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Here are a few suggestions:

1.  Keep an accurate accounting of your expenses so you have the information available at year end.

2.  If you maintain a home office, claim a percentage of the costs of maintaining your home.  See the Canada Revenue Agency (“CRA”) website for details and eligibility on claiming Home Office Expenses.

3.  If your spouse is helping you in your business, consider paying your spouse a wage comparable with others in their position.  This will help reduce your taxable income and provide for income splitting with your spouse.

4.  If this is your first year of being self-employed, consider making quarterly installments of the estimate of income taxes payable.  If you have been self-employed for more than a year, then when you filed your income taxes the previous year, CRA would have told you what your required quarterly installment payments are on your notice of assessment.  If you think that your income is going to be more than previous years, consider increasing your installment payments.

5.  Open an RRSP account and make monthly contributions to the RRSP.  Not only does this reduce your taxable income but it sets something aside for your retirement.

If you have questions or concerns respecting your business’ financial situation, we invite you to contact our office. Our highly experienced staff will be happy to discuss your situation.

 

Henry M. Francheville, CA, CIRP, Licensed Insolvency Trustee

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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Income tax debts are unsecured debts and, as such, the debt will be extinguished as a result of bankruptcy.    

HST is also an unsecured claim in bankruptcy.  If you were self employed and owe HST, then your bankruptcy will extinguish your obligation to pay the outstanding HST. 

If you were self-employed and have unpaid source deductions then that claim, too, is extinguished through the bankruptcy process, although the claim ranks first against non-exempt assets.

Canada Revenue Agency (“CRA”) has the right to garnish wages, but this right ceases on bankruptcy.  Thus if you owe tax and have not yet filed for bankruptcy, CRA can send a garnishment notice to your employer which will result in a portion of your wages or salary being withheld and sent to CRA. 

Once you file for bankruptcy, the garnishment will be stopped immediately as CRA cannot continue with collection proceedings once a person is bankrupt, just as a credit card company or other unsecured creditor is prohibited from continuing collection activities.

Income taxes, HST and source deductions that arise for the period after bankruptcy must, however, be paid as they are “post-bankruptcy” debts.

 

Lawrence Crandall, LL.B, CIRP, Licensed Insolvency Trustee

 

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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Using equity in your home to consolidate high interest debts into one lower payment is an option.  However many people become worse off because they cannot afford the higher mortgage payments, and now have an additional loan secured against their house.

Many banks are now offering what is termed “home equity loans” which in some cases is a second mortgage on the house and may limit your options to reorganize your financial affairs.  Most Trustees will work out an arrangement to deal with any equity in your home on terms more advantageous than a second mortgage.

 

Kristi Neilsen, BComm, CIRP, Licensed Insolvency Trustee

 

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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Most people focus on the negative aspects of bankruptcy.  However, our bankruptcy laws are intended to provide a number of benefits to an “honest, but unfortunate” debtor.  The Bankruptcy laws can:

  • Give you a fresh financial start by eliminating the legal obligation to pay most or all of your debts.
  • Prevent or delay a creditor from repossessing a vehicle or other property.
  • Stop wage garnishments and other legal proceedings by creditors.
  • Stop collection calls.
  • Prevent the termination of utility services, such as telephone and hydro.
  • Provide financial counselling to help you with budgeting and cash management skills.

 

Of course, some conditions apply to these benefits and you will need to get advice from the Trustee on your particular situation. 

Our Bankruptcy laws were designed to provide Canadians with the opportunity to recover from a financial burden they cannot reasonably carry and to protect their rights as well as the rights of their creditors.  The laws are not meant to punish but to help you get back on your feet.  If a bankruptcy or proposal is the right financial option for you, you should not worry about being punished, embarrassed or criticized for seeking the protection it affords you.

 

We are pleased to offer a free consultation to discuss your options and help you get a FreshStart!

 

  

Jean Goguen, CPA, CMA, CIRP, Licensed Insolvency Trustee

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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Before attempting to obtain and build credit you should make sure your financial house is in order.  This involves maintaining both a positive life style and establishing positive banking habits.

To create a positive lifestyle you should first make sure you are living within your means. This means that you are not using credit to meet your living expenses.  Try to make it a priority to pay your everyday living expenses on time and in full.  Finally you should always be conscious of money coming into your house and where it must go. In other words, you need to create a budget based on your family income and then do your best to stick to it. 

Remember to budget for and set aside money for expenses that occur on an irregular basis like insurance, back to school items and Christmas. 

