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[Music] welcome to the financial planning for canadian business owners podcast you will hear about industry insights with award-winning financial planner and entrepreneur jason pereira through the interviews with different experts with their stories and advice you will learn how you can navigate the challenges of being an entrepreneur plan for success and make the most of your business and life and now your host jason pereira hello and welcome to financial planning for canadian business owners i'm your host jason pereira just a reminder to please sign up for my newsletter jasonprairie.ca where you receive notification of all my podcasts television appearances blog posts and etc today on the show i have scott terrio manager of consumer insolvency for joyce nicolas hoyce michelos is a well-known toronto-based licensed insolvency trustee and i brought scott on the show to specifically talk about what insolvency means what the options are and how business owners can protect their assets in the event of insolvency with that here's my interview with scott hello scott how you doing jason good thanks for taking the time to come in sorry quarantine time to come on digitally yes we all know what that means at this point right exactly so scott terrio of voicemake loves tell us about what it is you do so hoy's michaelis is a as an ontario-based insolvence license insolvency trustee firm we have 25 offices across ontario the head office is in kitchener but we're in all the big centers everywhere from windsor to berry to ottawa and down to the gta i work in the king and young office downtown in toronto specifically when i'm working there and so i've been working at home since march 18th and everybody has we we switched our we switched our firm over and almost overnight like doug and ted did an amazing job uh getting everybody set up at home and we're continuing to function right now the courts are closed but because all proceedings that we do are summary in nature whether they're proposals or bankruptcies we don't actually need a physical courtroom so that kind of makes it easy for us we can keep helping people who haven't had the benefit of continuing work and uh we did about 5800 files last year which is a lot you know i'd say we're not sure what percentage of the ontario market we are but we're one of the top three uh consumer insolvency firms in the in the country so excellent so i have no doubt that this year will be a gangbusters business year for you but um it was good it was going to be before this so now it's just like yeah it's going to be nuts so so basically let's talk about before we get into the entire credit protection angle let's talk about what the process is for what happens when people can basically get into debt issues and specifically around what their options are and really one of the things i want to bring to light here is i want to people understand that they can turn to people like you sooner than later because more often than not by the time you get to them they've already done some things that are probably detrimental so let's talk about that yeah so regardless of whether it's an individual consumer or a small business jason sooner is always better when you're when you're talking about debt most small business owners once they've got into a little bit of trouble whether it's tax debt or or supplier debt or bank debt they keep digging and they keep pushing things down the road and debt only gets worse with time it's the opposite of wine i guess it's um well yeah the eighth one of the world of compounding works against you exactly you know the longer you go with debts the worse it gets plus the complexities of business mean that you're trying your best all the time possibly your you know resorting to using source deduction or hst in order to keep your payroll going if you're in that much trouble and that's normal i mean that's that's it's commendable in a way um you're trying to keep you're trying to keep things running but but then of course you keep getting getting in deeper and usually the sooner somebody comes to us by far the better we can do with them but that's not really how how it works uh psychologically we don't once especially with a small business comes to us they're usually well well well down the road and we're at the point of talking about some kind of a recovery either either a proposal or a bankruptcy okay so let's talk about what happens then so specifically around the concept of proposal people know the term bankruptcy yeah and they also think it means a lot of things it doesn't in canada but let's start specifically with with consumer proposals what are what is a proposal so there's two types of proposals there's a consumer proposal and that's division two or a division one proposal so and there's there's two definitions so a consumer proposal is for an individual not a business cannot file a consumer proposal as a business and it's when you owe 250 000 an unsecured debt or less okay and when i say debt when i talk about debt here i mean everything tax debt hst source deduction credit cards lines of credit student loans over seven years payday lenders all that stuff so unsecured as long as it's not your mortgage or against other assets like right yeah so secured debts are outside of this and of course if you you have the option of giving back the asset that's tied to the secured debt either the car or the house and then you could file and put the shortfall in as an unsecured debt in your proposal or bankruptcy so that's the definition of a proposal so what a proposal actually is is you're making a legal settlement with all of your