by admin | Credit Counseling, Credit Repair, Debt Management, Uncategorized
We often here experts on finance and banking coming up on various talk shows telling us about the various option we can avail if we are facing debt. Several books and articles too have been written on the same subject. It does get one wondering that if getting into debt is such a huge deal that you need so many people, and not just ordinary people, but experts, tell you how to deal with it, why not tell us about how to not get into debt to begin with?
Many people make the mistake of seeing a credit counselor only when they have hit rock bottom; that is they are about to file in for bankruptcy. If you want to do better financially, you need to prepare for it likewise as well. Do not pay debt by avoiding getting into it. Following are some of the things you could do that would help you avoid debt:
The Importance of Personal Finance:
Honestly, it would be very difficult to do anything for too long if you are bad at managing your personal finances. The importance of personal finance should be taught as a subject to all students so that once they enter into the practical field, they have the discipline and the steadiness that is required to manage money matters.
The Importance of Budget Planning:
Another thing I believe should be taught to all is how to effectively plan your budget in a manner which would not have you over spending on things. People should be taught to devise somewhat more sensible ways of spending their money. For example, rather than paying the retail prices for furniture or some new electronics that you may need, consider going for wholesale prices because they are way lesser than the retail prices.
Avoid Using Credit Cards:
Most people believe that the main source of debt is the plastic money you carry with you: your credit cards. For starters, they have very high interest rates and secondly, carrying them around with you just further tempts you to buy things that you do not necessarily need. So, if you cannot completely avoid using them, try not to carry them with you whenever you go out.
Say No to Borrowing:
Another way of avoiding debt is to stop borrowing money for something that you cannot afford at the moment. Say yes to saving and no to borrowing. While it is easy o apply for a loan and get one and then buy whatever it is that you wanted to buy, it can be difficult to pay the loan back consequently, you run the risk of running into debt.
Avoid Impulse Buying:
Just because there is a latest model of the phone that you already have, does not mean you should get it, especially since yours is working perfectly fine. In addition to this, what most of us do not realize is that while you may very gladly spend $200 on this new phone today, but it is not going to be worth that much in a couple of days. Electronics especially phones, drop down in their values very quickly.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Nobody looks forward to filing for bankruptcy, but it is one of the most common options that people opt for when they are in debt. Things may become even more complicated when you have child support or alimony duties too. This goes for both the cases; cases where you owe child support or alimony as well as cases where you get child support or alimony.
Both these claims (child support and alimony) are not dischargeable even if you file for bankruptcy. So while you may file for bankruptcy and get away with not paying anything for the moment, you cannot be released from these support or alimony responsibilities.
During a bankruptcy proceeding, both child support and alimony obligations are flagged as priority debts; which means you cannot be discharged from them. As general rule priority debts are given quite a treatment in bankruptcy. The child support payments in which you were lagging behind before you even filed your case, you are required to pay them back in full through whatever repayment plan you come up with.
Those who receive child support are often apprehensive of the fact that once they file for bankruptcy, they may not be able to protect the money they get from the support. Luckily, if you are a person who is finding himself in a similar situation, you can relax because the ongoing payments that you do receive as child support will be protected even if you have filed for bankruptcy.
And not just this but you can have the leftover money which you received as child support, marked as an ‘exempt asset’ which would prevent anybody who wishes to use that money for paying back the creditors from doing so.
Alimony money is your ex husband/wife’s money which they give to you so that you can manage some of the finances even after the divorce or separation. Since this too is considered as a ‘domestic support obligation’, you cannot be discharged from paying it and just like with child support, if you have missed paying any alimony money in the past to your ex spouse, you would be required to make up for that as well. If you are at the receiving end of the alimony money, but have to file for bankruptcy due to some financial setback, you also have to option of protecting that money.
Filing for bankruptcy is a big and serious decision. If you are about to file for a bankruptcy case and have child support or alimony duties too, please make sure that you look into the matter with an experienced attorney who can help you make the right decisions, ask him any relevant questions about any concerns that you may have, ask for clarifications for anything that you are not being able to understand. Remember to hash out all your concerns before filing for any legal matter, be it bankruptcy or anything else, so that you do not experience any troubles with the law later.
by admin | Consumer Proposal, Uncategorized
It is only natural to lose hope after you have filed for a consumer proposal. Many people worry about getting the credit again, and believe that it will never happen. But it is all a myth. You can get a credit card, a home, or even a car after you have gone through the process of a consumer proposal. When you are done repaying your debts, and have met all the requirements of the proposal, you are also officially debt-freehand therefore, responsible enough not to repeat the same mistakes again.
After you have paid back the debts, the credit bureau will be informed about it, and strike the credit rating to approximately R7. This rating will get upgraded to R1 after the duration of three years. An individual also cannot get a credit card until they have repaid the loan and built up their credit. But below are the steps which will facilitate you in rebuilding your credit after you have completed the consumer proposal debt payment.
1. Secured Credit Card
The first step towards rebuilding is getting a secured credit card. The card is called so because the person has to pay around 10 – 100% of the amount before getting that card. That money acts as a protection in times when the individual is not able to repay the amount again. Additionally, when planning on getting a secured credit card, apply for it at places where you haven’t before, and which are not in your repayment plan proposal. Also make sure to apply for a real credit card and not a pre-paid one. You can get 3 or more of such cards and also keep it at good standing to portray that you are responsible enough now to pay off the money.
2. Bill Payment on Time
As mentioned above, paying bills on time is essential. If you fall behind, it will have a negative impact on the credit ratings. So pay bills before the due date or on time and improve the credit ratings. Since the reports regarding the credit information is sent to the bureau on a monthly basis, you can use this as leverage by maintaining excellent credit rating.
