by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
Just as every action has an equal and opposite reaction, bankruptcy too has repercussions. Rebuilding your life after declaring bankruptcy may seem like a daunting task- starting anew on building your credit ratings, finances and emotional stability; but it can prove to be tremendously rewarding at the same time.
If you have recently filed for bankruptcy, it is essential for you to know that life after bankruptcy does not have to be about being a financial recluse. Rather, it is about a second chance at reforming your life and protecting yourself against future financial disasters. The following three steps will help you speed up your financial recovery.
No Shame No Guilt
Berating yourself in the aftermath of shame and guilt will only make matters worse. It will hinder your progress towards a new reformed life. People are forced into declaring bankruptcy often enough, be it due to unemployment, medical bills, or other personal setbacks.
A positive approach to the issue would be to make peace with your situation, making reforms, and moving on without self-pity or any negative thoughts.
Realistic Budgeting and Existing Bills
After bankruptcy, you need to be more watchful of your funds. Start off by listing down your cash inflows and outflows. Doesn’t matter if you have made one before or not; now is the time you need one more than ever. Plan your spending in a way that you do not end up stacking needless debt. Set aside an emergency fund which could come in handy if, God forbid, a calamity strikes out of the blue. Also prioritize paying your bills on time. You might want to consider setting up automatic bill payments, and of course, do not forget to pay your rent on time. Paying your current dues on time is the single most important step towards restoring your finances and credits.
Rebuild Your Credit with a Secured Credit Card
Improve your credit rating after bankruptcy by getting a secured credit card. This card will limit your credit to the amount you deposit in the account. Aim to progressively rebuild your credit by restricting your spending to minimal amounts as you work on paying off your existing debts as agreed. One thing to remember is that you stay away from secured cards that charge high fees.
It is particularly important to also keep yourself surrounded by the right kind of people. Friends, family, members of the church or others- people who encourage you, support you and guide you to a financially and emotionally stronger future.
You can always seek advice and counsel from professionals like the ones employed by GTA Credit Solutions to have a sound plan for rebuilding your finances and credit after bankruptcy.
by admin | Bankruptcy, Uncategorized
With bankruptcy increasing at a disturbing rate over the past few decades, it is important for you to know potential pitfalls that might lead you to falling prey to it too. People often overlook alarming issues that can leave them insolvent; listed below are some of the most common reasons that lead to one having to file for bankruptcy.
1) Unemployment
Unemployment resulting from termination, resignation, or layoff results in loss of income. This could prove equally disastrous as most people are not fortunate enough to receive dismissal packages, neither are they given proper notice. With little or no income in hand for daily transactions and emergencies, the situation only worsens; piling up credit card bills to pay will only result in the consequences worsening.
2) Excessive Spending
The urge to spend is often irrepressible in some people – be it shopping, payments on car loans, credit card bills – they just don’t stop, piling up stupendous debts which they are unable to pay back. Further, if they lack access to funds from other sources like debt consolidation loans or friends/family- a bankruptcy declaration is the only solution they have.
3) Divorce
Marriage termination brings about major financial burden for both partners-ranging from the legal fees (that can be sky rocketing), division of the couple’s assets, verdict on alimony, to the chronic costs of maintaining two separate households after separation. The legal costs single handedly can force most people into filing for bankruptcy, whereas paying for child support and other household expenses just furthers the distress. Spouses who are not able to pay the agreed child support and alimony often leave the other partners destitute too.
4) Unforeseen Losses
Events like theft, natural disasters, death, or other unexpected ones may result in loss of property and finances. As these situations are unanticipated, they are not usually covered in a normal bankruptcy claim. Most people do not know that these events need to be separately insured for insurance companies to reimburse the resulting losses. These losses, if not insured, have to paid for by the bearer himself, which may not be possible.
Do be mindful of the above mentioned financial pitfalls as possible indicators of bankruptcy. You might want to obtain personalized credit counsel from qualified professionals at GTA credit to work out comprehensive credit management plans for you.
by admin | Uncategorized
As reading week passes, graduating students start to contemplate their futures outside the halls of academia and one of the most prominent things on their minds will be paying off their student debts.
Their educations have largely been paid for through a combination of gifts (scholarships from schools or organizations, and/or monetary offerings from parents and relatives), and grants and loans from government sources.
In Ontario, that is handled through the Ontario Student Assistance Program (OSAP) and on graduation or leaving post-secondary school, students have to pay at least some of it back, and maybe all of it.
Ontario caps the amount a full-time student is asked to pay back, based on economic factors such as family income. Students in a two-term academic year have to pay back up to $7,300; those in a three-term year, $10,950. If students require more than those amounts, respectively, the difference is made up through the Ontario Student Opportunity Grant. Consideration for that grant is automatic, so there are no additional applications required.
