Weddell (Re), 2012 ABQB 84

Court of Queen ’ s Bench of Alberta Citation: Weddell (Re), 2012 ABQB 84 Date: 20120203 Docket: BE03 378032 Registry: Edmonton In the Matter of The Bankruptcy of Annjanette Ruth Weddell Between: A.C. Waring & Associates Inc., Trustee In Bankruptcy of the Estate of Annjanette Ruth Weddell Applicant - and - Annjanette Ruth Weddell Respondent Corrected judgment: A corrigendum was issued on February 8, 2011; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________

[ 1 ] The Trustee in Bankruptcy of the Estate makes an application for an Order that the Consumer Proposal filed by the Bankrupt be annulled; and that costs be awarded against the Proposed Consumer Proposal Administrator, Leon Miller Group Inc. The basis of the application by A.C. Waring & Associates Inc., Trustee in Bankruptcy of the Estate of Annjanette Ruth Weddell are that the Bankrupt is not eligible to make a consumer proposal in bankruptcy for the following reasons:– (

a) The amount of her debt excluding amounts secured against her principal residence, exceeded $250,000, and consequently she was only eligible to make a Division I Proposal; (

b) As a bankrupt under an ordinary bankruptcy administration, she needed the approval of the Inspectors in bankruptcy before proceeding with her proposal, and she did not seek or have approval of the Inspectors pursuant to s 66.4(2) of the Bankruptcy and Insolvency Act , R.S.C., 1985, c. B-3. [ 2 ] In addition to opposing the application by A.C. Waring & Associates Inc. for an annulment, the Bankrupt submits that the whole process of bankruptcy in proposal terms were never explained to her by the Trustee, and that now she wishes to file a Consumer Proposal through Leon Miller Group Inc.

She also seeks the Court’s approval for that Consumer Proposal, and to substitute for her Trustee A.C. Waring & Associates Inc., Leon Miller Group Inc. as her Administrator of the Proposal. [ 3 ] Leon Miller Group Inc. supports the Consumer Proposal of the Bankrupt, and has filed a Form 48 Report of Administrator on Consumer Proposal pursuant to s 66.14 of the Bankruptcy and Insolvency Act dated November 30, 2011 which reads as follows:– Form 48 Report of Administrator on Consumer Proposal (

Section 66.14 of the Act ) In the Matter of the Consumer Proposal of Annjanette Ruth Weddell I, Leon Miller Group Inc., of Edmonton, Alberta, the administrator of the consumer proposal of Annjanette Ruth Weddell, a consumer debtor, hereby report to the official receiver as follows: 1. That the consumer debtor made a consumer proposal on the 30 th day of November, 2011 and that I filed a copy of it with the official receiver on the 30 th day of November, 2011. 2.

That I have investigated, or have had investigated, the consumer debtor’s property and financial affairs so as to be able to assess with reasonable accuracy the consumer debtor’s financial situation and the cause of the consumer debtor’s insolvency. 3. That attached to this report is the consumer debtor’s statement of affairs and a list of the creditors whose claims exceed $250. 4. That I am of the opinion that the cause or causes of the consumer debtor’s insolvency are as follows: Failure of investment property.

5. That I am also of the opinion, for the following reasons, that the consumer proposal is reasonable and fair to both the consumer debtor and the creditors, and that the consumer debtor will be able to perform it: At present, the debtor has no ability to repay the creditors in full. The proposal will provide the debtor with relief and allow him to restructure his affairs in an orderly fashion that enables him to avoid a bankrupt without subjecting the creditors to the uncertainty of same. This proposal provides for a greater return to creditors when compared with the bankruptcy option.

A breakdown of estimated realizations and distributions for each scenario is attached. [ 4 ] Additionally a Consumer Proposal Form 47 was also presented to the Court dated November 30, 2011 which reads as follows:– Form 47 Consumer Proposal ( Paragraph 66.13(2) (

c) of the Act ) In the Matter of the Consumer Proposal of Annjanette Ruth Weddell I, Annjanette Ruth Weddell, a consumer debtor, hereby make the following consumer proposal under the Act . 1. That payment of the claims of secured creditors be made in the following manner: The secured creditor will be paid in accordance with the security agreement. 2. That payment of all claims directed by the Act to be paid in priority to other claims in the distribution of my property be made in the following manner: There are no preferred creditors. 3.

