by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
How refinancing can help modify your house
Basically refinancing your mortgaged home denotes the pay off, of loan and its replacement by another loan. There may be many uses for refinancing such as taking advantage of LIRs (lower interest rates) utilizing the huge equity of your home to buy something of high value, or to allow massive renovations to your house in order to turn it into a dream home.
Broadly speaking refinancing should not be undertaken for small projects such as putting up a spare window or replacing a warped door or covering the gate with a fresh coat of paint but for bigger projects. These may include putting up a sunroom near the front garden or creating a spare bedroom or completely overhauling your house. This would have the dual purpose of not only allowing your house to look better and be a more comfortable for you and your family but it would also greatly appreciate the overall value of your property.
Such refinancing may allow the homeowner a substantial amount of funds for large scale home improvement projects. Once the prospective home owner has been declared to be eligible for refinancing by the financial institution, (this outcome may be dependent on his credit history) they may potentially be able to refinance a sum of money that may even be greater than the original mortgage amount they had acquired initially. This excess liquid cash may then be utilized for any costly home improvement project.
To get the most value for the funds you have acquired through refinancing, it is advisable to go for only those renovations to your house that increases the overall value of the property. Since not every home improvement plan has the potential to increase the value of your property so choose carefully as to what works best for you. (Bathroom, kitchen and sunroom upgrades are generally considered very popular in Canada these days)
Important points to consider before availing the refinancing option
However, the refinancing option for major home improvement upgrades should be undertaken only after careful deliberation due to a variety of reasons:
- If you have utilized a ‘cash back’ option in addition to your refinance, your cumulative debt may actually increase and in the long run you just might end up paying markedly higher monthly repayments.
- You should also keep in mind that home renovations are no guarantee that your property value might increase and once you have renovated your house you would be selling it at a profit and moreover, will also be able to pay off all your debts.
- The real estate market tends to be mercurial and subject to change with Canada being no exception to the rule. Should property prices register a steep decline once you have availed the refinance facility, you would be paying off more then you could earn from selling your home
- It pulls equity out of your home, thus effectively eroding your investment.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Going bankrupt is a tough time indeed for anyone and it becomes even more stressful when a bankrupt individual decides to try and get a job in order to make his financial position more tenable. There are a veritable host of questions in his mind that might make the prospect of future employment quite daunting. However, it is not as bad as it looks. Here is why:
Effect of Bankruptcy on Job Applications
When it comes to government employment, no agency in Canada may consider your bankruptcy when deciding whether to hire you. Unfortunately, this rule does not apply to the private sector. And it is certainly possible that a prospective employer in the finance industry would be wary of hiring you especially when it comes to dealing with sensitive tasks such as making or supervising the disbursement of payrolls, general accounting and the like.
Honesty is the best policy
The key thing is to be upfront about it and to refrain from hiding your financial history if your prospective employer asks you. Rather than ‘fudging’ the question or out rightly lying (an almost certain way of losing out on your prospective job just when you need it the most) it is always better to speak the truth. If not for any other reason than the simple one that many prospective recruiters conduct a summary credit check on almost all would be employees as a matter of course. All details of your bankruptcy would be shown in that report and if you have lied, it would seriously tarnish your reputation as well as any chances of gainful employment in that organisation, since its altogether very easy to find out any information about your bankruptcy from your credit report.
While it is certainly true that all potential employers do require your specific permission before they can extract details of your credit history, however not giving consent to access such information would almost certainly compel any prospective recruiter that you have something to hide and so deny you any employment opportunities in that organisation. Therefore, it would always be in your own interest to be honest and up front about your bankruptcy during the application process.
Losing a job due to bankruptcy
As a general rule being bankrupt does not automatically mean that you would end up losing your job due to the fact that your personal financial history should not have any visible affect on your work. Your employers have no legal ground to dismiss you per se.
However, that does not always hold true and there are certain cases where your financial history may prove detrimental to your current and future job prospects, such as:
- Being employed in the financial industry including banks and other money lenders that deal with their clientele’s money (and therefore trust)
- If you are a credit councillor or an insolvency and bankruptcy lawyer, your current employers may not wish to allow you to continue in that position.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Not all of us have the financial wherewithal to stay out of debt. Sometimes we simply want more then we earn or just want to impress our neighbours, friends or our spouse and so we spend more than we are capable of paying back, or alternately make financial decisions that lead to disasters. Under the circumstance we have to understand how it would affect our better half, both in terms of legal ramifications as well as the emotional toll on the marriage itself. While on his or her part, the spouse has to understand the tremendous trauma you are going through when you are on the verge of declaring bankruptcy and losing all of your property.
