Albert, 82, has operated his convenience store for the past 30 years. Trade has long been prosperous, but unfortunately the past does not always guarantee the future.
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Albert’s convenience store is on the ground floor of a building that belongs to him and in which he lives. There are also two apartments there, the rental of which brings him additional income.
For three decades, his business was running smoothly and Albert could count on a regular clientele.
An avalanche of setbacks
However, the wind has turned in a direction he did not expect.
“The last two years have been very difficult. I did not see things coming even if the black clouds gradually accumulated, ”he laments. First of all, the traffic of his convenience store has decreased significantly due to the drop in population in his small municipality.
“Inflation, rising commodity prices and fixed costs, such as electricity, insurance, taxes and maintenance, also hurt him a lot,” says Stéphane Gauvin, Licensed Insolvency Trustee and Partner, Recovery and insolvency at Raymond Chabot. Cutting back on his profit margin, he was still unable to offer prices as competitive as those of the big chains and he began to lose customers.
On top of that, the lack of manpower forced him to work longer hours in his business, which made him very tired. Major health issues forced him to slow down. Lack of money and energy caused him to neglect the upkeep of his building, prompting his two tenants to move out.
“Albert has also fallen behind in his management, in particular in the production of his income and tax returns, as well as the payment of his taxes, duties, suppliers and electricity bills”, specifies Stéphane Gauvin.
The octogenarian made payment agreements that he failed to honor, and began to receive formal notices that resulted in judgments against him.
A legal hypothec was even published by the Ministry of Revenue on his building. Financial problems, exhaustion and depression finally pushed Albert to close the doors of his convenience store and consult a licensed insolvency trustee firm.
A difficult decision
In Albert’s case, given his situation, his state of health and the extent of his debts, the solution recommended by Stéphane Gauvin was bankruptcy.
“His building was sold so that it could partially repay its creditors,” explains the trustee. He will have to pay an amount to the trustee for a period of nine months, and all of his debts will be erased.
“It was a very difficult choice, but now I feel freed from the enormous weight that weighed on my shoulders. Since making this decision, my health has gradually improved and I also have time to enjoy my grandchildren,” says Albert. Even though his credit report was badly damaged by the bankruptcy and will be so for six years, this will not have an impact, because he did not intend to use credit again.
His financial situation
Assets :
- Commercial building: $75,000 market value considering the poor condition of the building)
- Convenience store equipment: $5000
Debts:
- Government (GST-QST, taxes, source deductions): $120,000 (legal mortgage)
- Mortgage : $53,400
- Property taxes : $5300
- Supplier invoices: $26,000
- Credit card : $21,000
TOTAL DEBTS: $225,700
Monthly income :
- Retirement income: $1900