That payment of the fees and expenses of the administrator of the consumer proposal and payment of the fees and expenses of any person in respect of counselling given by such person pursuant to the Act be made in the following manner: To the Administrator: $750 payable on filing of the consumer proposal with the Official Receiver; $750 payable on the approval or deemed approval of the consumer proposal by the Court; 20% of monies distributed under the consumer proposal, payable on the distribution of the monies; Counselling fees of $85 per session payable upon completion of the session;

$100 payable to the Official Receiver upon filing of the consumer proposal; $50 payable to the Clerk of the Court upon filing of the consumer proposal; GST on all applicable fees and disbursements. 4. That the following payments be made to Leon Miller Group Inc., the administrator of the consumer proposal, for the benefit of the unsecured creditors: I agree to make thirty (30) monthly payments of $900.00 for a total fo $27,000.00. Payments are to commence subject to creditor/court approval in January 2012.

A minimum of $900.00 is to be received by the Administrator of my Consumer Proposal, Leon Miller Group Inc., no later than January 9, 2011. This payment will apply against the $27,000.00 total payments. The debtor retains the right to increase the payments. All payments will be made without interest. No creditor shall exercise the right to set-off. No creditor shall be paid more than one hundred cents on the dollar. 5.

That the administrator of the consumer proposal distribute the moneys received to the unsecured creditors in accordance with the following schedule: Distributions will be made every six months commencing June 2012. 6. That the proposal may include the following additional terms: (

a) The creditors may appoint up to three inspectors responsible for the consumer proposal of the consumer debtor. The inspectors may have, in addition to any powers of inspectors under the Act the power to: (

i) Receive any notice of default in the performance of a provision of the consumer proposal and waive any such default; and (ii) Approve any amendment to the consumer proposal without calling a meeting of creditors, if the amendment would alter the

schedule for and the amount of payments to be made by the consumer debtor, but would not change the total amount to be paid; and (

b) That for the duration of my proposal, I undertake to file my tax returns by the legislative due date and in the event that I have self- employed income, I undertake to make, at a minimum, monthly remittance payments on my self-employed earnings and GST payable in an amount sufficient to ensure that for the appropriate tax yet, there will be no tax liability. [ 5 ] Additionally a very favourable comparative analysis of the projected dividends pursuant to the Consumer Proposal versus the bankruptcy dated November 30, 2011 were provided by Leon Miller Group Inc. which reads as follows: –

Consumer Proposal Bankruptcy To Date Receipts Pymts Amt Contribution in Proposal 30 $ 900.00 $ 27,000.00 Standard Payments 18 $ 209.00 $ $ 3,762.00 RRSP - Net Income Taxes $ $ Tax Refund $ $ 5,200.00 Total Funds Available $ 27,000.00 $ $8,962.00 1st Charge Disbursements Administrator/Trustee Fees $ 6,519.30 $ 4,814.75 Counselling $ 170.00 $ 170.00 Approved Disbursements $ $ 100.00 $ 6,689.30 $ 5,084.75 G.S.T. $ 334.47 $ 254.24 Registrar & Superintendent Fees $ 300.00 $ 300.00 Total 1st Charge Disbursements $ 7,323.77 $ 5,638.99 Net Projected Divided To Creditors Funds available for distribution $ 19,676.24 $ 3,323.01

Less: Superintendent ’ s Levy $ 983.81 $ 200.00 Net Distribution $ 18,692.42 $ 3,123.01 Unsecured Creditors Proposal Bankrupt Citicard $ 4,686.00 $ 4,686.00 $ 1,686.03 $ 178.57 Citicard $ 4,687.00 $ 4,687.00 $ 1,686.39 $ 178.61 Dell Financial $ 735.00 $ 735.00 $ 264.45 $ 28.01 Ford Credit $ 17,000.00 $ 17,000.00 $ 6,116.63 $ 647.83 Home Depot $ 17,400.00 $ 17,400.00 $ 6,260.56 $ 663.08 Home Depot $ 2,053.00 $ 2,053.00 $ 738.67 $ 78.24 Risdale, Evert $ $ 30,000.00 $ $ 1,143.23 Sears $ 934.00 $ 934.00 $ 336.05 $ 35.59 TD Visa $ 4,457.00 $ 4,457.00 $ 1,603.64 $ 169.85 Total $ 51,952.00 $ 81,952.00 $ 18,692.42 $ 3,123.01 Dividend % Combine Total 39.79% 35.98% 3.81% Analysis [ 6 ] The Bankrupt made a voluntary assignment into bankruptcy effective June 30, 2010, with A.C.