3. Low Balances Owing
The debts on your card should be low, which means you must not spend a lot. The estimated of 30% or less of the total credit should be your owing balance. Furthermore, ensure that you are paying back the entire amount every month. If not, make certain that you are repaying at least the minimum amount.
4. Stay in the Credit Limit
Every credit card comes with a credit limit, which is why it is important to stay in that limit or else you can get in trouble with the penalties thrown at you by the creditors. Therefore, this is a deal breaker and the most important rule to follow.
5. Stay on a Budget
In the start of every month, plan a budget and stick to it. You need to keep a check on the money you are getting and the place where you are spending it. This will also help you in recognizing the areas where you tend to overspend, and the additional taxes.
6. Keep a Check on Utility Bills
Many times, people ignore utility and phone bills. However, these are the firms that don’t waste time in reporting such incidents. So secure your credit rating and pay the cellphone and utility bills in a timely manner.
If you need further guidance regarding rebuilding of the credit, you can contact counselors present in your area and get the help you need!
by admin | Consumer Proposal, Uncategorized
Don’t we all end up spending a little too much money on things we hardly need? However, if this problem gets out of hand, you may end up with a huge amount of debt. In that case, you have two options. You can either declare bankruptcy or you can file for a consumer proposal. If you are one of those individuals who do not want to mess up their past legal records with the addition of a bankruptcy to it, then a consumer proposal is the silver lining available to you.
Pros
By opting for a consumer proposal, you can negotiate with your creditor and settle the debt amount; whereas bankruptcy doesn’t provide you with this option. In bankruptcy, you don’t get a choice and you have to settle for what is offered. However, a consumer proposal is a legally binding debt settlement agreement in which the person in debt has to payback a certain percentage of their total debt. These payments take place on a monthly basis, and are set at an affordable range. The payments can take place till the span of 5 years, and after that, they are relieved.
Additionally, the interest with the payment remains frozen at the time of filing, which saves you from paying additional interest money on it. Another extra bonus for selecting a consumer proposal is that it offers immediate debt relief, unlike debt consolidation, where payment of debt with the interest takes place.
Covered Debts
The debts that are covered in consumer proposal are unsecured debts which include:
- Bank Loans
- Finance Company Loans
- Credit Cards
- Income Taxes
- Payday Loans
- Canada Revenue Agency Debts
- Student Loan (more than seven years)
Your secured debts are not discharged and should be paid by you timely. These are:
- Car Loan
- House Mortgage
Reasons to Choose Consumer Proposal
- Many people choose consumer proposal to evade bankruptcy because of greater debt.
- If in future, you are settling for a profession which will cause trouble for you with the history of bankruptcy on it, then a consumer proposal is the best option.
- The process of consumer proposal is easier as it requires meeting with the administrator and formation of a plan. After the plan is approved, you can start the monthly payment without any documentation proof of income.
- Consumer proposal will save your assets, and the payment of your mortgage or car loan is continued without any obstacle. Whereas, a bankruptcy trustee will sell your assets.
- The set monthly income is decided beforehand and you don’t have to fuss over how much money you make.
- In bankruptcy, the higher your income, the greater you have to pay. However, in consumer proposal, a small amount is set which you pay for the period of 5 years.
- If you believe that you will need credit in the future because of which you want your credit rating good enough to be considered, then consumer proposal is the correct alternative.
Before coming to a decision, assess the situation and keep all your options open. You can also consult a nearby counselor who can facilitate you in reaching a conclusion, by considering all the related legal issues.
by admin | Bankruptcy, Consumer Proposal, Debt Management, Uncategorized
Can the debt go away with the death of the debtor? Unfortunately, you can’t skip debt even when you are dead. After your death, your debt is not passed on to your family members until and unless there is some kind of legal documentation present. Your relatives will only be accountable for your debt if they were a joint debtor or a guarantor.
So, if a person who is self-employed dies without paying the complete installment, then that money is collected through the estate, if the individual’s family members haven’t intervened yet and made the necessary payment. However, here, we will talk about the future of other debts such as credit cards, mortgage, and insurance.
Car Loan and Mortgage
If the dying individual was married, then they might have signed up for mutual agreement mortgage. In this case, after the death of one of the spouse, the other spouse is lawfully responsible for paying off the rest of the mortgage. However, there are circumstances when the partner is incapable of paying the debt without the income of the dead spouse. In this case, if you have a proper insurance plan beforehand, it will protect your spouse and other family members who are involved.
If your partner is unable to pay that money, traditionally, lenders go after your property to get the complete payment of the debt. The loans and bills are paid with the remaining assets and the proceeds of the deceased’s estate go to the trustees. Moreover, the creditors are informed about the person’s death, and are provided with a copy of the death certificate for the closing of the accounts.
Credit Card Debt
After your death, all debts on credit cards issued under your name will be disregarded and the lending company will bear the loss. But, if the credit card is issued and co-signed with a spouse, then they are accountable for making the remaining payments. Additionally, make sure to add a clause in your will about the removal of your name from different accounts to avoid any deceitful activities.
Insurance
You don’t want to die and leave your family buried under a mountain of debts. For this purpose, a proper insurance plan is necessary. There is the option of credit card insurance, life insurance, and mortgage insurance available. However, you need to assess their pros and cons and then decide on which is the better option for you.
The distribution of the property cannot take place until and unless all the debts, loans, and bills are paid. After the payment, you can pass on the assets as mentioned in the will. However, if the funds are not enough, they are dismissed as long as there is no co-signer, guarantor, or joint creditor.
To get information regarding the debts you are supposed to pay and which are dismissible, you can get the help of the best counselor and make sure your family doesn’t suffer because of the debt you owe.
