by admin | Bankruptcy, Consumer Proposal, Uncategorized
Credit and specially credit cards are often touted as the best possible means of achieving your life’s goals. They are often considered a means of ‘empowerment’ that allow you a degree of financial freedom that would hitherto not be possible if you were to spend entirely within your earnings.
However, nothing could be further form the truth since excessive usage of credit cards is a sure fire route to penury. The reason being that financial institutions that offer you credit lines and cards do not do so out of a sense of altruism but hard business sense.
Remember, everything that you purchase has to be paid back, with interest (in the literal sense.) When you are buying that latest LCD (liquid crystal display) TV or brand new car on your credit card, you may not remember that the money that you have spent was not yours to be begin with, but rather a loan that has been given to you so that the lender can make a profit off you in the long run.
If you are not careful, your bills will steadily accumulate and the net result would be incessant calls from your creditors who would be hounding you day in day out so that they could recover their dues. Slowly and gradually, the quality of your life would erode and you would be faced with the difficult prospect of placing your credit card debts as your most important priority. This will make everything else, even basic day-to-day expenses that are necessary to run your household such as food, energy bills, home lease payments, school books etc. end up being on a lower priority level. If this state of affairs continues long enough, you just might end up facing insolvency and may even have to file for bankruptcy.
This means that you would end up forfeiting almost all your property as well as having to face a steep downfall in your overall credit ratings.
Of course, it does not have to be this way. All you need to do is to say no to those glitzy adverts that try and make you believe that credit cards and loans are the panacea of all your financial woes and the short cut to your dreams coming true. If you were to believe that, then there is a very strong probability that the dreams may turn out to be veritable nightmares.
Though it may not be easy at first, but for your financial health it is very important that you get rid of your debts first and foremost. But even more important than that is getting rid of the ‘mindset’ that might lead to a debt trap i.e. using credit in any form as a means of ‘supplementing’ your monthly income. Remember, nothing can be further from the truth since credit is not a supplement but a burden on your existing financial resources.
If you find that your income is not enough for your expenses, then learn to budget your resources till each and every item in your priority list has been catered to and moreover, it has happened without you taking any unnecessary loans.
by admin | Uncategorized
Before we try to understand how to deal with our debtors, let us see what debt is all about and how we can avoid being in this situation in the first place.
What is debt
Debt (in the financial context) means any amount of money that is either owed and/or due. In a financial contract, the parties to any debt are referred to as ‘lenders’ i.e. those who actually give the amount of money and ‘borrowers’ are the people who take the money loaned by the lenders. A typical financial contract that involves borrowing any sum of money, generally envisages a return of the full amount (principal) at a later date along with a certain amount (interest) that is over and above the original figure that was borrowed. The borrower usually has to pay both the principal and the interest in staggered payments called ‘instalments’.
The trouble arises only when the borrower is not able to not meet his regular minimum instalment payments. This usually happens when the borrower is not able to earn an amount sufficient to make those payments while trying to earn a living for himself as well as his loved ones.
How to deal with debtors
However, there are many cases where the individual concerned is not paying even though he is ostensibly well-off. Under these circumstances there are various ways to deal with this problem.
What ‘not’ to do
Many provinces in Canada have laws that do not allow debt collection firms to harass their debtors. As a general rule, credit collection agents are not allowed to call on people between the hours of 9 pm and 7 am in many parts of the country. Also Sundays and statutory holidays are considered partially prohibited days in most provinces in Canada. Calling people or banging on their doors at 3 am is not a good idea (as many collection agents have found to their detriment after they were reported for harassment)
The law in Ontario province states that collection agents are not allowed to email, or speak with a debtor or even send him or her voice messages, more than three times in a seven day period after the first conversation. Collection agents are allowed only one means of communication and that is ‘regular’ mail.
What you can do to recover your loan
Any debt given to an individual is an investment and just because a debtor is not paying you does not mean it is a ‘sunk cost.’ This is what you can do to recover your hard earned money.
o Focus on the problem at hand
The borrower (debtor) might try to distract you with a barrage of personal tragedy stories as well as excuses till you completely lose the original point that you were trying to make. This is why you must not allow yourself to be distracted and make sure the discussion hovers around only one point, “How soon can you expect your payments to be cleared?”
o Be thoroughly professional irrespective of provocation
The sundry debtor just might try to make you lose your temper. Under no account should you do that and must not raise your voice or try and strike the debtor. If you indulge in physical and or verbal abuse, you might end up being hauled up on criminal charges. That is why it is imperative that your demeanour must be completely professional at all times.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Not all of us are born with the financial acumen to remain debt free for life. Sometimes we simply want more than we earn or just want to ‘keep up with the joneses’ or try to impress our spouse or other people close to us and before we know it, we have accumulated debts that we are quite simply not able to pay back.
Alternately, there may be a medical emergency or bad business decisions that just might lead to looming insolvency.
Bankruptcy in Canada
Stripped of all the hyperbole, the core idea behind personal bankruptcy in Canada is that you essentially have to surrender all your property to a ‘licensed insolvency trustee.’ This is done to get rid of all your debts. The trustee would help to ensure that your property is sold off and its proceeds are used to help your creditors recover their investments. Depending on which province you live in, certain bare essentials may be left to you so that you are able to continue living a reasonably normal life. The trustee will be responsible for making sure that neither you nor your creditors are treated unfairly.
Legal Aspects
If you were to go bankrupt in Canada, it is good to know that it will not have any direct financial repercussions on your loved ones such as husband, wife or common law partner etc. This is because your loans and your property are your very own (unless any loan is jointly owned or a close family member is a guarantor of your loan). This is why only ‘your’ personal property would be taken into consideration when you file for personal bankruptcy.
