by admin | Bankruptcy, Credit Counseling, Uncategorized
In a perfect world, we would all live within our means, save responsibly, pay cash for everything except our home, support worthwhile charities, invest wisely, and carry sufficient insurance. We seldom, do, though. Many of us have some bad spending habits that can be hard to break.
An honest assessment of your own habits should start to paint a picture of your money management capabilities. It doesn’t mean anyone else gets to decide your priorities — if you’d rather eat out every night than have a new car every couple of years, that’s entirely up to you. But if you’ve can’t afford both but have both anyway, or if you’ve budgeted for $250 a week for dining out and are spending more than $1,000, you have developed some very bad habits.
Have a good, hard look at your spending patterns. Do you buy when you’re upset or to alleviate boredom? Do you have no clue exactly what your income is, or how much you spend? Do you live in overdraft or put necessities like gas and groceries on a card, and then not pay it off at the end of the month?
Start keeping a money journal. Track not only what you spend and on what, but also how you felt at the time and any extenuating circumstances that led to the bad spending behaviour. Had you just gotten off the phone with your mother when you spend $100 you didn’t really have on eBay? Pay particular attention to little amounts that add up to a lot but bring nothing of value to your life, like late fees, bank charges, and interest on your debts. When you really, really realize that you’re spending $250/month on nothing, you will absolutely hate doing so.
Here are some examples of bad spending habits:
– Paying for necessities on credit
– Paying for premium brands when other brands will do
– Pay for storage; if you can’t fit all your stuff in your home, you have too much stuff
– If you occasionally come home from a shopping trip only to discover you already own the book/movie/cardigan you just bought, you may need not only better spending habits, but a professional organizer besides.
– You keep buying even when the money’s gone. If you have a certain budget for clothes, once the money’s gone, no more clothes. If that means you have to turn down days out with friends, get in the habit of turning them down.
– Robbing Peter to pay Paul. If you’re using revolving credit to make credit card payments, you’re in trouble.
– Spending what you don’t have for luxuries. Never buy vacations, clothes, jewelry, spa visits, theatre tickets or anything else you know deep down you can live without while you still have debts.
– Spending more than you make. If you are going into the hole even by $20 or $50 every month, find a way to curb some spending to make up the shortfall. Small amounts add up to big debts.
To rehabilitate your spending behavior is not an easy task. As with dieting, you can’t live on willpower alone — white-knuckle budgeting seldom works, at least in the long run. “Make more” and “spend less” are oversimplifications. To really change your bad habits takes replacing them with new, better habits.
– Have only the amount you intend to spend with you, and leave the credit cards at home. If you go out intending to spend $80 on a pair of new summer shoes, take $80 with you when you go shopping.
– If you’re prone to impulse purchases, make yourself leave the store, go home, and then go back the next day if you can’t live without it. Ask yourself: Do I need it? Do I already own something like it? Do I have a place to put it?
– Avoid temptation whenever possible. If you can’t handle a trip to the mall without coming home with three new books, a few highlights in your hair, and a three-course meal in your belly, don’t go to the mall.
– Make a list of your financial goals, including amassing six months in emergency savings, and display it prominently in your den or kitchen. Don’t give up what you want for want you right now — what would you rather have? A new car, a swimming pool or a trip to Spain, or a $4 espresso on the way to work every day?
– Be mindful of the real cost of what you’re buying in the most limited currency we have — time. It’s harder to spend money foolishly when you connect it to how hard-won money really is. Even if you make $100/hour or more, you’re still exchanging your life for material goods. Before you order the surf & turf, ask yourself if the steak and lobster dinner is worth an hour of your life. If it is, go ahead and enjoy it. If the idea of trading an hour of your life for a meal that won’t even take that long to eat makes you a little queasy, don’t do it. If you spend $100/month on gourmet coffee and make $20/hour, ask yourself if it’s worth five hours of your life every month to drink fancy lattes.
– Leave your credit cards at home. If you want to keep an emergency card with you, knock the credit limit back to about $500. At least then if you do get yourself in trouble with it, it won’t amount to much.
The biggest favor you can do yourself when it comes to spending is to become mindful. When you realize what things really cost — once you factor in the time you spent earning the money and the interest you’re going to pay to charge it — you’ll think twice before you buy.
by admin | Bankruptcy, Credit Counseling, Uncategorized
Credit is useful. Without it, few of us would be able to live in homes or drive cars we actually own. It can let us bridge financing in the short-term, let us book a hotel room or car rental, shop online, provide emergency peace of mind, consolidate other debts, track spending, keep our money safe when travelling, and earn rewards, to name just a few ways in which credit can make life more pleasant.