Waring & Associates Inc. who were appointed as Trustee of the Bankrupt’s estate. Arthur C. Waring swore an Affidavit January 10, 2012 in which he attempts to answer some of the Bankrupt’s present complaints in this matter, which reads as follows at paragraphs 4 to 10:– 4. When the Bankrupt consulted with me and my staff prior to making her voluntary assignment, we did discuss with her the possibility of making a proposal to her creditors, However, the Bankrupt was strongly of the view that a bankruptcy was a better option

for her rather than a proposal. My staff and I agreed with the Bankrupt’s assessment for the following reasons: (

a) the Bankrupt and her husband were involved with a real estate speculation business and they were the owners of property in Bruderheim, Alberta that was the subject of two mortgages in favour of TD Canada Trust and was subject to property tax arrears. The Bankrupt and her husband had no idea as to what their exposure might be with respect to this property (hence making a proposal very uncertain); and (

b) secondly, the Bankrupt had negative cash flow of $1,474.00 per month, consequently, the Bankrupt had no income available to service a proposal. 5. The Bankrupt could only have made a Division I proposal as she had debt, not including amounts secured against her principal residence, in excess of $250,000.00. Consequently, the Bankrupt was not eligible to make a consumer proposal.

As any proposal filed by the Bankrupt while in bankruptcy must be based on the debts outstanding at the time of her bankruptcy assignment, the Bankrupt would still only be able to file a Division I proposal and not a consumer proposal. 6. I have seen the consumer proposal that Leon Miller Group Inc., as administrator, filed with the Office of the Superintendent of Bankruptcy (“OSB”) on behalf of the Bankrupt on December 6, 2011. A photocopy Is attached as Exhibit “A” to this my Affidavit.

In addition to the fact that the Bankrupt was only eligible to file a Division I proposal, I note the following other significant deficiencies with respect to this proposal: (

a) This bankruptcy estate was converted from

summary administration to ordinary administration on December 10, 2010. (There are several reasons why the Trustee sought conversion of this estate, including the engagement of legal counsel to deal with the listing and disposal of the Bruderheim property.) In any event, due to this change the Bankrupt required approval of inspectors before proceeding with a proposal. (However, in this case, there are no inspectors.); (

b) The amounts provided for “Bankruptcy Realization” (when compared to “Proposal Realization”) in the proposal are erroneous. The Trustee anticipates that the realization under the bankruptcy will far exceed that stated under the consumer proposal. That is because the Bankrupt has significant surplus income, on a monthly basis, that she will be required to pay to the Trustee before obtaining her discharge from bankruptcy. At this point in time, the Trustee has received $3,350.00, but the Bankrupt is in arrears of $22,054.12.

The reason that the Bankrupt’s incomes is now in a significant surplus (as compared to when she first made her assignment into bankruptcy when she consulted with the Trustee), is because the employment situation of her husband changed, and her monthly family income increased significantly. The total projected excess income over 36 months is $50,808.00 ($1,411.00 per month x 36 months). The Bankrupt has $485.00 per month in child support income not previously disclosed to the Trustee. A Proposal Realization would have to exceed $54,000.00 in order to surpass the anticipated proposal in this bankruptcy estate. 7.