Legal ramifications
If you were to file for bankruptcy in Canada, just remember that doing so will ‘not ‘directly affect your wife, husband or common law partner. This is primarily due to the fact that your loans and bills are essentially ‘your” loans and the “In sickness and in health till death do us part” bit of your marital vows does not make your spouse liable to pay your debts. Once you declare bankruptcy your personal debts would be recovered from you through your property and your spouse will not be legally responsible for them.
It is however, a fairly common misconception that spouses are somehow responsible for each other’s debts. This is quite simply not true in spite of collection agents telling you that if you do not ‘pay up’ they will approach and extract the required amount from your spouse. This is nothing but a blatant ‘scare tactic’. You and you alone are wholly and solely responsible for your own personal debts.
However there is an exception to this cardinal rule and that is if it’s a ‘joint loan.’ Or alternately if your wife, husband or common law spouse has signed on as either a guarantor or a co-signee to the loan in which case he or she is also legally responsible for the debt as well. The loan may be either a bank loan or a credit card bill issued to the same account. However, in case of a supplementary credit card issued to him or her under your instructions and on the basis of your personal account than you will be responsible for paying the bills accrued on that particular card.
Movable and immovable assets
Quite apart from debt, once bankruptcy has been filed, a key problem (that a married couple may potentially face when either one of the spouses becomes insolvent) is the evaluation of who holds which assets. If your spouse holds property in his or her name only than it will not become part of bankruptcy proceedings. For example if your husband’s home is in his name only, then it would be party to bankruptcy proceedings provided you have filed for bankruptcy rather than him. However, if the property is in his name and moreover, he has become insolvent and filed for bankruptcy than he might lose the property, even though you would also be living in the same house.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
The rather unusually named ‘debt snowball’ strategy is a method many credit counselling agencies espouse as a means to help reduce your overall debt burden over an extended period of time. This stratagem is not all that difficult to master one you are able to understand it completely.
Essentially, how the system works is that if you have more than one credit card debt, you are required to pay off the smallest debts first while making only minimum payments of the larger debts regardless of how large they are.
Once the smallest debts have been completely eliminated, you may than move on to the next smaller one while following the same concept of paying more for the smaller debts and keeping away ever impending solvency by making minimum payments of the larger debts, overall.
Slowly and gradually, as all your smaller debts are eliminated one by one, you may then increase the payment amounts of your larger debts rather than continue to pay the minimum amounts you were making before to your credit card service providers. Eventually, your larger credit card debts would also be paid and you would be finally able to live a debt free life once again.
How it works
The ‘Debt Snowball’ method aims to get rid of smaller debts first even if they are charging low interest rates and encourages you to make only minimum payments of even high interest loans regardless of how much higher they may be.
According to this strategy, the money that you earn every month will be utilized to pay off the smallest debts first (however, you have to make sure that it does not affect your basic living expenses since then you would be forced to take even more loans effectively exacerbating the vicious cycle) while the minimum dues on your other loans are paid irrespective of the fact that their interest rates are steadily increasing and you may in essence have to end up paying ‘interest on interest.’
However, if you have two or more credit card loans whose payables are roughly equal, then many credit counselling agencies advise paying off the one whose interest rates are higher.
There are some key factors to take into ‘account’ (pun intended) while attempting to create the proverbial ‘Debt Snowball’
1. Stop spending beyond your means!
This is the most basic step of all. You can’t really expect to live a debt free life if you continue to use your credit cards to spend money that you don’t have, while being well aware of the fact that this is the single most important factor that is responsible for putting you in debt in the first place!
2. Be Myopic
Most credit counselling companies that use the debt snowball approach also advise you to acquire ‘tunnel vision’ instead of trying to pay off all your bills simultaneously. When it comes to credit card bills, focus on only one bill at a time and start on another one only after the first one has been completely paid off.