Adopting and maintaining a positive banking style involves keeping a positive balance in your bank account.  An easy way to do this is to open a savings account in the same bank as your working account and automatically transfer into this account on a regular basis. Even a little amount saved on a regular basis can add up over time and provide you some security. As noted in previous articles, obtaining and correcting errors in your credit report is also key to improving your future credit standing.

We are pleased to offer a free consultation to discuss your options and help you get a Fresh Start!  

 

Julie Molasky, CIRP, Licensed Insolvency Trustee

 

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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The most important thing you can do to help someone that is suffering from financial difficulty is to talk with them about it. It is important that they understand that they are not alone and that many people find themselves in a difficult financial position.

If you think your friend or family needs assistance in sorting out their finances, we advise that you give them the contact information for a Licensed Insolvency Trustee.

Many of the people that come to our office to declare bankruptcy or to file a proposal to creditors are referred to us by their family or friends.

Our office offers free consultations to discuss people’s financial difficulties. These consultations are without commitment and may help set out a way for your friend of family member to deal with their financial difficulties.

 

Jean Goguen, CPA, CMA, CIRP, Licensed Insolvency Trustee

 

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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In most cases people wait until the last possible minute before they call a Trustee in Bankruptcy. The problem with this is it can cause a lot of additional stress and worry that could have been avoided. We often hear people say they wish they had come to see someone sooner.

If paying your bills is causing you stress in any way, shape, or form, then you should speak to a professional that can help you to get organized and get a Fresh Start!

Sometimes it’s just about sitting down with someone to get organized and back on track.

We are pleased to offer a free consultation to discuss your options and help you get a FreshStart!  

 

Henry M. Francheville, CA, CIRP, Licensed Insolvency Trustee

 

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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This is a question that we get asked frequently. No, the Trustee in Bankruptcy will not dictate how a bankrupt is permitted to spend his or her money.

With respect to your income, the Trustee’s primary concern is whether your family’s monthly net income is higher than the guideline set by the Superintendent of Bankruptcy. The guideline income increases based upon the number of people in your household.

If your monthly net income is higher than the guideline amount, your monthly payments to the Trustee will be higher as well. So, the Trustee is primarily concerned with the amount of your income, not what you use it for.

As part of the bankruptcy, the Trustee will provide you with a counseling session to help you properly manage your money.

We are pleased to offer a free consultation to discuss your options.

 

Lawrence Crandall, LL.B, CIRP, Licensed Insolvency Trustee

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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No. The amount you pay for bankruptcy is based on your income and your assets.

The government has income guidelines that are based on the number of people in your household. Those guidelines determine what, if any excess you would have to pay during your bankruptcy. These monthly payments are determined when you first file but if a change in circumstances occurs during the bankruptcy the payments will be altered as they are based on your actual income.

There are certain assets that are exempt. These include your personal goods, a vehicle used in the course of employment, most RRSPs and pension plans. If you have assets that are not exempt that you wish to keep you have the option of making monthly payments to cover the equity in those assets and retain them.

We are pleased to offer a free consultation to discuss your options, what bankruptcy would mean to you and to help you get a Fresh Start!  

 

Kristi Neilsen, BComm, CIRP, Licensed Insolvency Trustee

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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Financial difficulty can often creep up unnoticed because no one is really watching for the early warning signs until they become so obvious that it may be too late.

Early warning signs of business financial difficulty include:

  • Increasing levels of supplier debt, bank credit and arrears of HST and payroll remittances over time, particularly without a corresponding increase in sales.
  • Receiving “overdue” account letters from suppliers or having your account sent to collection agencies.
  • Losing clients or not getting repeat business from clients.
  • Significant old items in inventory.
  • Increasing amount of old accounts receivable and difficulty collecting.
  • Frequent cost over-runs on contracts.
  • Renting or buying equipment, vehicles or business premises beyond what is required to operate the business.
  • Retaining staff who are not fully utilized when there is no real prospect of work.
  • No monthly accounting reports and/or not reviewing them and comparing to budget. 
  • No budgeting and/or planning is done.

Managing your business day-to-day means watching for these and other early warning signs and adjusting your business to deal with them on a timely basis.  As with most problems, the earlier they are identified and dealt with, the less likely that they will grow into something unmanageable.

Julie Molasky, CIRP, Licensed Insolvency Trustee

Licensed Insolvency Trustees
Tel: 1-888-455-6060
www.freshstartatlantic.ca
Fresh start…the road to financial freedom

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