Mark reveals that he filed for personal bankruptcy in November 2019 with more than $110,000 in debt, and explains why he saw bankruptcy as a no-brainer.
Transcript
Filing for bankruptcy
Yes, that is true. I am a bankrupt. I filed for personal bankruptcy in November of 2019, and I owed over $110,000 to my creditors. My biggest creditor was CIBC, for more than $62,000. So, CIBC, here's to you and your $62,000. My number two creditor was the Canada Revenue Agency, and my friends over there were owed $27,000. So, cheers to the Canada Revenue Agency. My third largest creditor was the Toronto-Dominion Bank, and I owed them over $20,000. A shout out to the Toronto-Dominion Bank: I actually liked the people at TD. They always treated me really well.
My fourth largest creditor was a debt buyer, CBV Collection Services. They would have purchased some kind of debt, and that was for about $650. My final creditor was Virgin Mobile, for $117, and that was in connection with my daughter's cell phone bill. I was paying her cell phone bill and there were issues with trying to cancel her account. I can recall having four telephone calls with the customer service people at Virgin Mobile, and they have got to have the worst customer service in the world. Richard Branson, instead of going into space, should be spending more money on customer service at Virgin Mobile.
The judgment debtor examination
I should explain what a judgment debtor exam is. CIBC sued me. I had an outstanding credit card and an outstanding line of credit with CIBC, and there was no point in my filing a defence because I didn't have one, so they got a default judgment against me. When a creditor obtains a judgment against a person, they're entitled to a judgment debtor exam. A lawyer for the creditor shows up, and the judgment debtor, in this case me, shows up and provides copies of relevant documents, things like previous income tax returns and pay stubs. They meet in an office with a stenographer there to record the proceedings, and the lawyer asks the judgment debtor questions.
I was not a big fan of CIBC, so I thought, I'm going to provide them with all the documents, more than what they were entitled to, but I'll have some fun with them at the judgment debtor exam. So at the exam, I wore my bathing suit. Now, some of you are asking, Mark, did you wear a T-shirt? The answer is no. I wore a muscle shirt. CIBC sent some hotshot lawyer from Toronto to do the exam, and they thought I was involved in all kinds of shady dealings to avoid paying any money to CIBC. At the end of this 90-minute exam, I think they had sort of come to the conclusion that maybe I wasn't doing anything nefarious.
Why bankruptcy was a no-brainer
It was actually a no-brainer. If I did a cost-benefit analysis, let's look at the advantages. I owed $110,000 to my creditors, and if I filed for personal bankruptcy, that $110,000 in unsecured debt would be discharged, or forgiven. The only cost I would be out of pocket was the $1,800 I would have to pay to the Licensed Insolvency Trustee. It costs $1,800 in Canada to file for personal bankruptcy.
I was also very fortunate that when I filed for personal bankruptcy, I did not have to surrender any assets to the Licensed Insolvency Trustee. In Canada, each province has exemptions when it comes to personal property, and if a person can take advantage of those exemptions, they may not have to surrender any of their assets to the trustee at the time they file. This is one of the reasons why people with significant assets would prefer to do a consumer proposal as opposed to filing for personal bankruptcy.
The second advantage I had was that I was not in a position where I would have to make surplus income payments. Under the federal Bankruptcy and Insolvency Act, if you earn more than a certain amount, I think it's somewhere in the neighbourhood of $30,000 annual income, then you have to pay 50 percent of the amount over the $30,000 to the trustee for a period of 21 months for a first-time bankrupt. There are circumstances under which that 21-month period may be extended.
So I would file for personal bankruptcy at the cost of $1,800, wipe out $110,000 in debt, not have to surrender any assets to the trustee, and not have to pay any surplus income payments. Then here's the kicker. At the time, I was in a position to inherit money, and if I filed for personal bankruptcy, any future inheritance would be beyond the reach of my creditors. If I had not filed, my creditors could have gone after the estate of someone who was leaving money to me, and they could have gone after what would be my inheritance. There was one other advantage. I provide advice to people who have debt problems, and going through the process of filing for personal bankruptcy would be a learning experience, so I would be in a better position to provide advice to people who are having debt problems.
The disadvantages
Now let's talk about the disadvantages. The only disadvantage I could see was for my ego and my reputation. At some point it might become public that I had filed for personal bankruptcy, and some people might think less of me because of that. You guys aren't going to tell anybody that I filed for personal bankruptcy, are you? You're not filming this, are you? No? Good. I was worried that Canadians might find out that I'd filed for personal bankruptcy. Thanks.