unsecured creditors as a group with through a trustee through the courts nobody goes to court but so you're actually saying look i can't pay you all this debt back with all the interest and penalties et cetera but i can pay you something so the idea is you know you pay them a percentage and that varies depending on a bunch of things that will get into that but you're basically you're making a settlement with them where you're paying a monthly amount for 60 months or less and it's structured it doesn't change once the creditors approve it so it's locked in you have the option of amending the proposal if you've run into any kind of material change to your income like you lose your job or something like that so there is a kind of a parachute out and you can always file bankruptcy within a proposal if you really need to so essentially basically they're able to more or less not quite fully get out of debt but come up with a proposal a schedule to pay this back at something that is far less crushing to their soul and to their pocketbook what does that reduction look like again sir well so so what you're doing is you're paying them back a percentage but it covers the whole thing so they're forgiving a huge amount of the principle and all the interest stops so that's a negotiation though based on capacity yeah and and the way we set them up is we always calculate a hypothetical bankruptcy first because if the creditors are voting yes or no on your proposal they want to know well if we say no to this what are we going to get in the bankruptcy because bankruptcy is always shorter and so in order for them to be incented to take the proposal you have to give them better than they would get uh had you filed a hypothetical bankruptcy instead so now how is the proposal different than the bankruptcy for the consumer right so a bunch of ways number one is the credit rating when you when you file a bankruptcy you get an r9 rating for six years after your uh your bankruptcy discharge so that's either nine months or 21. and uh the issue is i mean the r9 isn't isn't as bad as people think because i've had all kinds of people go and get mortgages and business loans and stuff after that because you're debt-free right your debt service ratio at that point is zero so yeah your ability to take out that suddenly improved dramatically to spell on your writing right yeah your cash flow is pretty good and you're not you're not spending all your money every month supporting supporting debt so a lot of lenders look at that and kind of go okay this actually is a fresh start so as long as you have either a good business plan or a good cash flow lenders will lend to you but that aside the bigger issue with bankruptcy and which is why we try not to do bankruptcies if we don't have to is that there's a lot more involved in bankruptcy number one is the terms of duties you have to report your income every month and prove it to us if your income changes if it goes up you have to pay more on surplus income and the surplus income rules are really restrictive in terms of what you can make every month after tax so bankruptcy can get very expensive in a hurry and we have to do your taxes for you by law for the year of your filing and you also would lose any refunds if you if you had them coming to you so that's expensive but the bigger thing to me is that after the six year period has passed the statutory sixth period with the rni and on your credit rating thereafter for the rest of your life if anybody ever asks you have you filed bankruptcy you have to say yes yeah otherwise it's close on everything yeah it's otherwise it's fraud now we can all argue how well canada deals with fraud wink wink nudge but this is something i tell everybody that comes in about if they're if they walk in and they're insistent on doing a bankruptcy okay i'm going to tell you the whole thing right and we're going to have to acknowledge it all in writing and everything because you really you should be doing a proposal or at least attempting one in the first place fair enough so and that's i'm also thinking like in terms of just you said the involvement what about the cost of this right i mean is this cost not borne by the assets of the insolvent person like is is that gonna be you know is it gonna be less going to all parties because of that well what normally happens is and i'll put this in the context of small business because that's what we're talking about here and so we never do business filings okay okay we could we're licensed to but we don't and the reason we don't is because if somebody comes to us with a significant business problem as i said earlier it's not usually something that is viable already right like they're at the point where they're going to close it down and then what we do is a personal filing because most times small business owners will have either personally guaranteed the business debt because most banks aren't going to be giving you 300 grand well well that's the thing right is that like more often than not we talked about the credit protection aspect of incorporation but as i keep saying to people that's a misnomer because you know the reality is unless you're a massive corporation with lots of assets they're going to want your signature on it every time right and so we're talking about businesses that are mostly service in nature like there aren't really any assets it's it's all sweat equity and you know reputation and stuff like that and so when you close it off if it's incorporated well that was smart wasn't it because now all the corporate debt is gone it's history they can't come after the corporation because there isn't one but inevitably there's