But every coin has two sides. The downside to credit can exact a considerable toll — on your sleep, your family life, your health, your future.
To make sure you get the benefits of credit without the potentially devastating downside, develop some good credit-handling habits that will serve you well all your life. Obviously, the most important of these are to not outspend your income and never carry a balance on your cards, but there are some other ways you can stay in control of your credit.
– Should you find yourself in financial trouble, don’t hide. Be honest with your creditors and ask for their advice. Most creditors would rather offer some guidance and help you pay what you owe than risk not being paid at all. The best time to negotiate a solution is before you get too far off track.
– Keep an eye on your credit report. To make sure it’s accurate and current, periodically check your credit report online through a site such as Equifax.ca. You are legally entitled to see your credit report periodically for free, although you can pay for monthly monitoring services or instant online access. If you do spot mistakes, contact the credit bureau with details of the transaction in question, and find out how to rectify the situation.
– Prepare a workable spending plan and keep track of where your money goes. Trim areas you don’t need, such as daily trips to the coffee shop drive-through, and be aware of those things that are easily overlooked but that can add up to a lot of money, such as debt interest and bank charges. Writing down everything you spend is a great way to discover some hard truths.
– Stay away from high-interest payday loans and store credit cards.
– Start saving for emergencies. Experts recommend having three to six months’ worth of expenses banked, starting with putting away 10% of your net. If you happen on extra money, from an inheritance or a raise for example, add it to your savings. You won’t miss it if you don’t get in the habit of having it.
– Pay more than the minimum monthly payment on lines of credit and credit cards. It’s the only way to get ahead — paying just the minimum can add years (yes, years) to your repayment schedule and add thousands in interest.
– Never make late payments. Not only will late payments be reflected negatively on your credit report, but you risk losing low promotional interest rates or incurring extra charges.
With some care and common sense, credit can be a good friend. Without them, it can be your worst enemy.
by admin | Bankruptcy, Uncategorized
Q: What are the advantages of declaring personal bankruptcy?
A: Your unsecured creditors must stop any collection actions against you, including legal actions, and any garnishment on your wages or bank account stop. You are released from unsecured debt and free to make a new start.
Q: Can I go to jail for declaring bankruptcy?
A: Honest but unfortunate debtors who file truthfully don’t go to jail. There are no criminal charges associated with filing for personal bankruptcy.
Q: Will people find out about my bankruptcy?
A: It will be on public record, and all your creditors (secured and unsecured) will be notified. Your employer will only be notified if the trustee is required to stop your wages from being garnisheed.
Q: Will I lose my house?
A: It depends on the amount of equity you have in the property. You may be able to pay the value of the equity to your trustee to be distributed to your creditors. As long as you are able to keep current with your mortgage payments, you may be able to keep your home. Talk to GTA Credit advisor or your mortgage lender about your unique case.
Q: Will I have to sell my assets?
A: Not necessarily. GTA consultant will advise you about which assets may need to be sold or distributed. If you have assets in which there is no equity (if you owe more on a secured loan for an item, a car for
example, than the item is worth) and your trustee agrees, you may be able to negotiate with the lender to keep the asset.
Q: Does declaring personal bankruptcy cover all my debts?
A: No. Personal bankruptcy covers only unsecured debts, and some unsecured debts aren’t covered, such as child support, alimony, court fines and penalties, or debts that are found to be fraudulent. Student loans may be covered if you stopped being a student more than seven years ago, and can meet some other requirements. Secured debts such as mortgages are car loans are not covered by bankruptcy unless you relinquish ownership of these assets. Always discuss your unique situation with GTA Credit consultant.
Q: What happens if my bankruptcy doesn’t get discharged?
A: Once the trustee has completed the administration of your case and been discharged, if your bankruptcy isn’t discharged, you will remain responsible for your debts and your creditors can resume their collection actions.
Q: Why wouldn’t my bankruptcy be discharged?
A: Your trustee or your creditors can prevent your bankruptcy from being discharged if you don’t perform your obligations during the nine months after you declare, such as not showing up for credit counselling sessions or not provideng monthly income & expense report or failing to make the required monthly payments to your trustee.
