Bankruptcy numbers likely to swell
By GILLIAN SLADE on August 29, 2020.
gslade@medicinehatnews.com@MHNGillianSlade Bankruptcy numbers have dropped dramatically since a 20 per cent increase was reported earlier in the year, but it is only the calm before the storm, says a bankruptcy trustee. Since the courts were basically closed for several months, creditors have apparently just been sitting back. “They can’t threaten court action when the courts aren’t open,” said Randy Kobbert, licensed insolvency trustee with Meyers Norris Penny. It meant the number of people filing for bankruptcy fell significantly across the country and here in Medicine Hat. Numbers published by the superintendent of bankruptcy for the month of June includes bankruptcy and personal proposals – a settlement offer to creditors: Canada saw a 41 per cent drop year over year, with 11,178 in June 2019 and only 6,585 in June 2020. Alberta saw a 38 per cent reduction, with 1,416 in June 2019 and only 881 in 2020. In Medicine Hat, there was a 50 per cent drop from 24 in June 2019 and 12 in 2020. Unfortunately, Kobbert says these numbers do not mean everything is going well. “The urgency is not there yet – the can is being kicked down the road,” he said. “It’s been widely predicted by many economists that we could be in for a rough ride in the final three months of this year.” A lot will depend on the programs in place to reduce the shock, and whether people slip between the cracks. CERB will end at the end of September. EI is being designed to take over with modifications. There is a reduction in the number of insurable hours you have to have worked before being laid off. Some self-employed people who did not previously pay EI premiums may qualify under the new rules. For some EI will be less than CERB, said Kobbert, who expects an audit of CERB. “You are only allowed $1,000 of employment income in order to collect CERB.” Someone may have been getting other government programs at the same time and there could be a claw back. There may also be some surprises when people file their tax return next spring. “Because they’ve already received it there is tax payable on that money,” said Kobbert. The six-month deferral of mortgage payments is also about to end, and deferral did not mean forgiveness. Money deferred is still owed and there will be interest. See the News on Tuesday for some advice Kobbert has for those facing financial hardship. 19-18
