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.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Consumer Proposal is the answer to serious debt problems in Canada. It is a legal agreement between the lender and the creditor that offers the creditor a chance to payback an amount that is lesser than their debt. Insolvent individuals, who cannot pay off all their debt on time, and do not own any such assets, can qualify for consumer proposal.
There are a lot of advantages of considering consumer proposals over bankruptcy. Some of them are discussed below.
1. Reduced Payback Debts
When an individual, who is under a huge debt, files for consumer proposal, their debt is reduced. This means that after filing for consumer proposal, they only have to pay up to 30% of their debt amount. This encompasses collection debt, credit card debt, income tax debt, overdrafts, and line of credits.
2. Protecting the Assets
Unlike bankruptcy where your assets can be taken away from you, consumer proposal protects them once it gets accepted. These comprise of your vehicle, cottage, house, RESPs, and RRSPs. While you are managing your debt, you need to protect your assets too, because these are the only things you are left with after your retirement. Nevertheless, you just need to keep making payments till the duration that has been accepted by your creditor.
3. Affordable
Not only is the process of filing for consumer proposal less expensive, but also the amount you are supposed to pay to the creditor is decided on the basis of your financial capability. Additionally, it takes around 60 months to pay off the proposal therefore; you can save the debt repayment amount by saving from your monthly expenses and become debt free once the period of 60 months are over. By paying at least a particular amount of your debt, you will feel an ownership and responsibility of doing something about the problem yourself. Moreover, this option is best for people who cannot pay the entire amount, but can pay back some of their debts.
4. No Legal Actions against You
Once the application for the consumer proposal is submitted, you will be protected against any legal actions taken by the creditors, such as garnishment of the wages and harassing phone calls. You will not find these benefits in other debt reduction alternatives. Other debt managements take place through the negotiation between the lender and creditor.
5. Simpler Process
The process to carry out consumer proposal is quite easy and uncomplicated. You can take the help of a counselor to create a proposal that the creditors will agree on, and is also in accordance with your interest and budget. Filing of the proposal is the next step, and lastly, after you have gotten a green light from the creditor, you will make payments on a monthly basis.
If bankruptcy is your least favorite option, then apply for consumer proposal. You can also take help of counselors that are experienced in the field to help you decide on which options you should settle for.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
A number of people find themselves in a position where they need to get a loan even after they have gone through the consumer proposal. The best part is that you have made it through the consumer proposal, and now you have better control over your finances. Do not feel bad that you had to go through this because these processes were made for us to financially reestablish ourselves.
Now, the question is, can you qualify for mortgage loan in Canada after you have completed your consumer proposal?
Time Duration
During the consumer proposal, the bank will not lend you any money as you are already under debt. The individual has to wait for up to two years after the discharge to be regarded as a candidate for loan. This is because the bank has to make decisions in their interest and many times, people stop paying the consumer proposal amount and declare bankruptcy in the middle of the process.
Bank Requirements
The bank will decide if you are eligible for mortgage after consumer proposal or not. This judgment is made on the following criteria.
a. Low Debt Income Ratio
Your debt income needs to be low, if you have not developed a balance on credit cards after the proposal is complete. You will be at risk because you will be in debt of more money than you are earning.
b. Stable Job
Second thing that the bank will take into consideration is how stable your job is. Your income and the length of your employment will also be verified. If you do not have a stable job, or a steady source of income, then you will have hard time convincing the lenders to provide you with the money.
c. Credit Score
Lastly, your credit score will be examined, which has the power to either grant you with mortgage or not. If you are applying for mortgage just after completing your consumer proposal, your credit score will be low. Therefore, you need to acquire strategies to boost your credit score and credit rating.
Moreover, after you have completed the consumer proposal, you can wait for some additional time and then apply for the mortgage. During that time, you can work on enhancing the credit rating because you will only get the bank’s approval if your credit score is good enough. This is the most important criteria out of the three. Individuals who are not able to meet this criterion will not get the mortgage loan even if they meet the other two conditions.
People can also carry out a credit check on themselves before they make an application on their mortgage approval. The credit bureau should include the right date of the completion of consumer proposal, and the creditor of the consumer proposal must be shown inactive. This way, you will correct the blunders before filing the mortgage application.
