June 5, 2008

When Debt Overwhelms

For most consumers, credit is an economic fact of life. In Canada there are 44.1 million Visa and MasterCard users. Nearly 19 million cards, or 46 per cent, carry a balance. All this debt carries a high price when debt overload leads to insolvency. Certain solutions must take place for insolvency to begin the steps of starting on the road to financial recovery:

Apply for protection

Under the federal Bankruptcy and Insolvency Act a proposal application for protection must be filed or an assignment of bankruptcy must be made.

Proposal for payment

A proposal is an arrangement between the debtor and their creditors. It outlines how to pay off only a portion of the debts, the timeframe to pay it off or to provide some combination of both. To be acceptable, the creditors must be better off financially under a proposal than if the debtor were to go bankrupt.

Consumer proposals

A person is eligible if the total debts, excluding debts secured by a principal residence, do not exceed $75,000. Consumer proposals cannot be for more than five years. The debtor is not automatically bankrupt if creditors do not accept the consumer's proposal. Insolvency counseling is required.

Other forms of proposals

There is no restriction on the amount of money a person owes. If the creditors do not accept the proposal, the person is automatically bankrupt effective the date of the creditors meeting. Insolvency counseling is not required.

Declaring insolvency should be a last resort for individuals over committed with debt. People, who have not been bankrupt before, may be granted an automatic discharge after nine months if the creditors, or Superintendent of Bankruptcy has not opposed the discharge and insolvency counseling has taken place.

IPBC Membership Updates

Bookkeepers Across Canada Want to Hear From You

IPBC is encouraging its members to actively contribute content, articles, tips and or insights into all areas bookkeepers are exposed to. Do you have an interesting challenge, tax story or client strategy that might help others? What about some great tools, tricks or trade secrets you would be willing to share? IPBC is interested in hearing from you. Please email us with items you think might interest other readers. Email your items to wendy@instituteofprofessionalbookkeepersofcanada. ca.

IPBC Members Featured Benefit for June

IPBC is pleased to have OnPoint Software Training Solutions as one of its Partners.

OnPoint Software Training Solutions

Offering easy access to Quickbooks 2008 training course over the internet from the comfort of your home or office. IPBC members are entitled to these special discounts:

• One free Quickbooks course of their choice (live or taped when available).
• 10% discount off of additional Quickbooks training.

Don't delay as this offer expires June 1, 2009!

Learn More About OnPoint Software Training Solutions

Tip of the Week

A Solicitor

You can't be an expert in everything; hiring advisors can save you from mistakes and head- aches. A solicitor can be an important adviser for any business, big or small. The role of the solicitor is to help you with all legal issues like what structure suits what you want to achieve, do your forms and policies meet your legal obligations, like your privacy policy, recruitment policy etc. They can also help you protect your assets, financial issues, and in particular your intellectual property like trademarks, copyright etc.