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.
by admin | Bankruptcy, Uncategorized
The initial goal of any person who is facing debt is usually to ensure that their family won’t face any trouble if they file for a bankruptcy, particularly their spouse. The question regarding the impact of a bankruptcy on the partner is also commonly asked by those who are suffering from a debt, and looking for the right options. Let’s see what the law has to say about it.
Joint Debt
It is assumed that since you are married to that individual, they are logically responsible for your debts as well. However, this is not how it works in Canada. Your spouse is only accountable for your debt if it was acquired jointly under your names.
So, if the wife signed for a credit card before marriage, the husband is not lawfully responsible for the debt on those credits just because he married her. But if there is a mortgage or a joint credit card that you have signed together after the marriage, then both of you are liable to repay the debt.
One Filing Without the Other
The option to file for bankruptcy without the other partner is also provided. If a wife files bankruptcy without her husband, it means that the wife has discharged her debts. However, the husband still owes money in a jointly held debt. The credit report of the wife will show bankruptcy in it, while the husband’s credit report will remain the same.
In case where the husband’s credit report is damaged with bad ratings because of the wife’s bankruptcy, the responsible agency should be informed, and the issue needs to be resolved on an immediate basis. In conclusion, the credit report of the spouse who is not filing for bankruptcy should remain the same, and changes will only take place in the credit rating of the spouse who is filing for the bankruptcy.
Non-Joint Debts
As the name suggests, these are debts that you haven’t co-signed with your partner, therefore it will not affect the credit report or the rating of your partner, nor will they be in debt because of your debt. The balances are entirely your responsibility; however it may concern your spouse indirectly later on.
If you and your spouse are considering buying a house after the discharge from the bankruptcy, you might face difficulty in qualifying for the mortgage. The reason is that bankruptcy is visible in your credit report; therefore it will be challenging to buy a house together.
Supplementary Credit Cards
When an individual applies for a credit card, they also get a credit card for their partner. If your husband or wife signs up for that card, then they are also legally responsible for the complete balance owed. It doesn’t matter if the account is in your name. Hence, it is essential to check your debts to make certain that your spouse is not in any of the joint accounts, before declaring bankruptcy.
Divorce or Separation
Just like marriage cannot make the other partner liable for the non-joint debts, the divorce doesn’t remove the joint debts either. You can divide your property, but you cannot divide the debt. Both the parties will be equally responsible for repaying that debt, irrespective of the legal separation or divorce agreement.
To understand the complexity of the matter where spouses are involved, you can look for the best counselors, who will inform you about the other alternatives to make the process of bankruptcy simpler for you.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
People struggling with debts are usually under a lot of anxiety and stress from just thinking about how they will repay them. Well good news: there are more than a few options that might work for you. Each of these options will vary for each person with different situations therefore it is only wise that you take the time out and consult a licensed insolvency firm or consultancy to discuss all your options first and then plan your repayment options accordingly. Your options include:
1. Bankruptcy
When discussing all debt repayment options, it is only wise to start with the most basic one: bankruptcy and work our way through. This type of debt repayment method involves minimum obligations and money that the creditors are likely to receive once the person files for bankruptcy. Usually people have to repay a very little amount of money to attain relief from their debts.
2. Consumer Proposal
The No.1 alternative to bankruptcy, consumer proposals allows a settlement offer with the creditors to repay a portion of your debt over a fixed period of five years. Once you pay off that fixed portion of your debt to your creditors, you are a free man; the remaining debt will be released. But the creditors must be offered or be able to receive much more than they would have received in a bankruptcy. If majority of the unsecured creditors approve of your consumer proposals, others too have to comply with it in case of few exceptional debts.
3. Debt Management Plan
Debt Management plan (DMP) is a viable option to repay debts. You simply need to consult your certified non-profit counselor if you can keep up with a budget with reduced interest rates. Debt Management Plan will help you pay all your debts in a period of a five years with reduced or no interest at all. In case your debts are tax debts, DMP will be of no help.