In my opinion, this consumer proposal that the Bankrupt is putting forward through a different trustee is just an attempt to avoid surplus payment responsibilities identified by this Trustee once the Bankrupt filed her income and Expense Statements (which are late). My opinion that the Bankrupt is trying to manipulate the bankruptcy system in order to avoid her payment responsibilities is based upon the following factors: (

a) the Bankrupt is a very sophisticated person, being a senior bureaucrat in the Alberta government. She has significant responsibilities as one of the persons in charge of budget and staffing for Alberta Health. The Bankrupt makes over $100,000 per year (not including the child support paid by her husband); (

b) the Bankrupt has been bankrupt previously and is well versed in the bankruptcy process. However, I think that she had an expectation that she would be able to go through her bankruptcy with less responsibility for making payment of surplus income; (

c) unknown to me, in early November the Bankrupt filed a complaint against me and my staff with the OSB. I did not learn of this complaint until December when a representative of the OSB’s office told me. That representative also advised me that the Bankrupt had

withdrawn her complaint in late November when she advised the OSB that she would be filing a proposal with another trustee. I subsequently learned that after my counsel had communicated to Leon Miller that he saw no reason for a meeting between trustees, the Bankrupt again contacted the OSB to advise that she wanted to proceed with her complaint against me and my staff. 8. The Office of the Superintendent in Bankruptcy directed Leon Miller Group “file a motion as soon as possible annulling the proposal under

Section 66.3(1) of the Act ” as it is our opinion that the consumer was not eligible to make a consumer proposal that was filed ....” A photocopy of the Office of the Superintendent of Bankruptcy’s letter to Leon Miller Group Inc. dated December 16, 2011, is attached hereto and marked as Exhibit “B” to this my Affidavit. 9. Notwithstanding the direction of the Office of the Superintendent of Bankruptcy to Leon Miller Group Inc., that administrator has made application to carry on with the proposal, rather than annul it. 10. I am very concerned about the deeming provision in

section 66.18 of the Bankruptcy and Insolvency Act which may take effect 45 days after a proposal has been made. I am very concerned that the creditors who have received the consumer proposal may be mislead by it. Consequently, the Trustee is seeking an Order that the deeming provision in

section 66.18 does not operate, Furthermore, as the creditors should be fully informed as to all of the correct facts in this case, the Trustee is proceeding to convene a meeting of creditors. [ 7 ] Additionally the Bankrupt as of the date of this hearing produced for the Court a eight page written

summary entitled “Chain of Events” involving the Trustee and his alleged mistakes and improper actions, plus many multiple page exhibits, all in an unfiled non- Affidavit form. The Bankrupt’s oral argument also took over an hour to complete, and it is obvious that the Bankrupt has put in a great deal of effort and time in dealing with her many complaints about and problems with the Trustee because the matter is of very serious consequence to her.

Unfortunately however almost all of her materials and submissions are based on currently inadmissible materials of an unfiled nature that the Trustee has not had a chance to fully examine on, and to respond to.

The Bankrupt subsequently provided the Court with Table Comparisons for the Court’s consideration outlining the various options and forms of bankruptcy as she saw it, and her annotated excerpts of the applicable Bankruptcy and Insolvency Act provisions which are marked as Schedules “A” and “B” respectively to these Reasons. [ 8 ] Leon Miller argues that while the Bankrupt’s debts exceeded $250,000 at the time of the original filing of for bankruptcy by the Debtor, this was because there was an investment property owned jointly by the Bankrupt and her friend upon which there was significant mortgage debt.

He submits that the Bankrupt’s debts excluding the mortgage debts when the mortgage on the investment property was sold, were under the $250,000 limit at the time of the filing of the Consumer Proposal Division II being sought at this time. [ 9 ] The Office of the Superintendent of Bankruptcy Canada has written to Mr. Miller with respect to his documentation with respect to the Division II Proposal in a letter dated December 18, 2011, the material parts of which read as follows:– ...

First, we do not have any documentation that the above Division II Proposal (the Proposal) was approved by the inspectors for the ordinary bankruptcy, which is also under the same estate number, in accordance with

section 66.4(2) 9a) of the Bankruptcy and Insolvency Act (the Act). As this was a prerequisite before any further action could be taken it is our opinion that the filing of the above matter was not done in accordance with the Act. Second we are concerned that the debtor is filing a consumer proposal while in an ordinary bankruptcy with acknowledged aggregate debts in their original Statement of Affairs exceeding $250,000, even when excluding debts secured against their principal residence. . . . Therefore, we ask that you have the debtor withdraw the Proposal, in accordance with

section 66.25 of the Act . Failing that, we ask that you file a motion as soon as possible annulling the Proposal under

section 66.3(1) of the Act, as it is our opinion that the debtor was not eligible to make a consumer proposal when it was filed, primarily due to the

section 66.4(2) (

a) issue noted above.

