptcy Trustees and Alternatives to Bankruptcy

The pandemic really did a number to the financial health of many Canadian citizens, and this effect gets aggravated by daily life.

1. You might have been laid off from a job for various reasons
2. No matter how many payments you make, the amount of debt simply does not budge
3. You could not obtain any form of credit since you maximized it
4. The previous sentence took place because you used credit for your most basic needs
5. Or your small business simply never took off

If you have faced any of these reasons, or in the worst case, all of the above, you may need to declare bankruptcy before you go off the deep end. This is not as dire as it sounds, contrary to the term. Bankruptcy is not the end of your finances, it actually helps provide you with some relief from your crushing debt. That is a good thing. In 2017, Red Deer had a population of 103,588. In that same year, 13,286 Alberta residents filed for personal bankruptcy or bankruptcy proposal. Alberta’s population in 2017 was 4.244 million. Therefore, about 324 people in Red Deer filed for personal bankruptcy or bankruptcy proposal in 2017. Contacting a Red Deer tax lawyer might be a good place to start if the CRA is sending threatening letters.

What is Bankruptcy?

Under the Bankruptcy and Insolvency Act (BIA), Bankruptcy is defined as a procedure that intends to provide financial relief to those who have filed for it. What bankruptcy does is that it prevents your creditors from performing any legal action against you. This is done so that creditors cannot have any advantage over the other.

Bankruptcy is the best solution if it is identified that there is no other viable solution to operate or restructure your debt to benefit your creditors, or if all other solutions have been utilized. Bankruptcy may be the best solution, and possibly the last resort, but there are other alternatives to this remedy as well:

• The repayment of debt through the use of personal budgets,
• Debt Consolidation Loans to help refinance your debt.
• Credit Counselling Agencies that allow repayment under a debt management plan.
• Direct Negotiation for an Informal Debt Settlement with your creditor
• Consumer Proposal to Avoid Bankruptcy and Eradicate your debt.

From what you can see here, there are other solutions before you have to declare bankruptcy as your final solution. Think of bankruptcy now as a remedy to help you.

Filing for Bankruptcy

If you are in this section, chances are, you may have exhausted all the possible remedies to address your debt, and you would have to file for bankruptcy. This begins when you consult with a Licensed Insolvency Trustee (LIT) or a Bankruptcy Trustee. They are the only authorized people in Canada who are regulated and licensed to administer bankruptcies.

Once you have found a Bankruptcy Trustee, a simplified version of what they do for you is that they would deal with your creditors on your behalf – they would pay the proceeds from the sale of your non-exempt assets (an asset which exceeds the equity limit set by the province), and pay your creditors.
Bankruptcy as a legal remedy does not last forever, as you can only avail of this remedy for a length of nine months, with the condition that you fulfil the conditions asked of you in the interim, and that this is your first bankruptcy. If surplus income is involved, then this may be as long as 21 months – your Bankruptcy Trustee would help you with this.

A second or third bankruptcy would last anywhere from 24 to 36 months, but this is not a constant measure. In accordance with the fulfillment of your other obligations, history of bankruptcy, and presence of any bankruptcy-related offenses, the length of time that you can avail of this remedy is a question for the courts to answer.

Once you have received a notice of Absolute Discharge from your bankruptcy, you have no obligation towards discharged debts. This, however, will reflect on your credit rating for the next six or seven years in accordance with your provincial laws.

The CRA and Bankruptcy

Despite your exhaustive plans to avail of all possible solutions, where you come to the realization that you would have to file for bankruptcy, the Canada Revenue Agency would become involved in the initiation of bankruptcy actions. The CRA has the ability to exercise its right to oppose the discharge from Bankruptcy of a debtor and petition the Bankruptcy Courts to decide. This opposition is not the norm, however, and is only expected when the tax debt is a large amount, or if the taxpayer failed to answer for their back taxes. Accusations of tax evasion or tax fraud may be filed by the CRA against the taxpayer, or the taxpayer may be accused of evading the collection efforts of the CRA.

As with most legal proceedings, it is possible for the CRA to negotiate with the taxpayer before the hearing takes place for a settlement to be paid through the Insolvency (Bankruptcy Trustee) with the approval of the court. The CRA can then actually extend the state of your bankruptcy if only to seek remedies for taxes owed to the government.

How to Be A Bankruptcy Trustee?

If you have reached this point, your interest may have been piqued by the idea of working to help fellow Canadians find solutions to overcome their indebtedness. Perhaps, a career in Bankruptcy as a Bankruptcy or ILT Trustee beckons to your interests. The Office of the Superintendent of Bankruptcy Canada has the jurisdiction to review the license applications of trustees in accordance with the BIA. To be a trustee it is important that the trustee have a university degree OR five years of relevant work experience in the field of bankruptcy. An applicant who is also a member of a recognized Canadian professional organization is also qualified to apply as a trustee.

• Applicants must pass a three-year education program on bankruptcy and insolvency practice and law, and must consent to be investigated by the RCMP before a license is granted.
• The applicant must be possessed of a good reputation and must not have been convicted of a criminal or economic offense for which the applicant has not received any pardon.
• The superintendent evaluates the ability, skill level, comprehension, professionalism, and work ethic of the applicant to ensure that they would be able to capably help their clients.
• Applicants must complete the Chartered Insolvency and Restructuring Professional Qualification Program, offered by the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).
• They must also complete the Insolvency Counsellors’ Qualification Course given by the CAIRP. Applicants must also be solvent and not have declared bankruptcy within the past five years from the date the application is filed.

Work Opportunities for Bankruptcy Trustees

Given the rigorous regulatory processes that applicants must undertake before they can take part in the assistance of fellow Canadians for debt solutions, it is understandable that this is a highly sought after profession in Canada, as a Bankruptcy Trustee has the responsibility to manage assets that are held in trust and administer proposals and bankruptcies filed with them.

Clients are a constant, as they are mandated by law to work with a Bankruptcy Trustee if they wish to declare bankruptcy or file a consumer proposal. The fees of a trustee are regulated by law and are generally cheaper than a debt consultant. Bankruptcy trustees can operate independently, or for better network opportunities, they can join a firm with other bankruptcy trustees.

Red Deer Bankruptcy Information in Alberta would provide you with the needed information to know if you would need a bankruptcy trustee in your future, and link you with the professional help you will need to help you with your debts and other obligations.

References:
https://www.pwc.com/ca/en/services/insolvency-assignments/what-is-bankruptcy.html
https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/br03733.html
https://gtdebtsolutions.com/bankruptcy/how-bankruptcies-work-in-canada/
https://www.afarber.com/blog/cra-bankruptcy-or-consumer-proposal/
https://www.bankruptcy-canada.ca/find-a-licensed-insolvency-trustee
https://debtsolutions.bdo.ca/how-we-help/what-is-a-licensed-insolvency-trustee/
https://www.bankruptcy-canada.ca/licensed-insolvency-trustee