personally guaranteed debts that will now be yours personally so that's got to be dealt with personally and anything like director liability right like hst source deduction payroll tax that stuff is all coming after the directors so we end up doing personal filings on every single one of our business business situations yes i mean and if if someone was say a large-scale manufacturer they may have securitized their assets against i mean more often than not here's the reality it's really it's interesting because um people are so used to the concept of if i give uh go to a bank and i have 250 000 as a down payment what kind of loan will they give me yeah you know they're used to mortgages where that's like four or five to one they're not used to the fact that oh you have 250 000 great we'll lend you we'll take that 250 and we'll lend it back to you right and that's because how what's the percentage of small businesses that fail in the first two years like enormous right yeah and so it's you know and if you buy a house well chances are you're probably going to have that mortgage for years and years bank's going to do well worst case scenario you sell it right yeah absolutely so so yeah so that makes a lot of sense as to why the business bankruptcy or bank business proposals wouldn't be done because frankly i mean those assets are collateralized if they're collateralized if not they're secured by the consumer so basically the consumer proposal definitely a more favorable route to go have you seen situations whereby business owners have done the consumer proposal and then the business continued on without issue yeah so usually what happens with those is they will transition the business to somebody else so they'll do a proposal on their own personal debts and the creditors will will go for that because they end up getting something back it's usually you know we set them up they're pretty generous and then what they'll do is they'll the business will keep operating but mom or their cousin or somebody kind of takes it over as during the time period of the proposal now a proposal doesn't prevent you from being a director but a bankruptcy does so in a bankruptcy you would have to assign the directorship until you're discharged in a proposal there's none of those restrictions so yeah you can if you've got a business that's viable you can do a proposal on your personal debts and keep going on the business now of course the creditors all this will be just closed to the creditors and so they'll be looking at this and going okay well if it's really that viable you know why doesn't he just pay his desk back but all that'll do is just mean they'll want more back in the proposal and usually it's reasonable enough especially with the percentage or the interest forgiven and especially if they're cra debt because that's massive well they're they're sitting in the pole position right they get involved back first no they don't no they don't don't they no cra has no super priority except if there is a business bankruptcy and there are assets involved and then the crown all crown debts get paid first but that's the only one i'll give you the other one i'll give you the other one and it has nothing to do with insolvency it's on death if there's a tax liability by the estate and beneficiaries have received assets already the those assets can be can go be gone after by cra especially if they came by way by way of beneficiary designation whereas other creditors can't so yeah but i mean that's that's not a business owner or credit protection issue that's a estate planning issue yeah and then i mean cra has all kinds of powers that people don't realize along those lines like you know if you have a bunch of debt cra can come after your spouse yep you know they can raise what's called a liability an assessment against your spouse and just say well i guess you must have some money right and people hear that and they freak out right but like this is all just knowing and not knowing right well you bring up an interesting point there because that's an often common misnomer or point of panic i find with people is they think well oh my god my spouse got into all this debt what happens can they come after me right so let's just clarify that well so there's legal separation debt cannot be inherited that's important so if you die with debt your estate has assets it has to pay out what it can to the creditors but if you die without assets um nobody's inheriting that debt right likewise you cannot be accounted for uh liable for judgment credit or debt like banks and credit cards stuff like that for your spouse those guys can't touch you it's just a cra thing yeah unless of course you basically uh say you know guaranteed said loan in which case well it's technically your loan as well yeah so co-signing is is is another matter entirely right and that's that's actually a very very common uh misunderstanding from people that we talk to is uh well i'm joined on those debts so are they going to come after me for half no it's all about yeah yeah i know i got i got some bad news for you right yeah yeah yeah everybody thinks joint means 50 50. no i don't know no joint means 50 50 almost as much as marriage does jason yeah i'm gonna put it that way yes as my as my wife reminds me when i want to eat her ice cream yeah oh yeah yeah some masses don't get divided evenly no it's all or nothing man that's right good example uh so we talked about uh the consumer proposals let's talk about uh the back and forth process of this so how much negotiation do you typically see in a consumer proposal you know do they do they accept the first offer is there always a haggle yeah good