Conclusion [ 10 ] The following excerpts from the Bankruptcy and Insolvency Act are relevant:– 66.4(1) All the provisions of this Act , except Division I of this Part, in so far as they are applicable, apply, with such modifications as the circumstances require, to consumer proposals. Where consumer debtor is bankrupt

(2) Where a consumer proposal is made by a consumer debtor who is a bankrupt , (

a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken therein; . . . (

c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; 66.11 In this Division, “administrator” « administrateur » “administrator” means (

a) a trustee, or (

b) a person appointed or designated by the Superintendent to administer consumer proposals; “consumer debtor” « débiteur consommateur » “consumer debtor” means an individual who is bankrupt or insolvent and whose aggregate debts, excluding any debts secured by the individual’s principal residence, are not more than $250,000 or any other prescribed amount; “consumer proposal”

« proposition de consommateur » “consumer proposal” means a proposal made under this Division. 14.04 The court, on the application of any interested person, may for cause remove a trustee and appoint another licensed trustee in the trustee’s place. [Underlining Added] [ 11 ] It is common ground that the Consumer Proposal being made by the Consumer Debtor who is bankrupt in this case has not been approved by the Inspectors. In fact no Inspectors have been appointed in this matter. Mr. Miller argues that in a consumer proposal by a bankrupt under ss 66.12 and 66.13, the bankrupt must obtain the services of a Trustee in Bankruptcy to act as administrator, and that this

section does not refer to the Trustee but rather a Trustee. [ 12 ] The Bankrupt in this case seeks to remove a Trustee for cause and appoint another licensed Trustee in the Trustee’s place. [ 13 ] I conclude that while the application to remove the Trustee can be made by any “interested person”:

Section 14.04, and while these words would seem wide enough to embrace this Application and A.C. Waring & Associates Inc. the Trustee at some level, they in fact do not apply in this case. If there is a surplus in the Estate after payment of the creditors’ claims, the Bankrupt may bring an application under s 14.04 to remove the Trustee.

However if there is a deficiency in the estate, the Bankrupt cannot bring such an application because the Bankrupt in that case would not have standing given the outstanding interests of the creditors. [ 14 ] The Court may for cause remove a Trustee and appoint another licensed Trustee in the Trustee’s place, but the materials presently presented in this regard by the Bankrupt are unsworn and unfiled, and that matter is not formally before me.

What is before me is an application that for an Order that the Consumer Proposal filed by the Bankrupt be annulled because the amount of her debt exceeded $250,000 at the time the Consumer Debtor became bankrupt, and as a Bankrupt under an ordinary bankruptcy administration, she needed the approval of the Inspectors in her bankruptcy before proceeding with her Proposal. [ 15 ] Given that it is common ground that when the Bankrupt made her voluntary assignment into bankruptcy effective June 30, 2010, she had debts in excess of $250,000, and was therefore in excess of the limit allowed for filing a Division II Proposal.

Given that she also does not have the approval of the Inspectors, the Bankrupt cannot proceed with her Consumer Proposal. [ 16 ] I know of no legal authority that allows me to substitute the amount of the Bankrupt’s debts at the time of her filing of her present Division II Proposal, for the time specified in the Bankruptcy and Insolvency Act to determine when the claims of those creditors should be calculated. The time specified in the Act is the amount owing when the Consumer Debtor because bankrupt, although it does appear from the materials before me that as of December 2010 Ms.

Weddell’s debts were less than $250,000. [ 17 ] As for some of the other many complaints of Ms. Weddell, there is still much to be determined in this matter, and in her bankruptcy process generally. Ms.