However, if you don’t finish your academic year and got a grant, you may be required to pay that amount back in addition to the $7,300 or $10,950. You may also be required to pay more than the set cap if you don’t file an income tax return, or if any family member listed on your OSAP application doesn’t file a return, or if an audit of your application reveals that you were awarded more than you would have been entitled to.
As with any other form of debt, the longer you take to pay off your student loans, the more it will cost.
There is a six-month grace period after graduation (or after leaving college or university without graduating) during which loans can be paid back, mostly without interest. In the seventh month, a payment schedule is brought into effect.
The way it works is that shortly after graduation, the student will receive a letter from the National Student Loan Service Centre outlining the amount owed, the interest rate charged on the debt and the expected monthly payment according to terms for paying back the amount owed. Payments start at the end of the seventh month after leaving school.
Payment schedules can range from 10 to 15 years and they aren’t set in stone, which means that you can apply to alter them according to your earning status — pay more if you are earning more; have them reduced if you can’t afford to make them.
Repayment assistance through Ontario’s Repayment Assistance Plan (RAP) is available to those who can’t afford to make payments. The repayment amount is recalculated based on the amount owed and your family size and income. Your monthly payments are reset to a lower amount and then grow as your income grows, up to a maximum of 20 percent of your family’s earnings. Those with very low or no income are entitled to a suspension of monthly payments until their family income grows to a certain level.
Students can also chance the term of their loan repayment scheduled by applying through the National Student Loan Centre.
One last thing to remember: the amount owing on your student loan will never be discharged until it’s paid off in full. The only possible exception is if you declare bankruptcy and have been out of school for longer than five years, in which case you can apply to have your debt discharged through a bankruptcy court.
Outside of that possibility, you are still required to make your monthly payments on your OSAP loan even in bankruptcy, though you can make changes to them through the repayment assistance measures listed above.
by admin | Credit Counseling, Uncategorized
One of the main concerns of paying off creditors is the thought of compromising your financial future in settling debts in the present. In particular, people are worried that creditors will seize all or part of their pensions in order to settle debts.
The good news is that in most cases, creditors are not allowed to touch your retirement income. The bad news is that in some cases, mostly depending on where they live, the type of retirement fund they hold and the creditor making the claim, money set aside for retirement can be used in the settlement of your debts.
First among the variables is the province of residence. Although there is federal government protection of retirement savings under provisions in the Bankruptcy and Insolvency Act, it depends on the laws of the province or territory when it comes to shielding your investments from creditors. British Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward Island, and Newfoundland and Labrador have laws mimicking the federal regulations.
In most cases, the funds are protected unless you file for bankruptcy, in which case a trustee gets to decide how to liquidate them in order to settle debt. In the cases mentioned above, the trustee can only look at savings acquired within 12 months leading up to the filing for bankruptcy. In some provinces, there are no time restrictions and in others, funds are locked in and sheltered regardless of the date of bankruptcy filing.
That’s where the type of retirement fund comes in. Some companies provide pension plans and put funds on behalf of the employee into either locked-in RRSPs (Registered Retirement Savings Plans) or RPPs (Registered Pension Plans). Those funds are generally protected from creditors either in a bankruptcy or outside of it. The rule of thumb is that if you don’t have access to locked-in funds, neither do your creditors.
However, you can lock in your self-directed RRSPs or GICs (Guaranteed Investment Certificates) for a set time and when the locked in period expires, they are accessible. The exception in terms of self-directed retirement income savings are RRIFs (Registered Retirement Income Funds) held in a life-insurance contract provided that money isn’t deposited in order to deliberately shelter it from creditors, proof of which must be determined in the courts.
In general, your government issued retirement earnings — Old Age Security (OAS) and CPP (Canada Pension Plan) or QPP (Quebec Pension Plan) — cannot be touched by creditors. There are, of course, a few exceptions.
The primary one is, naturally, the CRA (Canada Revenue Agency), whose broad sweeping powers allow it to tap into whatever means it deems necessary in order to settle tax debts. The CRA will simply send a letter of direction to Employment and Social Development Canada (ESDC) — the administrators of OAS and CPP programs — and/or your bank with instructions of how much to withhold to settle your debts. The amount can be negotiated with the CRA.
Your bank can also have access to those funds if you owe them money due to mortgage or credit card debt, and can tap into the accounts into which you deposit the pension or retirement funds. Again, locked-in funds aren’t touchable but if you release those funds into an account with the bank to which you owe money, they can be seized.
Your ex-spouse is another exception, in the case of money owed either as part of a separation or divorce settlement or because of not fulfilling your support obligations (spousal or child). Up to 50% of your pension can be tapped into to make up owed money, but you can petition the courts to reduce or eliminate the debt owing.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
One of the most frightening jolts you can get financially is to go into a bank account to see if you have enough to cover off a payment only to find a zero balance.