4. Consolidation
Consolidation may seem like a good idea if you are overburdened with debt. In consolidation of debts, the bank usually lends enough money so that you can combine all your debts into one with lower interest rates. This means reduced monthly payments, making the debt more affordable than before and additional repayment duration. However, this may not be an option for those who already have a bad credit rating.
5. Sell Assets or Liquidate
You may have sufficient assets to sell to pay off your debt but you may not be willing to do so, especially if it means selling your house and uprooting your family. Not only that there are other things to consider when selling assets such as home since there are possible tax consequences and their long term impacts on your retirement plan. So be sure if you want to go that way.
6. Budget
If you can make a budget work for you, you can easily repay your debts over time. If a person believes that just be reducing his spending he will be able to repay all his debts in a given amount of time, it is better to consult a credit counselor to kick start your budgeting plan. But once you do, stick to it.
by admin | Bankruptcy, Uncategorized
Going bankrupt is a shameful state to be in. Having to file for bankruptcy is a thing we all hope never to face in our lives. There are a number of repercussions to go through when you consider filing for a Bankruptcy. But it doesn’t mean that your life, career or financials can never be recovered. There are a number of ways one can recuperate from the setbacks caused by bankruptcy and plan ahead of time to never be in that position again.
Bankruptcy Paperwork
It is of great importance that you keep copies all the documents, paperwork, bankruptcy petition, order of discharge as a record for future. These may come handy if you go bankrupt the second time.
Check Your Credit Report
It is also recommended that you keep a check of your credit card report every few months after you receive your bankruptcy discharge. A free copy of the report can easily be retrieved from the credit reporting agencies. This will help you keep note of all the discharged debts and check for any discrepancies.
Payment of Non-dischargeable debts
In case you have any in-disposable debts such as student loans(less then 7 years) you may need to make arrangements with the creditors on how to pay them. Student loans usually receive forbearance for the time you were insolvent. Other programs such as income-based repayment can also be opted to lessen the burden of debt.
Rebuild your Credit
If you want to rebuild your credit rating, obtain a secured credit card. It uses the money deposited in a bank as surety for the credit card. It is much easier to attain as some creditors don’t even require a credit check before offering a secured card.
But keep in mind not to use more than 10% to 20% of your available credit. This means that if you have a limit of $1,000, don’t use more than $200 at one time. The purpose is to rebuild your credit rating so be responsible. If you plan to buy a house and paying less 20% down-payment, CMHC required two credit cards with minimum $1,500 limit.
Timely payments for house
Simply continue to make them monthly mortgage payments if you didn’t reaffirm your home mortgage loans and plan to keep it. But remember, the bank still has a lien on your home; meaning it can foreclosure if you fall back on your mortgage payments.
Timely payments for vehicle
If you wish to keep your vehicle along, keep paying the monthly installments. The lender can reclaim if you fall behind on your payments.
Update Your Will
It is advisable that you review your will after the whole bankruptcy episode has finished. In case you don’t have one yet, consult credit counselor or Trustee
Savings plan
Pay yourself first. Even if it is a matter of few dollars per day, keep it saved for unanticipated emergencies. It may seem insignificant or worthless at the moment but even the smallest amounts can add up to cover expenses in the longer run.
These may seem like things easier said than done, but if you keep an account of all these details you are ensuring yourself a secure financial future.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
While most consumer proposals are filed individually, it is also a possibility to file for a joint consumer proposal. When two people have nearly substantial debts they are eligible to file a joint consumer proposal, legally referred to as “commonality of debt”. Debts however don’t have to be identical but as a general rule of thumb more than half of your debts must be common.
But whether it is a good idea or not depends on the circumstances at hand. Here’s what you need to know before considering your options.
Advantages of a Joint Proposal
Reduced Total Payments
Joint consumer proposals can be filed even with less offering to the creditors’ altogether. For example if you were to file two separate consumer proposal you may have to give 50 cents per dollar (25 cents on each). In a joint consumer proposal banks may also accept 35 cents per dollar offer, making them less expensive.