good question so everything is uh there's a lot of structure in this stuff so the bankruptcy act says when you file a consumer proposal the creditors have 45 calendar days after the date of signing in which to give us the trustee back proof of claim and their vote okay so if they don't prove a claim they don't participate in the dividend so i've seen situations rare but where a bank votes yes or no and then doesn't send a proof of claimant well they don't get any money that's kind of stupid so the trustee's job is to make sure they do all that stuff right though so typically about 70 of proposals go ahead as offered and 99.9 go ahead with a counteroffer okay because the creditors can can come back and say yes or no they can ask for more if they ask for more you're not bound by that so i will call the person and say okay look here's what they wanted you offered 300 they want 500 let's saw it off at 400. it's not a massive negotiation it's usually that's about it so you're not ping-ponging back for for periods of time no no usually once and that's it and a lot of creditors they all behave differently in voting so every dollar owed in a proposal is a vote so if you owe a hundred grand you need 51 000 worth of votes on aggregate to make the proposal go ahead and the other 49 doesn't matter they're in any way so we have creditors who are hard to deal with we have creditors who are easy to deal with cra usually wants specific things like they they demand that you be current on your filings which is sensible so we just have people bring their filings up to current anyway beforehand because i'd rather have cra be in a good mood when they vote right and i mean i mean we cultivate relationships with the cra officers that are involved because usually there's only seven or eight of them for the country in this case yeah i get to know them right like they're shocked by that because they're they're used to like everything's got to have a wall right and up in front of it but like i just call it i say look guys you know here's what so-and-so went through he got divorced last year's mother was sick whatever i kind of give them the make it a person right so which all too often in any financial aspect especially while even government as well is that too often this becomes a dehumanizing exercise because you know you lose sight of the fact that these aren't numbers on a page these are keeping a lot of people's lives so exactly right so start to finish what are we looking at timeline for consumer proposal versus bankruptcy yeah good question so both of them to get underway is quick like if you if you i called i talked to three people today for the first time and you know they're filing next week so now sometimes it's months sometimes it's weeks often times it's within two weeks in fact i'd say eight or nine times out of ten with me anyway everybody's different but i like to get things moving like if you come to see me your soul searching is all done dude like we're not discussing whether you should be doing something or not we're discussing like what are we doing exactly the details right so unless i sent them there in which case i'm sending them their specific scene you don't want to do it you just got to listen it's got to listen right depends on the source yeah yeah exactly well no that's true right like i have usually and you're right what we call business and professional referrals it's totally different right because we're talking about can we do this as a viable operation right can we do this as a proceeding but still keep the business going whatever but with consumers it's usually more cutting right it's like you've hit the wall let's let's get something underway here so it it can happen within a week or it can take months basically depends on the speed of the person needs to go and we also like to get all the ducks in a row before we file something because you can't unfile something so when you get a bankruptcy underway or a proposal you can't stop it it has to see itself out or fail so length of time bankruptcy can either be nine months for first time bankrupt with no surplus income 21 months first time bankrupt was surplus income 24 months second time bankruptcy without surplus and 36 second time with surplus so those are the four lengths of bankruptcy now keeping in mind that bankruptcy can be any length if you don't do your duties so by the end of the bankruptcy if you didn't pay the trustee or you didn't do your counselings or you didn't give us your tax information to do your taxes or if you didn't provide your income to us every month you don't get discharged if you don't get discharged big giant question mark because it's up to the court right and the court will usually place a conditional order on your discharge you could be in bankruptcy for another year or two proposal is five years or less consumer proposal by statute we set them all up for five years because they are open terms means you can pay them any time you'd like to sooner without penalty or interest so five years or less basically there are situations where a lump sum proposal is possible where somebody has access to family funds or something they just want to pay at all and usually if you can do those the creditors will take less than otherwise because they get all their money at once right so that's pretty much how the time frames work so now there was one other thing i wanted to cover because i think we covered it in previous conversation what happens if someone does a consumer proposal and gets themselves in hot water again what are their options at that point uh you mean after the proposal seen itself through are you talking correct after the proposal