“Nothing good had happened to me for months until the pair from 4 Pillars came into my life. One of the first things they said to me after reviewing my financials was that I should not go bankrupt and I wasn’t going to lose my condo.”
The debt situation
Ryan, age 50, (name changed for privacy) ran a successful ad agency in a medium-sized Canadian city.
Despite being a respected local business owner, his company began to suffer from cash flow problems. After a major client deferred their marketing spending for a quarter, his bank ended his line of credit.
Soon, he was exposed to over 200,000K in debt and began draining his savings, investments, and was threatened by looming bankruptcy.
As a result, he contacted 4 Pillars to help deal with his dire financial situation. Here’s how we helped him avoid bankruptcy.
The results
Within a few months, 4 Pillars worked with Ryan’s creditors and drastically reduced his debt.
Ryan owned large amounts to various creditors (these included his commercial landlord after he broke his office lease to shut down the business and his bank which had given him a large line of credit to keep the business running).
4 Pillars helped to restructure his corporate debt and reduce the overall amount owing with a consumer proposal.
Ryan had personally bankrolled his business and now faced over 200K in debt from accounts payables, his 5-year office lease, and 90K line of credit.
He was being pursued by creditors including collection calls and multiple lawsuits.
4 Pillars reduced this debt and protected Ryan’s personal assets, which included a downtown condo.
Ryan recovered from this financial crisis and avoided bankruptcy. He recently started a new business and was featured in a local magazine for innovation in his industry.
How we did it
Technique #1: Negotiate with creditors
Ryan’s financial tailspin began when a major client deferred an advertising campaign. Business had been slow and the timing couldn’t have come at a worse time.
Near the same time, his bank informed him that his business’ operating line of credit needed an injection of $45,000 in cash. He had two days to make the payment or the access to capital would be revoked.
Faced with major pressure from his creditors, Ryan began thinking about bankruptcy. He met with a bankruptcy trustee and told his staff the bad news. His business was done and it looked like he would lose everything.
“My staff would be laid off; the media would get wind of it and it would end up on the front page of the business section in the local paper; the bank would send their henchmen in; my creditors would start circling; my personal account would bleed out; I would be officially – and publicly – ruined. I remember closing my office door and hiding out of view of my staff. I dropped to the ground and broke down.”
A friend told him about 4 Pillars and urged him to get a second opinion on the bankruptcy. With little hope, he contacted one of our local offices.
Soon after meeting with 4 Pillars, Ryan decided to not file bankruptcy and took our advice.
“I did as my friend suggested and called the 4 Pillars debt consultant. I talked to a guy named Benjy Houser who arranged a meeting with me for a face-to-face discussion.
He suggested he come to my office, with one of the 4 Pillars partners, who specialized in corporate debt restructuring. I had no idea what to expect and wondered if this was a legitimate business. The first bankruptcy trustee I had met – the one who charged me $267 that I didn’t have – had advised me to be wary of debt consultants. I was very naive and didn’t realize he was protecting his own interests.
Nothing good had happened to me for months until the pair from 4 Pillars came into my life.
One of the first things they said to me upon reviewing my financials was that I should not go bankrupt and I wasn’t going to lose my condo.”
4 Pillars took over the negotiation process and began working with his creditors.
This was a huge relief to Ryan as his bank had become increasingly aggressive and had moved him to a special collections agent.
Like hiring a mortgage broker, creditors will be much more open to different options when a professional who knows the rules and industry begins talking to them on behalf of the debtor.
Technique #2
Analyze and Restructure
Every business (and individual debtor) has bargaining power with their debt.
Our experts in our Victoria office sat down with Ryan and began analyzing his situation.
After analyzing his debt, we made recommendations to Ryan
and began structuring a consumer proposal. This protected his assets, helped him avoid bankruptcy, and drastically reduced the amount owing.
Technique #3
Structuring the consumer proposal
We met again with Ryan and laid out our plan for the consumer proposal. This allowed him to restructure his debt and avoid further financial disaster.
We structured the consumer proposal based on our experience with these types of debt.
We then submitted the consumer proposal and his creditors accepted. These creditors included three banks.
Needless to say, Ryan was very relieved that his creditors had accepted the consumer proposal as he could now begin to rebuild without the burden of bankruptcy or huge amounts of debt.
As Ryan put it,
“The relief is easy to imagine. I was financially exhausted but my debts had been resolved according to the law, and my creditors had no further claim over me.
But there was a sense of shame as well because I had walked away from a number of unsecured creditors, small businesses like myself who were out of pocket the debts my company owed them but was unable to pay.
Several of my creditors called me up to officially forgive my debt to them. That touched me enormously. A few others continued to email me looking for compensation.
One would do so for over a year, despite the lack of any legal claim. And I can’t say I blame him. I might have felt the same way had I not had the experience I did.
When a business in debt goes down, many people suffer. That’s not something my Consumer Proposal could eliminate.
However, with my Proposal accepted and my debt legally resolved, a new process was about to begin: rebuilding my credit rating and my reputation.
Both were going to take time, focus and making the right decisions. After 4 months of unrelenting negativity, it was time at last to move ahead.
I felt ready for the new challenge.”
Technique #4
Credit Rebuilding
We believe that support after debt crises is key to helping families and businesses build a secure financial future.
According to our recent research into 3000 Canadian families experiencing debt crises, 13.6% of Canadians who file bankruptcy have gone bankrupt before.
As we’ve seen often, many people who fail to learn essential financial planning skills will survive one financial disaster only to soon face another.
We worked with Ryan to create a program that would quickly rebuild his credit and ensure that he had a good financial roadmap to start his new life.
As you likely know, consumer proposals do have an impact on your credit rating. But your credit rating, with the right guidance, can be rebuilt quickly.
We laid out a strategy for rebuilding Ryan’s credit and checked in regularly to make sure that he was on the right path forward.
Results Summary
How we helped
Used debt restructuring to help Ryan avoid bankruptcy
Ryan kept his condo and other assets
Helped Ryan avoid 200K in debt and removed pressure from three major banks
Helped to rebuild Ryan’s credit and built a long-term financial foundation
Life after debt
We recently checked in with Ryan. While losing his business was very traumatic, he recently started a new company.
His new company was recently featured on the cover of a magazine as an example of innovation in his industry.
He is busy working building his new business and spending time with his daughter.