Combined Debts
A separate proposal limit is usually up to $250,000 excluding the mortgage, whereas when co-filing a joint consumer proposal the limit exceeds to $500,000.
Easy management
It is obviously easier to manage payment per month than two separate payments. This is less stressful than taking care of individual payments.
Disadvantages of a Joint Proposal
Although joint consumer proposal may seem like your best option, here are some of the cons that you simply can’t neglect.
Creditor votes ‘no’
A creditor may be willing to accept a proposal from one person but due to prior difficulties of the other ask for a lot more money to accept his proposal. In under such a circumstance there are chances that the creditors will say no. This would not have happened if both the parties had filed the consumer proposal individually.
Divorce or separation
Suppose the husband and wife had filed for a joint consume proposal and then went through a divorce, then that could be a potential problem. If one spouse kept making half payments while the other rejected to do so, the whole proposal will be nullified. So the key to remember is consider all the pros and cons beforehand and make sure that if such a time comes, you both will fulfill your obligations.
Credit Rating Impact of Filing a Joint Proposal
In most cases joint or individual consumer proposals have similar substantial impacts. All your debts are reported as an R7 and after you make all the payments the proposal remain for three years on your credit report.
The only difference can be observed if one spouse pays off all his debts before the other. For example one spouse paid off debt in two years and the other in 4 years. Proposal on the second spouse will obviously remain longer on his credit report.
However, if one spouse wants to rebuild credit faster, it will be more sensible to file two separate proposals and devote all the additional funds into paying one off first. But it is always wise to pay off all the debt as soon as possible which is why joint proposals present a preferable option.
by admin | Bankruptcy, Uncategorized
Whenever we hear the word bankruptcy, an image of an irresponsible individual struggling to control his budgets or pay his debts comes to mind. Bankruptcy is often considered a disgrace. It is a word people want to stay away from, as far as they can.
A number of people file for bankruptcy as they are unable to control or find themselves in need of financial constraints. But that’s not something to feel ashamed about.
The article focuses on some of the most common myths about bankruptcy that demands to be diminished.
Myth of losing everything you own: True to some extent, but not entirely.
Creditors will take most of your assets because they expect their payment in some form, but you will be allowed to keep the legally secured ones along as long as you keep making the installments on leased goods. RRSPs and RRIFs are often exempted from bankrupt rules
Different territories apply different limits on bankruptcy policies. Some also allow you to keep your valued possessions such as pets, furniture clothing etc. whereas in some regions, these assets are divided equally among the creditors.
Myth that people will know that I am bankrupt: The ultimate fear why people don’t file for bankruptcy is that everyone will come to know about it ruining our image.
Although bankruptcy filings are public, they are not published in the newspapers if your assets are minimal. You will only receive through a notice via email. So unless you yourself tell all your friends and family, they won’t have a clue. Most importantly, the reason for filing for bankruptcy must be your financial safety rather than what the world is going to think of you.
Myth that credit rating will be ruined forever: That is absolutely false. The concept that bankruptcy will destroy your credit rating forever is not true. You can have credit ratings as early as nine months after of the discharge. Bankruptcy filed will show on your credit report of maximum six years but that cannot stop you from applying for credit cards or loans only after nine months and can be re-established.
All your debts will be erased: You can only wish that were true. However, the following debts are exempted from bankruptcy i.e. these still have to be paid.
• Car Loans
• Mortgages
• Spouse and child support
• Student loans
• Court fines and Assaults
Myth that my spouse credit rating will be destroyed: Credit ratings of your spouse will only be affected if he/she co-signed your loans and credit cards. If this is not the case, your spouse shall not be dragged into the scenario. Creditors have no legal right to go after your spouse if you have bankrupted. But on the other hand, the spouse must pay all the their due debts
Filing for liquidation is an important issue. It has to be taken after viewing all available options. However, the myths suggesting bankruptcy filing is shaming yourself or showing how incompetent you are when it comes to managing your financials, are not true at all. In fact, it is the opportunity to start with a clean slate.