scene itself later down the road okay so yeah three or two three years later oh i did it myself again yeah it doesn't happen a lot but it does happen usually it's very specific circumstances but they can always do a proposal or bankruptcy again as long as they're new debts okay so you can't do a proposal twice on the same set of debts so if you fail the proposal if you missed three payments that's the rule out of 60. your proposal is deemed annulled and you've got no more chance of doing a proposal on those debts the creditors will then go back to day one and add penalties and interest back so if you go four years and fail your proposal you're gonna be an unhappy camper because now you're gonna go back right to the full fifty thousand you owed and then they're gonna be after you again because the stay is lifted the creditors rights are revived all that stuff interesting and yeah so bottom line is once you agree to one of these things keep your word because it can be very punitive if you don't yeah well you can and there are ways that like a proposal has two parachutes right you can file an amended proposal as i said if you have a material change to your circumstances like you lose your job or something and then you would offer less they would take it because it would still be better than a bankruptcy probably or you could still file a bankruptcy if you needed to so we talked about all those uh before we get uh started on creditor protection and assets that are fair play versus not fair play for creditors let's start talking about one other question for you in other interviews and other conversations we talked about how what we get through american media often skews canadian consumers understanding of what bankruptcy is and means tell me and the listeners what are the big misconceptions about bankruptcy in canada yeah so like everything else you know this industry suffers from being in such proximity to a giant and so every time you watch a show and you hear chapter 7 or chapter 11 or chapter 13 that's the american bankruptcy code that's nothing to do with canada we have all this very similar proceedings that we can do but they're done very differently american bankruptcy law in a nutshell is highly litigious so you need a lawyer you mean like america in general yeah exactly it's just it reflects the society exactly okay so everything you think about down there is the same in bankruptcy if you're going to do bankruptcy you're going to court your tax debt is not necessarily included it's up to the court your student debt not necessarily included up to the court the amount you're going to pay like all that stuff is highly determined by the court and by how much you can pay a lawyer so it's expensive it's time consuming lawyers get rich on it and pretty much nobody else and the canadian system is extremely streamlined like i've had american lawyers bankruptcy lawyers say to me at conferences it's like holy like i can't believe somebody can go through this just with a couple of meetings and they never ever see a lawyer or they say how do you guys make money yeah they do and so like so there are bankruptcy lawyers in canada there are lots of them but they are for situations that go sour okay so basically if somebody doesn't do their duties and it's worth hiring a bankruptcy lawyer to go and stand in front of a judge oftentimes a trustee will do it themselves but there are situations especially in business bankruptcies or bigger bigger matters that are personal bankruptcies where uh you need a lawyer because you've got to sort out a bunch of stuff but usually that's that's where they hid assets and they lied on their statement of affairs they didn't tell us about the yacht and monaco and all that that kind of stuff whoops yeah so this is let's not forget that we had a finance minister forgot to talk about a french villain a disclosure right let's not yeah yeah exactly that kind of stuff right where it's like a massive non-disclosure was discovered okay well that's bad so that's fraud yeah so now yeah exactly so now so the bankruptcy lawyer stepped in but that's i don't know if doing 11 years of this i've seen a bankruptcy lawyer three times maybe like it just doesn't happen because if you if you do everything right up front it's not going to happen right yeah so the canadian bankruptcy lawyer is a whole different animal than down there like they don't do any very rarely do personal stuff or else if they do it's it's the bigger matters where there's assets involved in the estate stuff like that but it's oftentimes business bank our season and they get involved to make sure that the corporate proceedings are going the right way and stuff like that it's funny every time i think of bankruptcy in the states i think of the one scene from the office which i'm sure we've talked about before michael gets up and says i declare bankruptcy and you're like michael that doesn't do anything you can't just say you're bankrupt no no i didn't just say it i declared it yeah i get i get that one on twitter a lot people fired that one at me because it was brilliant no you actually do something just to clear it yeah exactly all right so now that we've covered off what uh consumer proposals look like and what um what bankruptcy looks like and you know hopefully everybody takes away that if you get into trouble the former versus the latter and seek out help sooner than later because oftentimes and we'll talk about this now um yeah so there's certain things that creditors do not have access to generally so let's talk about what types of assets those are okay so in bankruptcy law in canada there are a lot of exemptions okay so you can have a car