Q: I have to leave the country for work. Can I declare bankruptcy first?
A: Talk to GTA consultant about your unique situation.
Q: How long does bankruptcy take?
A: From filing to discharge, a normal first bankruptcy takes nine months or more (if you have surplus). There are some factors that will affect that, such as if this isn’t your first bankruptcy, you have surplus income, your creditors dispute your bankruptcy or you fail to meet your obligations. Talk to your trustee about your unique case.
Q: What happens if a creditor I forgot to include in the bankruptcy contacts me after I’m discharged?
A: In most cases, as long as the debt was incurred before you filed for bankruptcy and is a provable debt, your trustee will send notice to the creditor and it will be cleared. Talk to your trustee..
by admin | Bankruptcy, Uncategorized
What is bankruptcy?
A: Bankruptcy is a legal process that may discharge you from most of your debts, subject to reasonable conditions.Once you declare bankruptcy, your unsecured creditors cannot take any further steps to recover the money you owe them.
Q: Who can declare bankruptcy?
A: Anyone who owes more than $1,000 and is unable to pay their debts in the normal course.
Q: How much does it cost to declare bankruptcy?
A: There are administrative fees, court costs, mailing costs and government fees your trustee will require you to pay. GTA Credit Solutions charges a small fee.
Q: Can I declare bankruptcy without a trustee?
A: GTA Credit will arrange the trustee.
Q: Will I lose all my assets?
A: There are a few exemptions: Household furnishings to a value of $11,300, personal effects to a value of $5,650, a personal vehicle to a value of $5,650, tools of the trade to a value of $11,300. Certain life insurance policies and RRSPs, and most pensions, are also exempt.
Q: What do I do to declare bankruptcy?
A: Call us. We will discuss with you the specifics of your unique case, including how much you owe and how much you own. (You are required to disclose all assets to your GTA consultant and trustee.) It’s important to keep us up to date on any changes to your address, phone number, employment and income. It’s a good idea to hand over to us all of your credit cards. You will also be required to attend two credit counselling sessions.
Q: What if some of my debts have a guarantor or co-signer?
A: If you declare bankruptcy, a guarantor, co-signer or supplementary credit card holder will likely be held responsible for the debt.
Q: What’s a counselling session?
A: The goal is to prevent you from getting into financial trouble again. A counsellor will help you understand why and how you got into trouble, help you budget, and teach you how to properly use credit in the future.
Q: What effect does bankruptcy have on my credit rating?
A: A first bankruptcy will give you a credit rating of R9, which is the worst rating, for as long as seven years or more after your bankruptcy is discharged.
Q: Can I keep my bank account?
A: You are allowed to have a bank account, but if you owe money to the bank where your account is, you may need to open one at a different bank.
Q: Can I keep my leased car?
A: As a secured debt, it is possible to keep a leased car, but remember that monthly expenses that are simply too high are probably the biggest part of your problem. Giving up the car will reduce your expenses – not only is there the lease payment to consider, but also insurance, gas, repairs and maintenance.
Q: Can my partner and I file a joint bankruptcy?
A: Yes, when two debtors are involved in a close financial relationship and their debts are substantially the same, it is possible to file jointly for bankruptcy. Your GTA Credit advisor and trustee will advise you if they believe a joint filing is in your best interest.
Q: What are the laws pertaining to bankruptcy?
A: The laws that govern bankruptcy are contained in the Bankruptcy and Insolvency Act (the Act), which the federal government established to help unfortunate but honest debtors recover from their financial problems and get a fresh start. The Act details the responsibilities and rights of all parties involved in solving debt problems: the Superintendent of Bankruptcy, the official receivers who represent the Superintendent of Bankruptcy, the court, licensed trustees – and you.
Q: Is bankruptcy my only option?
A: No! There are many options that can help you solve your money problems, including a consumer proposal. Come on in and we’ll talk you through all your options, and then we’ll help you decide which one is right for you.
Q: How does bankruptcy affect alimony or maintenance payments?
A: It doesn’t. Alimony and maintenance are provable claims that will be treated as preferred claims for any amount incurred the year before your bankruptcy. Alimony and maintenance payments must be kept up to date, and a bankruptcy will not stop any action for collection.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Q: Will filing a consumer proposal impact an immigration sponsorship?
