by Ajay oberoi | Bankruptcy, Credit Counseling, Debt Management
The break-up of a marriage or common-law relationship has certain financial ramifications for both parties, including the splitting of assets and the creation of equalization payments (support).
However, both can be financially draining on one partner (and sometimes both) and could lead to bankruptcy.
So, what happens if one of the “exes” does file for bankruptcy as a result of financial hardship following the breakdown of the relationship?
Bankruptcy basically results in the liquidation of property (houses, cars, RRSPs, etc.) in order to pay off a portion of the outstanding debt (mortgages, loans, credit cards, taxes owing, etc.).
In the event of a bankruptcy following a divorce, the equalization payment also becomes an outstanding debt and the spouse being “supported” will have to settle for a reduced payment according to the bankruptcy payment agreement. However, spousal support does get preferred status in the bankruptcy’s payment distribution schedule, meaning it takes priority over other creditors such as credit cards and the amount outstanding is still payable after the claimant is discharged from bankruptcy.
So, in a nutshell, say John is supposed to pay Jane $1,000 a month for support and owes her $15,000 in back support. The trustee rules that over the course of his bankruptcy, John will pay back the $12,000 owed in the year prior to bankruptcy in addition to a percentage on the outstanding $3,000, and when he is discharged from bankruptcy, John still has to pay Jane the outstanding balance on the $15,000. Say John pays Jane $13,500 over the course of his bankruptcy; he still owes her $1,500 after he is discharged from bankruptcy. These are just examples for easy calculations and not indicative of actual payment schedules.
Now, the family home throws a wrench into the bankruptcy works. Under Canada’s Bankruptcy and Insolvency Act (“BIA”), the trustee liquidates the claimant’s assets to settle debts, but he can’t very well do that if the spouse with custody over the children is still living in the family home.
There are two solutions: force the sale of the family home in order for the bankruptcy claimant to realize his/her share of the asset’s value, or facilitate the sale of the claimant’s share in the home to the spouse receiving equalization payments. There are difficulties with either solution.
In the case of the former, provincial law may prevent the sale of the home due to the resultant financial hardship created for the child(ren)’s guardian, disruption of the child’s life, the availability of suitable alternative housing in the area of residence, the employability of the supported spouse (especially if he/she is required to stay at home to care for dependents), and even because of the history of the spouse and children in the family home.
Although preferable and perhaps an easier avenue toward asset liquidation, attempting to facilitate a sale between ex-spouses is dependent on the spouse taking possession of the house being able to secure suitable financing to purchase it. Again, that depends on the employability and financial stability of the spouse.
Either way, bankruptcy does make a difficult time more difficult for both parties in the separation but in the end, the bankrupt individual has a fresh start financially, and the supported spouse receives regular support payments (as opposed to the deadbeat’s “not at all”). In case if you want any help regarding debts call 416 650 1100 or visit www.gtacredit.com
by Ajay oberoi | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Debt Management
We all belong to a generation of people that works hard to get going with life in terms of money. The economy does not come easy on us anymore. On top of that, being young has its own perks and downsides in this regard. We have our own sets of needs, wants, and desires. The new model of the Hoover board in town, that new sushi bar that just opened in your locale, birthday gifts for your loved ones, and what not – there’s a lot we have to take care of. After all, we all are working so we can have a comfortable life. However, living in times as unpredictable as today’s, we can never be too sure. Whenever people hear the word “saving”, they immediately think that they are being asked to give up on their wants and start cutting back. That is not entirely true.
Saving has become important because it acts as a cushion in a hard time. It takes away all your anxiety when you are busy spending on your favorite pair of shoes or stocking up on those neon-colored socks. Saving does not mean cutting back; it only means that you do things a little differently, and spend a little differently. It is all about perspective. To make sure you don’t see saving as a financial constraint, here are some tips that will make it easier for you to save more and spend in a better way in the long run.
- Start by taking your own lunch from home at work, so it saves you the extra expenditure on meals every day. Start doing your laundry at home instead of giving a pile of clothes to the washer every week. Put that washing machine to serve the purpose it is made for. It will save you the cost of weekly laundry. The point is, start eliminating extra expenses by seeking alternative, cost-effective methods to get them done.
- Do not stack up against your debts. Pay them off as soon as you can. Pay off all your fines, tickets, bills, and loan payments. All these expenses will only accumulate interest over them if kept on hold for long. These expenses are easy to brush off, it is human nature to delay what they do not want to deal with. However, paying them right on time will leave you with more cash to use, once this liability is done with.
- Whenever you get your paycheck, it gets more tempting for you to go and spend it on all the things you have been wanting for the entire month. Don’t do that. Make a commitment to yourself to make only one or maximum two big buys from each paycheck. This is because you cannot be sure what expenses you might have to incur later. This is why you must have some amount saved in your account and not spend it entirely on your wish list.
- Open a savings account. It is always a better option than putting all your money under the mattress. It allows you to save your money while giving you an extra amount over it every month. Who does not like extra? This way your money will not be spent on useless gains, and you will always have something in your bank accounts for your rainy days.
by Ajay oberoi | Consumer Proposal, Credit Counseling, Credit Repair, Debt Management
Buying the first-ever house is like a dream come true. The four walls, a roof to sit on, and the fences around it with a small vegetable garden – yes, all those who have gone through the process can understand the sentiments involved here. If you see it from a buyer’s perspective, you will understand that for them it is not a house they are buying, but a home they intended to make. So, it has to be perfect. However, we should not forget about the most important factor involved in this process: how to finance this decision. Mostly, people go for the house loan option. It is easy and it lets you have your dream instantly come true. It allows you to pay them off while living in your new comfortable home. However, there are few steps that must be taken, before you finally succeed in getting a house on loan.