that's worth 6 600 bucks net value you can have a car that's worth 50 grand as long as it's owed 50 grand like as long as it's encumbered i don't care because the net value is nothing right so you could be driving a porsche and pay in you know the full 80 000 loan on the thing that thing's worth 50. great keep driving it if you want now we have a cash flow discussion at that point with the person and say like is this make sense to keep paying for this thing every month but yeah anything that's incumber you can have a house worth a million dollars as long as you owe a million dollars because the house is not i don't get anything if i sell the house bank gets it all now home equity is not exempt obviously so if the house is worth a million and you only owe 700 000 well you're going to have to deal with the 300 000 of that or the net amount after sales right so you can have an rrsp worth any amount as long as you haven't contributed in the last 12 months so jason's clients put all your money in an rrsp and don't don't do bankruptcy for a year and you're good okay so that said though those are those the assets so if i put something in the last 12 months it doesn't paint the entire thing or just last 12. no the last 12 months contributions to a registered account is a reviewable transaction yeah which means the trustee can has to disclose that to the creditors and actually that means usually that means they had they asked to have it paid in the in the bankruptcy to cover the non-exemption which makes sense right because i put it in one day before i go talk to you right why would that be at the table right so what about pensions they're a little bit different right no pensions no pensions are exempt assets okay in a bankruptcy completely so so but not there's no 12-month rule there right no that's right because it's because it's a locked-in uh account so there's no 12-month rule and pensions that's correct so and this is where people end up getting into trouble sometimes because they'll be like oh you know things aren't going very well i've got a lot of debt right now i'm going to start cashing out my rsps which oh yeah or pension which basically like i've had people refuse to go talk to people like you and instead of unlock unlock lyra's and i'm rubbing my temples in pain because it's like wait a sec you just compounded your problem now you have a tax liability yep that you are realizing in order to pay off this debt so you know you have literally nothing to show for it in fact you're you're you're worse off from retirement yeah because if you take out 40 grand you're going to get taxed at 35 for taking that out and next year when you do your taxes you're going to have 40 grand more in your income to get taxed on and now you've got and now you've got 40 grand less to retire with so it's just a mess right but people panic and i see that happen all the time by the way that like you don't have to be a big player i've seen people take as little as 3 000 out of an rsp to make a quick rent payment or something like dude what are you doing but again it's um knowing versus not knowing and being able to undo versus not right so that and that's why it's better to talk to somebody sooner because prevention in this stuff is way better than trying to undo something yeah i would say that one of the more common desires of anyone you speak to is to be debt-free right that concept in itself everybody seems to be married that idea and don't be wrong we all want to get there because hey you want to be encumbered it lowers your cost of living it all makes sense but i will see people do it to the detriment right uh the rsp was an example right yep and i've often have to give the argument like would you rather you know would you rather be debt-free sooner and then have to start from scratch all over again or be debt-free five years later and have a substantial nest egg yeah that is really the decision people are facing sometimes that they if they make these calls yeah and you know what no matter what investment return you get i can almost guarantee that your debt will cost you more over time right because most debts are 20 interest or something like that credit cards so yeah unless you're making 40 returns on your investment even if you are you're still paying all that interest and you're dragging along behind you so yeah it's better to get debt free first and then you can do all kinds of well consumer debt right like we're talking about low interest that or investment that like it's different right yeah but yeah i mean like one of the first things as much as i always cringe with people in the rock at the hard place of you know making good money massive credit card debt and then massive rsps and it's like well no these two things are not gonna solve each other unfortunately you just gotta tighten the belt you know if you get lower if you have if you haven't lose your job if you're in a lower income period that can be an opportunity to harvest those rsps potentially absolutely um so what tfsas rdsps rdsps are those what do those look like in a credit situation our esps uh sadly this is a very big failing of the bankruptcy law are not exempt into bankruptcy so if you've got 30 grand in there for your kids the net amount so the amount that you contributed not the government is non-exempt so that's bad so usually what we'll do is well again i'm telling everybody to do proposals anyway but if you come in and you have that as part of your situation i say look you better do a proposal here the creditors are going to want you to pay a chunk of that in the proposal but it's better to keep that habit there rather than start over right so that's a