A: You should check with Citizenship and Immigration Canada to get the most up to date information, but as of this writing, you can submit a consumer proposal and sponsor someone for immigration at the same time. You can’t, however, sponsor someone while you are an undischarged bankrupt. It’s important to note that when a consumer proposal is successful, any interest you’re paying is frozen, you may only have to repay a portion of your debts, garnishments on your wages cease, and your creditors are restricted from taking any legal action.
Q: How does a consumer proposal affect my credit report?
A: For the course of the proposal, up to five years, you will be rated “R9” or bad debt. Once the terms of the proposal are fulfilled, you will be rated “R7,” which reflects that you are repaying your debts by special arrangements, for three years.
Q: Who keeps track of my credit history?
A: In Canada, there are two credit bureaus, Equifax and TransUnion, who keep track of your credit. A consumer proposal will be reflected on your credit report for three years after it is completed.
Q: How does that affect my future?
A: A lower credit rating will affect your ability to get future credit, but the rating you get with a consumer proposal is not as bad as if you declare bankruptcy, and it doesn’t stay on your record as long. A bankruptcy will be on your credit report for seven years or more.
Q: I own a house and a car. Do I get to keep them?
A: Most of the time, secured creditors aren’t involved in a consumer proposal. You will likely continue to make your payments as usual.
Q: What happens when my mortgage comes up for renewal?
A: You’ll have to discuss the details with your lender, but usually if you keep your payments up to date and can prove that you will be able to continue to make your payments in the future, you will qualify for a renewal.
Q: Am I qualified to submit a consumer proposal?
A: You may be, if your debt doesn’t exceed $250,000 not including your mortgage (primary residence). Everyone’s case is different. GTA consultant can review your details and help you determine that.
Q: Can I go to jail for filing a consumer proposal?
A: As long as you file truthfully, there are no criminal charges associated with filing a consumer proposal.
Q: Can I pay my full debt through a consumer proposal?
A: At the end of the term of the proposal (up to five years), your debts are considered fully paid, even though most of the time the amount will be less than the actual debt you started with.
Q: I have to leave the country for my work. Can I do a consumer proposal first?
A: You should discuss your unique position with GTA consultant.
Q: How much does a consumer proposal cost?
A: It depends on a few factors, including your monthly budget and the value of your assets. Talk to GTA consultant about your specific situation.
Q: How long will a proposal last?
A: Up to five years.
Q: What happens if I can’t afford to finish my proposal?
A: If you miss three months of payment and do not file an amendment, your proposal is no longer a legally binding agreement and your creditors are free to take further collection action against you for the full amount of your debt. You may have to file for bankruptcy. Your trustee can advise you further.
Q: What happens if I forget a creditor on my proposal?
A: It depends on the amount of the debt. Your proposal may continue as offered if the debt is small, but a larger debt may mean an increase to your proposal payment.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
How does making a late payment affect my score?
A: Badly! 35% of your credit score is based on your payment history. Credit bureaus don’t make available to the public their exact formula for calculating the points on your credit score, so it’s hard to say exactly how one late payment might affect you. Better to just be on time.
Q: So how does the rest of my credit score break down then?
A: Well, 35% comes from your payment history, 30% is your debt utilization ratio (sometimes also referred to as a credit to debt ratio), 15% is your credit history, 10% is new credit, and 10% is the types of credit you have in use.
Q: How do I get a credit score if I’m new to Canada?
A: If you have a short credit history – or none at all – you may not have a credit score. You need to have at least one active account within the last six months. The best thing you can do to start establishing credit is to apply for a secured credit card.
Q: How do I rebuild my credit after filing a proposal or for bankruptcy?
A: It will take some time, but you can do it. Your GTA consultant will help.
Q: Will filing for bankruptcy affect my spouse?
A: Not directly. But we do recommend that you come see us together to talk about both your options for solving your financial problems.
Q: Will my personal information be kept private?
A: In the case of credit counselling and informal arrangements, absolutely. For formal proceedings like a proposal or bankruptcy, the Office of the Superintendent of Bankruptcy keeps a record of your filing. A trustee is required to file
your income tax return for the year in which you declare Bankruptcy, so Canada Revenue Agency will also have a record of it. Your creditors will also receive notice once it has been filed with the Office of the Superintendent of Bankruptcy.
Q: How long does a proposal or bankruptcy stay on my credit record?
A: In Ontario, a consumer proposal stays on your record for three years after it’s completed; a first bankruptcy stays for up to seven years or more.