3. Don’t stop at the very first pay off
Once a bill has been paid off successfully, rather than using the money freed to buy non essentials, it is advisable to continue to utilise that sum to pay off the next bill. This process has to continue without a break till ‘all’ your debts have been paid off and you can now enjoy a completely debt free life.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
When you go to a creditor in order to get a loan, the first thing they want to know is your credit rating. A credit score is something that summarizes your credit history including your present financial condition. This is basic credit scoring, but there are certain areas of credit ratings that most people are unaware of. Following are some of them:
- Something as simple as paying your bills on time is something that could actually enhance your credit score.
- It is not only your financial history, but also a bad public record that can lower your score by a good margin.
- A bad credit score can even cause hindrance in getting the desired job. Many employers judge professionalism on the basis of how you manage your life – most importantly, your finances!
- If you have a good credit limit, you don’t have to use all of it. It is recommended to keep within thirty percent of your credit limit to keep your credit score in a good condition.
- Clearing your mortgage does not help in improving your credit score. Instead, when you’re not paying mortgage (even due to the fact that you have cleared the full payment on it), your credit points get reduced.
- Those old accounts that you no longer use might still be of use. The main reason for this is because your new creditors will feel safer when they get to see your long, healthy credit history. Unlike common belief, shorter (even though clean) credit history is not as good as a longer (and fair) one.
- Opting for a secured credit card is a better option for starters as compared to choosing an unsecured one, right away. In most cases, taking an unsecured credit card is not an option for people having no credit history.
- Don’t focus all your credit on a single loan instrument. Try to keep a mixture of different products like a credit card, a car loan, and a home mortgage etc. Focusing all your credit at one instrument is not considered very healthy.
- Looking to rent a place? Even landlords take a look over your credit ratings before renting the place, just to make sure that you don’t default on the rent payments.
- A credit score above 650 is considered a good score.
- In Canada, Equifax and TransUnion are the only agencies for credit reporting.
- Even staying at a single place for a longer period of time can improve your credit ratings.
- Try sticking to one or two credit accounts at most. This will help you manage your finances in a better way as opposed to having a lot of accounts. Furthermore, make sure your accounts have very little to no balance. This will help you in maintaining or even improving your credit score.
There are a lot of things that affect your credit scores. Therefore, to maintain a good one, you should be aware of most, if not all, of the factors that help in building a good credit rating. Damaged your credit rating already? Contact GTA Credit Solutions Services Ltd. (GTA CREDIT) to help you in getting your credit scores back on track.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
A number of Canadians are finding themselves under insurmountable debts. Whether it is because of some medical needs, student loans, mortgage loans, credit card loans or any other loans – when these debts get overwhelming and people start spending more than they can pay back, they are left with two options. These alternatives are consumer proposal and bankruptcy. Both of the options can help you get out of the debt; however, both have different ways to go about doing that. Below, we will discuss which option out of these two is the best for which type of candidate.
Candidate for Consumer Proposal
Consumer proposals are best for those individuals who want to keep their assets protected, and have a stable flow of income. The reason is that the creditors in this debt management are more interested in how much the individual earns, as that is the asset for them. They do not want your liquidated assets. Being insolvent and having a stable wage makes you an ideal applicant for consumer proposal. In addition, you will also be entitled to pay all the taxes.
Once you settle for consumer proposal, you have power over your finances and assets. The decision regarding what to do with the vehicle or home is entirely yours rather than of any bank or trustee. Additionally, the reports regarding bankruptcy will be sent for only 3 years.
Moreover, there are certain limitations of consumer proposal itself that are necessary conditions to be eligible for it. Not having the debt of more than $250,000 other than mortgage, and inability to payback the entire debt are some of the conditions, and even meeting the conditions do not necessarily provide you with the creditor’s acceptance. You will receive a certificate whenever your proposal is approved.
Candidate for Bankruptcy
On the other hand, people who are right candidates to file for the bankruptcy are those who want to free their unsecured debts. To be qualified to file for personal bankruptcy in Canada, an individual has to be under the debt of more than $1,000. This will provide the individual with financial relief and guard them from their creditors.
To settle the debt, the individual needs to be aware that they have to give up few of their assets. Moreover, the bankruptcy will remain for 6 years on your credit rating if it is your first time declaring bankruptcy. Those who get automatic discharge will find bankruptcy on their credit rating for less than seven years. Lastly, you are not obligated to pay the taxes, as you cannot afford to pay.
You can take help of counselors who can guide and advise you on your debt problems, and ways to deal with it. A professional insight will surely be supportive to help you move forward and take responsibility of your actions, and give you a financially fresh start.
