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 | Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Dealing with debt can be a nerve-wracking situation for most people. When we find ourselves face to face with our debts we assume that bankruptcy may be the only option we have which could possibly save us. However, if you are a resident of Canada you just may be in luck because you have an alternative to bankruptcy: A Consumer Proposal.
Despite the Consumer Proposal being one effective solution of reducing debts, most Canadians have never heard of the term. What is it? How does it work? And why it is better than bankruptcy, are just a few of the questions that may be going in your head.
Consumer Proposal vs. Bankruptcy:
We say that a Consumer Proposal is a far more powerful solution to settling your debts than bankruptcy and we say this with good reason. By filing for a Consumer Proposal you can take the debt which for some reasons you cannot pay at the moment, reduce the debt by two thirds or possibly even more than that, stop all the interest that may be charged on the money you owe and get five years time to pay back the owed amount.
During these five years you are safe in the sense that nobody can take you to court or sue you for not being able to pay your debt. The five year period that you are allotted takes off some of the pressure as it is a good amount of time in which you can arrange for money to pay back.
It is better than bankruptcy also because you would not be required to surrender any assets while agreeing to a Consumer Proposal. If you are still not convinced, here’s another reason why Consumer Proposals are a way better option to handle your debt than bankruptcy: when you opt for a Consumer Proposal you get an R7 credit ranking which is basically indicating that an agreement has been made between you and your creditors about how the debt would be settled. This R7 rating remains on your report for three years only. On the other hand when you file for bankruptcy, an R9 credit rating is assigned to your credit report which is the worst rating anybody could have and to make matters worse it remains on your credit report for about seven to fourteen years.
While we now understand why Consumer Proposal may be a good option for an individual in debt, but what is in it for the creditors? When a person in debt files for bankruptcy, the creditor gets nothing out of it whereas when he files for a Consumer Proposal the creditor gets something out of it. For example, you owe 20,000 dollars and you file for a Consumer Proposal which reduces the amount by some percent, consequently you have to pay back some amount of money, let’s say 200 to 300 dollars per month to the creditors, whereas in bankruptcy you just straight up cannot pay anything at all at the moment. This is why most creditors are more than willing to accept a Consumer Proposal.
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 | Credit Counseling, Credit Repair, Uncategorized
Perhaps the best reason to protect your credit is that good credit will help you obtain a mortgage when it comes time to buy a house, and at the best possible interest rate.
If you’ve decided it’s time to get on the property ladder, you need to be realistic about your financial management abilities and your employment stability. Remember, too, that a home costs much more than its price tag: you must also factor in property taxes, condo fees, utilities, insurance, maintenance and repairs, and all the other costs of ownership — they quickly add up.
When you’re deciding how much home you can afford, first take a good look at your household expenses and your reliable income. As a general rule, your total housing costs for mortgage repayment, taxes, condo fees and utilities shouldn’t be more than about 30% of your gross (before tax) monthly income.
Ideally, you want to save for a down payment 20% or more of the price of the house you want. You can under some circumstances in Ontario obtain a mortgage for 95% of the value of the home, but you’ll have to pay insurance fees to Canada Mortgage and Housing Corporation (CMHC) that could cost you thousands.
Before you shop, visit potential lenders and get preapproved for a mortgage. Your lender will decide how much home they think you can afford. Canadian mortgage laws are pretty strict, but it’s still possible to become overextended. It’s in the bank’s best interest to loan you as much money as they can; since they have your house as collateral and you’ll pay thousands in interest before you even begin to pay off the principal amount, they can’t lose. Don’t give into the temptation to buy more home than you really need.
Remember you’ll also need to have several thousand dollars put aside for title searches, lawyer’s fees and the like.
It can be daunting, but real estate has a reputation for outperforming the stock market in the long haul, and it’s about the only investment you can use while it appreciates. If you own your home outright, it could be a substantial part of your retirement savings. This all makes owning a home one of the smartest financial moves you can make.
If your debt load is preventing you from owning a home of your own, there are steps you can take to pay off your debts faster. Call a qualified Credit Counsellor for help today.