Weddell and her husband who has also spoken in these proceedings will have sufficient opportunity to make further representations as to for example with respect to the duration of her bankruptcy and the amount of her over access income. [ 18 ] Accordingly I conclude that the Bankrupt was not eligible to make a Consumer Proposal in bankruptcy as she purported to do, and that the Consumer Proposal Bankruptcy filed in this matter must therefore be annulled. [ 19 ] The Applicant also requests that I award costs personally for this application against the proposed Trustee Leon Miller because he filed misleading materials, because he ignored the Office of the Superintendents’ letter of December 18, 2011 to withdraw the Proposal, and because he violated the Institute of Chartered Accountants Rule of Professional Conduct 302.1 which reads:

A registrant shall not accept an engagement with respect to a public accounting practice or the public practice of a function not inconsistent therewith, where the registrant is replacing another registrant or public accountant, without first communicating with such person or firm and enquiring whether there are any circumstances that should be taken into account which might influence the decision whether or not to accept the professional engagement. [ 20 ] Whether these Institute Rules apply to a Bankruptcy Trustee is debatable, and in any event I conclude that Mr.

Miller did consult with both Arthur Waring Trustee and his legal counsel Mr. Summers, although without any meaningful results. [ 21 ] I decline to award costs against Leon Miller or Leon Miller Group Inc. because of the complicated nature of the many accusations and information that have been presented by the Bankrupt. While it is argued that Mr. Miller has filed a misleading proposal, and that Mr.

Miller is simply assisting a second time Bankrupt to shop for a new Trustee namely himself, it is difficult to come to that specific conclusion without considering properly filed materials on both sides of that issue, which are not presently before me. [ 22 ] What is clearly before me is that Mr. Miller and the Bankrupt are non-lawyers trying to make complex legal arguments which are beyond their present ability. I ascribe no bad faith on the part of either Mr. Miller or the Bankrupt at this time. As such I decline to award costs personally against Mr.

Miller, and the costs of these proceedings shall simply be dealt with in the normal course and be paid out of the Bankrupt’s Estate. Heard on the 31 st day of January, 2012. Dated at the City of Edmonton, Alberta this 2 nd day of February, 2012. Donald Lee J.C.Q.B.A. Appearances: Brian Summers Fraser Milner Casgrain LLP for the Applicant Annjanette Ruth Weddell and Kevin Weddell Appeared on Their Own Behalf Leon Miller Group Inc. for the Proposed Consumer Trustee

_______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice Donald Lee _______________________________________________________ Please note that paragraph [7] has been corrected to read as follows, and Schedules “A” and “B” have been added: [7] Additionally the Bankrupt as of the date of this hearing produced for the Court a eight page written

summary entitled “Chain of Events” involving the Trustee and his alleged mistakes and improper actions, plus many multiple page exhibits, all in an unfiled non- Affidavit form. The Bankrupt’s oral argument also took over an hour to complete, and it is obvious that the Bankrupt has put in a great deal of effort and time in dealing with her many complaints about and problems with the Trustee because the matter is of very serious consequence to her.

Unfortunately however almost all of her materials and submissions are based on currently inadmissible materials of an unfiled nature that the Trustee has not had a chance to fully examine on, and to respond to. The Bankrupt subsequently provided the Court with Table Comparisons for the Court’s consideration outlining the various options and forms of bankruptcy as she saw it, and her annotated excerpts of the applicable Bankruptcy and Insolvency Act provisions which are marked as Schedules “A” and “B” respectively to these Reasons.

Schedule “A” Division II Consumer Proposal Division I Consumer Proposal

Summary Bankruptcy Ordinary Bankruptcy Qualifier <$250,000 debt >$250,000 debt No Assets Assets > $15,000.00 How is income dealt with for a family of 6? There are no limits on Income and can take up to 5 years to pay, so the payments are lower. There are no limits to income and can take up to 5 years to pay, so the payments are lower. BIA guidelines allow monthly income of $4478/mo - fewer kids means less income allowed. BIA guidelines allow monthly income of $44781mo - fewer kids means less income allowed.

What If I earn over income? The Insolvent is fee to earn more & pay more directly to the Creditors at any time (doing this would shorten the term & the process would be over quicker) The Insolvent is fee to earn more & pay more directly to the Creditors at any time (doing this would shorten the tern, & the process would be over quicker) *The amount the Trustee can charge to the Estate is capped at $6,000. Any Surplus income over $200 is clawed back to the Estate, so payments will be much higher (and possibly more unmanageable for the Insolvent). *the amount the Trustee can charge to the Estate is not capped by the OSB (as it is in

Summary), thus required payments can fluctuate & the Trustee can realize a greater personal profit - while Creditors may receive less. Are my kids affected? No No YES, if claimed as a member of the family unit - then they also must claim their Income as a part of the family income - this means that their income is also realized for the benefit of the Creditors. YES, if claimed as a member of the family unit — then they also must claim their income as a part of the family income - this means that their income is also realized for the benefit of the Creditors.