- The first thing to do is to fill out a loan application, after which your application will be sent for review. Once your application is reviewed and approved, you will be given a bank letter stating the amount of money that has been approved for your house loan.
- After getting the bank approval letter and getting all your documents verified, you can go out and start looking for the house, ideally the one that comes under the amount you have been approved by the bank and whose monthly mortgage installments you can conveniently afford. It will be better to hire an estate agent so you can get a house at fair market value.
- Once you have selected the house, you will have to start the bidding process and your agent will help you with it. When you have chosen a house, you will make the purchase and send those details to your lender, who will use those documents to start your loan process.
- After the process has begun, the bank will visit and put the house under appraisal to make sure that the property you have purchased is up to the city standards, and the money they have lent is being used in its exact purpose.
- You will need to hire a mortgage consultant who will sit with you and work to make sure that the house you are buying is insured, all the reserved rights have been transferred in your name, and that there is a smooth transference of all the legal rights from both ends.
- Your house loan will finally be approved once all the qualifications have been met and the house fits on their set standards. After that, a final date will be set where you will go sign the papers and close the deal. From there on, your loan servicing will begin.
by Ajay oberoi | Consumer Proposal, Credit Counseling, Credit Repair, Debt Management
Living in this economic era is not easy. It can leave you exhausted, deprived, and confused about how to make do with your limited resources. It is true, resources are scarce, and we have to work too hard to earn them, which is why sometimes it becomes difficult to go on spending the way you like. There are always things we need to save for. When it comes to savings, the first thing that comes into our minds is to create a budget and stick to it in order to avoid spending more than it is needed.
Talking about living on a strict budget, let’s admit that it is not easy at all. However, it’s not that difficult either, if you manage to take care of a few things. It all depends on your attitude and how you manage your resources. If you have proper management, then even little may seem more. However, oftentimes, I have seen people making such mistakes that only make it difficult for them to stick to their budgets and give in to their spending habits. Living on a budget is not that difficult, but there certain things that make it hard for people to stick to it.
- While deciding to live on a budget, we need to know what we are aiming for. You must know what you are cutting back for, what will be the end result, and what will you achieve after all these savings. You need to have a clear goal in your mind. There is always a precursor, a need that makes us restrict our spending. Otherwise, the retrains will take over you after some time, and you will lose all the motivation to carry along with your plan. You can only stick to a budget if you have a motivating goal in front of you – a holiday, new mobile, or if you are going big, then probably a new house by the lakeside!
- Yes, the whole purpose of making a budget is to limit your expenses and tie the loose ends, which you can trip over. However, a fixed budget will only leave you stressed and burned out. You need to ensure that your budget is flexible enough to incorporate some adjustments. If your budget is too fixed, you will eventually give up. You do not have to think that just because you are on a budget, you cannot afford to treat yourself on a good dinner or drinks with your friends in the afternoon. Be realistic and have some flexibility in your budget.
- There are certain expenses that only need to be paid once a year. They almost get lost at the back of our mind and you might not remember until the deadline arrives. It could be your car tax or your yearly online subscriptions – all these can come up all of a sudden, leaving you in panic, and take a hit on your budget. Avoid this. Calculate all your one-off expenses and take out a little amount for them from each month’s budget, so it doesn’t become a headache at the end.
by Ajay oberoi | Credit Counseling, Credit Repair, Debt Management
When you are starting a business, especially if it’s your first entrepreneurial venture, you have many emotions attached to it. You are excited. You are hopeful and yet doubtful. You are almost overwhelmed. This is all because, behind all those emotions, there is one worry that keeps you on your feet – how to fund your business. You have the vision. You have the goal. You have the enthusiasm it will take to run that business. However, what you are short on is cash to run that business. Young entrepreneurs are often faced with this dilemma when starting their first business and maybe this is why many of them bail out on the journey before it has even begun.
You do not necessarily have to have a drawer full of cash to start your own business. You can go to venture capitalists to invest in your business. You can pitch your idea to someone who has the money, time, or resources to put in, or you can choose to apply for a loan to start your small business. Getting a loan to start up a business when you are fresh in the market with no background or history to prove your credibility might turn out to be a daunting experience. You might be focused on all your dreams, visions, and aspirations regarding your business, but the lenders would only care about you having a secure way to pay them back.
However, we are listing down the basics you should check off on your list before applying for a small business loan.
- Before you go to a lender to ask for a loan, you need to have a strong business plan to back up your business claims. It should include all your future budgets, prospected sales, and all the expenses you will have to incur. You must also include all your revenue resources, as well as your suppliers and customers. All this must be laid down clearly in the form of a solid business plan, so your lender will be convinced that you are diligent about your plans.
- You cannot expect the bank to give out a full-fledged loan to you. They sometimes do, but many times the bank would want you to contribute at least 15% – 20% of what you are borrowing from them. It is possible that you will have already saved up some amount before going to the bank. Other than that, have any collateral ready to put up against the loan because it is a new business, an uncharted territory – the bank needs this security.
- Get all your documents ready before going to the bank. Your credit receipts, your income statements, your tax receipts, all the future projections, everything that can be legally required by the bank. Call them up and inquire beforehand what they will be required, and then take that along when you go to meet them.
- The bank will need to see something official here. You need to get your business registered and obtain all the permits and licenses that you will need to operate your business activities. The bank will verify them and ask you to fill in credit forms. After that, you will have to wait until the lender makes their decision.