tough one our dsps are treated similar to rrsps in bankruptcy so disability savings plan tfsa is cash so if you've got 30 grand on the tfc you might as well have it in a bank account that's not exempt that's money so that's that would be in play in a bankruptcy and therefore you'd have to pay for that that amount and more in the proposal because the creditors are going to want a bit more right so absolutely so and i mean the most common thing i see is is that we all see i think if someone starts a business they want to have the assets in their spouse's name right there's a certain amount of limitations you do to that uh you know for instance the the putting the house and the wife's name's always been one of them but good luck getting a mortgage only one person's name on the uh so there's a limitation there and we also have to be cognizant of what are known as attribution rules as well because they can lead to tax implications so overall good coverage i mean bottom line is no before you go start tapping any assets to pay off debts yeah make sure you understand whether or not creditors even touch those now before we're of course doing this during the entire cove crisis you've clearly seen a spike in business as we discussed earlier is there any specific advice around some of the programs that they have been put out by the government that you want to share that would be relevant to this time period well one of the i'd say the big one is the office of the superintendent of bankruptcy which is the governing body federal that oversees this business they're like the watchdog when the serb benefit was announced they immediately said that doesn't count as surplus income so if you thought it would have been terrible my god well it would have but it just means that if you file bankruptcy right now on that 2000 a month there's no surplus income so if your wife is making a whole bunch of money and you lost your job you could do bankruptcy for nine months 200 a month so it's a great time to do a bankruptcy now of course i would try to get you to do a proposal anyway because you should if you can but it lowers the amount of of a potential proposal because the creditors wouldn't get anything in a bankruptcy right so why wouldn't you do that right because if you only stand to go back to work in other words a good time to file a proposal is when you're making as little as possible because you're doing it now it's like a balance sheet it's a snapshot and so if you go make more later six months from now and a five-year proposal that money's yours to do whatever you want with now you would probably pay the proposal down faster but you don't have to so a lot of people right now are are kind of scrambling to do that and say okay well look now once once i got there their heads sorted because these are the ones that called us panicking right we also have been telling a lot of people right now to do nothing so that's why the bankruptcy filings and proposal filings are going to drop like crazy for march april may because they were they were like this right we were doing tons of files because the canadian consumer was already in a bad spot before this happened like that's this is the worst possible case that could have happened so what's going to happen is there'll be a big dip in filings in later in the summer and the fall they're going to be off the charts because all the people who ended up realizing that they didn't get their jobs back for the ones that we told to wait because you don't want to get into a five-year commitment when you don't know if you have income and then come the summer they a whole swath of them is going to not have jobs to go back to so now they're going to have to do something because creditors aren't going to wait once the courts are open again right so i think we're going to you're going to see a dip and then you're going to see an outrageous spike yeah well it's definitely a symptom of the times unfortunately so scott thank you very much for spending the time to help explain this to people and uh hopefully they hopefully the listeners if they do find themselves in this position we'll reach out to you first of all where can people find you well so i'm at stereo at hoys.com is email so that's s-t-e-r-r-i-o at hoys.com boys.com is our website is massive man like it's a rabbit hole we got youtube stuff we've got video we've got tons of blog posts um it's fantastic if you want to find stuff out without talking to somebody which i get i get a lot of people do and up after this situation even more people will be doing that i'm on twitter at uh scott theriault hma is the handler definitely follow scott on twitter he's uh i would say like this little subculture of personal finance twitter experts that i think are on there and scott scott posts quite a lot and shares a lot of interesting stories and yeah like i can't resist it so i'm perfect because i i just i'd say what's on my mind so get in trouble sometimes but that's fine but yeah there's and then if you follow guys like me and jason you'll also find all kinds of other guys that are really good at stuff and different fields right so that's the nice thing about it is you can learn a ton from the kind of the corollary contacts that you make so excellent well scott yes uh yet again thank you for taking the time to come in thank you and uh my pleasure and uh stay safe for everybody out there this has been financial planning for canadian business owners thank you yet again for taking the time to chime in and uh please if you enjoyed this podcast leave a review on itunes stitcher wherever you get your podcast as it does help 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