You can also take the help of a counselor to guide you regarding mortgage and your eligibility. Even if you do not qualify now, you will be provided with directions that will facilitate you in the future.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Declaring bankruptcy will free you from the unsecured debt, and give you a discharge, but it will remain on your credit history for up to 7 years, 1st bankruptcy. However, it does not mean you cannot improve your credit score during this time span. If you live in Canada, and are looking for ways to improve your credit ratings in order to get a car loan or secured credit card, then follow the steps mentioned below to enhance your chances.
Paying Bills on Time
After declaring bankruptcy and getting a discharge, the bank monitors the spending habit and other finances of the individual to ensure that they do not fall in the same pattern again. In order to show them that you are responsible enough, and also to improve your credit ratings, you need to pay all your bills on time. Whether it is water, internet, gas, or cable bill – all this could really have an impact on your credit ratings, and will inform your lender that you are managing your finances well. This will later help you in scoring a secured credit card in around 6 months.
Contract Cell Phones
The best part of contract cell phones is that you have to pay the bills on the monthly basis. Once you apply for a contractual cell phone, your payment details will be sent to the credit bureaus on a monthly basis. If you are paying all the bills in a timely manner, you will be portrayed as a responsible individual, which will automatically boost your credit score.
Wait for Some Time to Apply for a New Credit
Gaining the trust of credit lenders is essential, if you want to get a new credit. However, it is not an easy process. It is normal for the lenders to reject your new credit application even if you are paying your bills on a timely basis every month. So if you are rejected once, do not lose hope and patience. Make sure you are not applying for a lot of credit, and also that there is a gap of minimum of 6 months between applications. If you do not follow this, your credit report will bear the consequences, as the result. The longer you wait, the better outcomes you will get.
Secured Credit Card
Once you get the secured credit card, you initially have to deposit the sum of $1,000. This will secure your credit limit, so that if later, you are not able to pay the money, this money will be used to make those payments. Since the reporting of your credit to the agency is also taking place during this process, you will be reestablishing the credit score by paying the entire amount of credit card bill on time.
Save Money and Don’t Overspend
If you properly budget your money and save it, you will not be needing loans if an emergency strikes. Therefore, saving plays a really important role in rebuilding the credit score. You can use this money as a security deposit or down payment, and face the problem without getting into debt. Moreover, while spending from your credit card, know your limit and do not end up spending more than you can afford.
Follow these 5 tips, and your credit score will improve in no time!
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
A Consumer Proposal and a Division 1 Proposal are two different types of proposals as stated in the Bankruptcy Insolvency Act (BIA). While both the proposals can be availed by Canadians, but there are some differences in the two which might give one precedence over the other.
Consumer Proposal and Division 1 proposal:
Before we move on to the differences between the two proposals, let us first have a look at what each of these proposals is actually about.
Consumer Proposals were designed to help people settle their debts as an alternative to filing for bankruptcy. A person having a debt of or under $250,000 can file for a Consumer Proposal. Amount of debt exceeding this limit would mark you ineligible to file for this proposal.
Also known as a ‘Commercial Proposal’ , Division 1 proposals were initially designed for business owners who wanted to deal with their debts without having to sign up for bankruptcy. However, it is available as an alternative option to individuals as well.
Now, we shall discuss the differences between the two proposals. The first and the most obvious difference is in terms of the amount limit each of them carries; as mentioned above the Consumer Proposals have a limit of $250,000 whereas the Division 1 Proposals are limitless.
Another major difference between the two is that if you are opting for a Division 1 Proposal, but have not been able to strike a successful negotiation with your creditors, you are required to file for bankruptcy. There is no such concept in a Consumer Proposal; filing one and not being able to negotiate anything with your creditors simply would bring you back to square one from where you first started, you would not be asked or required to file for bankruptcy unless you make your own call for filing one.
The third difference and probably the most important one is this that Consumer Proposals are a simpler process with Division 1 proposals being more complicated. Once you have filed for a Consumer Proposal, the decision is passed on to the unsecured creditors who have a period of 45 days to vote either for or against the proposal. They may even present a counter-offer of their own. Consequently, if majority of the creditors have voted for the proposal, the proposal is marked as approved 15 days later.
In a Division 1 Proposal things are more formal; within 21 days of filing this proposal, a Meeting of Creditors is held. At this meeting, the Trustee presents a report which covers the person’s business and financial affairs. Consequently the Creditors then decide whether they want to vote for or against the proposal which ultimately decides whether the proposals gets accepted or rejected.
The only thing you need to keep in mind when choosing between the two proposals is this that go for a Division 1 proposal when you have high levels of debt to settle, otherwise a Consumer Proposal may be enough for you.
