In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, writer, talks with Scott Terrio, Manager of Consumer Insolvency at Hoyes Michalos. Hoyes Michalos is a Toronto-based license and insolvency trustee. Scott Terrio talks about what insolvency means, what the options are, and how business owners can protect their assets in the event of insolvency.
Episode Highlights:
● 01:15 – Scott Terrio explains the work that he does.
● 02:55 – What is the process and options for when people get into debt issues?
● 04:18 – What are consumer proposals?
● 06:50 – How are consumer proposals different from bankruptcies to the consumer?
● 10:30 – Business debt is quite different from consumer debt.
● 13:33 – Can a spouse become liable for their other spouse’s debt?
● 14:57 – How much back and forth typically happens with consumer proposals?
● 17:07 – What is normally the timeline differences between consumer proposals and bankruptcy?
● 19:36 – What if someone goes through a consumer proposal and gets in financial trouble again?
● 21:08 – What are the misconceptions about bankruptcy in Canada?
● 24:25 – Which types of assets do creditors not have access to?
● 27:37 – Consumer debt usually costs you more over time.
● 28:38 – What do RESPs, TFSAs, RDSPs look like in a credit situation?
● 30:23 – Which bankruptcy programs are relevant to this COVID-19 moment?
3 Key Points
1. Hoyes Michalos is a Toronto-based license and insolvency trustee firm with 25 offices across Ontario, Canada and did about 5800 files last year.
2. Consumer proposals are for individuals, not a business, with $250,000 in unsecured debt or less, and are making an agreement to pay a percentage of your debt.
3. About 70% of consumer proposals go through as offered and about 99.9% co ahead with a counter-offer.
Tweetable Quotes:
● “Sooner is always better when you are talking about debt. Most small business owners, once they’ve gotten into a little bit of trouble, whether it is tax debt or supplier debt or bank debt, they keep digging.” – Scott Terrio
● “What a proposal actually is, is you are making a legal settlement with all of your unsecured creditors as a group, through a trustee, through the courts.” – Scott Terrio
● “You file a bankruptcy, you get an R9 rating for 6 years after your bankruptcy discharge. So, that is either 9 months or 21. The R9 isn’t as bad as people think, because I’ve had all kinds of people get mortgages.” – Scott Terrio
Resources Mentioned:
● Facebook – Jason Pereira’s Facebook
● LinkedIn – Jason Pereira’s LinkedIn
● FintechImpact.co – Website for Fintech Impact
● jasonpereira.ca – Website
● sterrio@hoyes.com – Email Scott Terrio
● Linkedin – Scott Terrio’s Linkedin
● Twitter – Scott Terrio’s Twitter
● hoyes.com – Website for Hoyes Michalos