Payments to Trustee Estate YES, determined at time of proposal & does not change over the term. Larger payments can be made at any time to shorten the term. YES, determined at time of proposal & does not change over the term, Larger payments can be made at any time to shorten the term. YES, determined at the time of bankruptcy and will Increases corresponding to over income amounts. YES, determined at the time of bankruptcy and will increases corresponding to over Income amounts. Can the Trustee take my home from me/force me to sell?

NO, Retain ownership, with the right to sell, keep any equity, pay creditors directly from the equity, etc NO, Retain ownership, with the right to sell, keep any equity, pay Creditors directly from the equity, etc YES, If there is more than the allowed $20,000 in equity, the Trustee can force a sale or request payment of any amount over $20,000 equity. YES, If there is more than the allowed $20,000 in equity, the Trustee can force a sale or request payment of any amount over $20,000 equity.

Can I sell my home to decrease my payments? YES, no restrictions. YES, no restrictions. YES, but can only keep $20K and it MUST be reinvested within 60 days or it also goes to the Trustee/ Estate. YES, but can only keep $20K and it MUST be reinvested within 60 days or it also goes to the Trustee/ Estate. Can I apply for a mortgage? YES and more likely to qualify in a proposal. YES and more likely to qualify in a proposal. NO, will not be granted a mortgage until discharged from Bankruptcy. NO, will not be granted a mortgage until discharged from Bankruptcy. Can I keep my Tax Returns?

Yes Yes NO, white a bankrupt ALL returns go to the Trustee/Estate. NO, while a bankrupt ALL returns go to the Trustee/Estate. Credit Bureau On credit report for 6 years On credit report for 6 years On credit report for 14 years On credit report for 14 years Monthly Budgets Required No (less stress to Debtor) No (less stress to Debtor) Yes Yes What if I have higher expenses because I am going to School etc? Because the payments are set for the term of the proposal, there is less uncertainty in making plans that involve the cost of education, etc.

Because the payments are set for the term of the proposal, there is less uncertainty in making plans that involve the cost of education, etc. *Regardless of what the expenses are, the payments are tied to income and there is fluctuation in the payments so difficult to make plans and stressful. *Regardless of what the expenses are, the payments are tied to income and there is fluctuation in the payments so difficult to make plans and stressful.

Credit Counseling Yes Yes Yes Yes NOTES: - I make better decisions when I can contrast one option to another and so, (after receiving no response to my inquires to the AC Waring office on November 8 & November 9th) , I tried to find information related to surplus income on my own. As I researched further, I learned about Proposal options that were not explained to me by AC Waring. - I created the above comparison chart to help me understand the pros/cons of each option.

Whether a Division I or Division II proposal, either one would have been a better option for me & my Creditors; when contrasted with an Ordinary Bankruptcy in particular, as the Trustee fees can be much higher.

- The majority of the information was obtained from the Office of the Superintendent in Bankruptcy website, but I found numerous other information sources in Canada as well.

Schedule “ B ” Excerpts of Bankruptcy & Insolvency Act 66.4

(1) All the provisions of this Act , except Division I of this Part, in so far as they are applicable, apply, with such modifications as the circumstances require, to consumer proposals. Where consumer debtor is bankrupt

(2) Where a consumer proposal is made by a consumer debtor who is a bankrupt, (

a) the consumer proposal must be approved by the inspectors, if any, before any further action is taken thereon; (

b) the consumer debtor must have obtained the assistance of a trustee who shall act as administrator of the proposal in the preparation and execution thereof; (

c) the time with respect to which the claims of creditors shall be determined is the time at which the consumer debtor became bankrupt; and (

d) the approval or deemed approval by the court of the consumer proposal operates to annul the bankruptcy and to revest in the consumer debtor, or in such other person as the court may approve, all the right, title and interest of the trustee in the property of the consumer debtor, unless the terms of the consumer proposal otherwise provide.