The Surrendering of Property
This is perhaps one of the worst things about bankruptcy. Most of your property may well be confiscated and sold off and its proceeds given to the creditors. To see your life’s hard work and assets being handed over to others is not an easy pill to swallow. But, look at the bright side. Your creditors will not continue to hound you anymore.
Credit Rating
It is unwise to think that bankruptcy would not affect your credit ratings. However, it is not the end of the world when it comes to applying for fresh credit. In fact, you will continue to receive credit card and loan offers in your mail (however, the fine print would have changed and they would be charging you more interest than ever before).
Yes, bankruptcy has a severely negative impact on credit ratings, however, if the alterative is that you are being mercilessly hounded by creditors and you are lagging behind on almost all your monthly payments, then it is an axiomatic assumption to realize that your credit ratings are going through a downward spiral in any case.
Remember, bankruptcy is not the end of the road at all. Hundreds of thousands of Canadians go through it every year and simply restart their lives all over again. In time, both your credit ratings as well as your property will be back to the position they were before.
by admin | Uncategorized
Buying a home for yourself as well as your loved ones is possibly the biggest financial decision you may make in your life. Therefore, there are a lot of points to consider before you may make your choice.
· The Pros of buying your own home
1. Ownership of property
The fundamental difference between renting a home and buying one is that the amount you pay for mortgage payments will eventually serve to ensure that one day after all the payments have been completed you would be the ’whole and soul owner’ of your very own property. Moreover, you can also opt to refinance your house and be able to utilize the funds generated in this way for either renovating your home (or thereby further enhancing its value) or alternately any major expenditure that you may have in mind.
2. Stability
Since you live on your own property, you can pretty much do what you like with it and are not answerable to any landlord and would not have to worry about having your rents increased or being evicted from a place that you may have grown to think of as your own home.
· Disadvantages of owning your own property
3. You cannot shift easily
In case you have to move urgently to some other city or locality, you would have to sell your house. This may not be done simply and easily and you might need to wait until a real estate agent finds a prospective buyer or alternately you may decide to sell at a loss, quite unlike rented premises in which case you would simply relocate elsewhere.
4. All repairs are your own responsibility
Unlike rented accommodation, any repair or routine maintenance work is your own personal responsibility.
· Advantages of rented accommodation
5. Low Cost
It is a whole lot cheaper than buying your own place. Buying a house may mean you would end up being indebted for years, if not decades, while rented accommodation gives you the flexibility of changing your home as and when you want.
6. No need for DIY (Do it yourself projects)
Renting a house a allows you to let your landlord deal with such irksome problems as a ruptured mains or sewage pipes, rats, spiders and other assorted creepy crawlies that may infest the house.
7. Fluctuations in the real estate market
If the price of the property you are living in were to drop, it would not be of any consequences to you if you occupy it as a tenant. And moreover, as an added bonus it might lead to lower monthly rent payments.
· Disadvantages of rental accommodation
8. No opportunity to build equity
Every dollar you pay for rent is gone forever. In other words, you cannot build any equity. In case, you have to face adverse financial conditions, and are unable to pay your monthly rent, you might face eviction from your home.
9. Higher rents
Your landlord (property owner) has the authority to raise rents once your original agreement expires and as such, you would be forced to pay higher or seek alternative accommodation.
by admin | Consumer Proposal, Credit Counseling, Uncategorized
It is an axiomatic assumption that large families tend to have larger budgets. In fact the larger the family the more its expenses. Moreover, before you know the runaway expenses may well spell financial ruin for you and as a direct consequence, your loved ones will be affected as well. This is why it is imperative to have a properly planned budget in place so as to ensure that you are safe from any unforeseen financial emergencies in both the short as well as the long term.
1. Cash is in
Its altogether very tempting to use credit to buy things that we can’t afford at a particular point in time. After all the ‘buy now pay later’ aspect of credit cards make life easy, right? Wrong! Basically, using credit cards to buy stuff you cannot afford effectively means you just might end up driving yourself into penury. If you are not in a position to afford something on your current income, buying the same thing and then paying interest to your credit card service provider is certainly not a good idea.
In order to avoid cards, make sure you do not carry them with you in the first place.
2. Categorize your budgets
Alternately, you may draw your salary at the beginning of the month and then allocate portions of that amount to specific mini budgets such as grocery shopping, children’s entertainment, eating out etc. Once the amount for that mini budget has been spent, try not to use amounts meant for other contingencies to ‘refresh’ that particular budget.
3. Eat at home
Eating out arguably makes one of the biggest dents on any large family’s budget. To curtail these expenses involve your children when you go grocery shopping and (within limits) allow them to buy what they like. You may also consider making weekly lunch and dinner menus with individual family members being allowed their own choice of a meal on specific days. This would not only be healthier for the overall fitness of your family, but would give your wallet some relief as well. Moreover, it would cement your family’s ties as well, if all meals were to be taken together.
4. Teach your children to save
Kids as young as seven or eight may be taught the value of saving so that they do not treat you as an unlimited expense account. You may give them a weekly allowance and make them responsible for their own entertainment expenses. You might also encourage them to keep an ‘expense journal’ so that they are able to realise just when and where they have been spending their money.
5. Set priorities
Make sure that you have your priorities right. Basic household expenses such as energy bills, children’s education and groceries are your first and foremost priority followed by contingency saving. Only after the basic requirements have been met, should you feel free to go and splurge on that giant screen LED 3D TV or other consumer items of a similar nature.