You’re in financial hardship; you’re juggling payments to make sure one doesn’t get too far behind; you’re trying to pay as best you can and in one fell swoop, you’re left with zero and you don’t know if you’re going to be able to pay the rent or make the car payment. What happened?
In all cases, it’s because one of your debts is to your bank (a mortgage, loan, credit card or line of credit) and they have the right to take what they can to pay off some or all of the amount owed to them, even if it leaves your bank account empty. And pleading your case won’t do you any good because their payment is more important than all the other payments you may have.
When you borrow money, there are two types — secured and unsecured. Secured debt is a loan that is borrowed against some property — a house, a piece of furniture or a car, for example — and the creditor has the right to seize your property and (with notice) sell it off to pay off your debt. A mortgage is the best example of a secured contract — if you don’t make your payments, the bank can repossess your house and sell it to pay off the amount owed. A financed car purchase is another example, where the dealership technically owns your car until the last payment is made.
A credit card is unsecured debt. Even though you fill out an application that indicates you have a mortgage (maybe with the same bank) and/or a car, the credit card company can’t seize your house or your car to pay off the amount outstanding to them. What they can do, is take money directly out of an account you may have with that bank.
And if you get wise to this and don’t leave any money in that account until such time as it’s needed to make other payments, they may get wise to your ways and garnishee (or freeze) your account, in which case deposits are allowed but withdrawals are not (whether those are cash withdrawals or automatic transactions).
Banks don’t have to notify you before this happens because they don’t have to get permission from a court to do this. Neither do government agencies (if you owe back taxes or support), but other creditors have to sue you in order to gain access to your accounts.
They usually send you notice that they are considering the action and if you don’t act on it, they will file a suit to recover what is owed, including gaining access to your accounts. If you are sued, you have to go to court in your own defence and if judgment is awarded to the collector, you will have to pay all fees and costs, in addition to the debt and related penalties.
It should be noted that there is a statute of limitations on owed debt, which in Ontario is two years after the last payment was made. If you have unsecured debt and haven’t made a payment in two years, and your creditor hasn’t sued you to recover the money, the threat of a claims suit is not valid. If they do attempt to sue you, you may still have to go to court in defence and plead the expiration of the limitation on your unsecured debt.
It is important to note, though, that if you make a payment (regardless of whether it’s a bluff) — even a small one — the two-year clock resets and they can then initiate a suit for all the money owed.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Everybody dreads calls from collection agencies, but there are certain guidelines collection agencies must follow in dealing with debtors and there are certain things consumers can do to protect themselves from the harassment some collection agencies employ.
First of all, let’s understand why collection agencies do what they do. They have been hired by creditors to get payment as quickly as possible from debtors. For their efforts, they get a fee or commission from the company whose debt they’re collecting. As such, the best way to get collection agencies out of your hair is to pay off your debts as quickly as possible.
Collection agents are allowed to contact you in order to make you aware of the debts you owe and are allowed to use reasonable means to collect. They don’t have to explain your rights to you, and if you’re ignorant to those rights they may overstep the boundaries within which they are required to operate.
Collection agents are required to send a physical letter explaining who they are, who they represent and the debt they are attempting to collect. Six days later, they are allowed to contact you in person or by phone. After making contact with you (in person by email or through a voice mail — a physical letter is not considered contact) an agent must limit contact with you to three or fewer times in any seven day period, without your consent.
The glitch is that if you don’t answer the phone and if they don’t leave voice messages, it doesn’t count as contact. In that case, you could have the same number ring up to several times a day as often as they want.
Collection agents cannot contact you at all on holidays or on Sundays except between 1 and 5 p.m. They also cannot contact you between the hours of 9 pm and 7 am on any other day.
And they can’t contact your family members, relatives, neighbours or friends except to ascertain your address and phone number. And, they can’t contact your employer except one time to get your employment information. The exception in all cases is if the other person has guaranteed your debt, in which case they are subject to the same collection contact protocols, or if you have given the agent permission to contact them.
Collection agents are also not allowed to use threatening, profane, intimidating or coercive language, to put undue, excessive or unreasonable pressure on you to pay off your debt, harass you about your debt and obligations, or to give out false or misleading information about you to others.
If you feel a collection agent has acted inappropriately, send off a letter (by registered mail so you know they’ve received it by signing for it) explaining in detail what you feel the transgressions were and how you expect the agent to comply with the law (in Ontario, according to the Collection and Debt Settlement Services Act). You can also file a complaint with the Ministry of Consumer Services.
Another thing to keep in mind is that there are several websites that recommend how you deal with collection agents, but some of them are obviously created by people who have had bad experiences with agents. As with all things, be informed but get your information from credible sources, such as federal and provincial consumer agencies.
