by admin | Bankruptcy, Consumer Proposal, Debt Management, Uncategorized
Most of the 70,000 Canadians who file for bankruptcy each year do so honestly and carry through with their obligations during the bankruptcy in order to be discharged from it with a clean financial bill of health.
However, there are those who file for bankruptcy under fraudulent reasons, and those who commit fraud after the filing. To weed out those individuals, the Office of the Superintendent of Bankruptcy (OSB) carries out case investigations to ensure that creditors receive just payment for the bankrupt’s accrued debts.
The government lists several ways in which a bankrupt can be held accountable for misleading behaviour. The primary reason is the neglect to fully disclose property (which includes buildings, land and other assets, such as cars, business tools and artwork) or debts to the trustee in bankruptcy, or by making false statements to the trustee. Or, the bankrupt may have sold off property prior to the bankruptcy (usually to a relative or business partner, in order to shelter it from disposal during the bankruptcy), or following the filing (if it had been hidden from the trustee).
Another prime example of fraudulent behaviour is the acquisition of credit through misrepresentation. After filing for bankruptcy, the person turns over all credit cards to the trustee for cancellation and must notify potential creditors of the bankruptcy or past ones when attempting to obtain credit. Failing to do so constitutes fraud, but it should be noted that applications for credit less than $500 do not require the bankrupt to reveal the bankruptcy.
The person can also be found guilty of fraud leading up to the bankruptcy, if he/she acquired credit with the full knowledge of the inability to repay the amount borrowed, and/or demonstrated behaviour (such as living an extravagant lifestyle) indicating he/she might have been planning to file for bankruptcy.
The penalties for fraudulent behaviour in, or leading up to, a bankruptcy are considered on a case by case basis and are judged by criminal or civil courts. They are punishable according to the severity of the crime and the level of intent demonstrated by the individual in committing the offence. A person who obtains an exorbitant amount of credit in a short span of time, or by misleading creditors, and/or with the knowledge that he/she will be unable to repay the debts, may face jail time in addition to having to fully pay the debts they were seeking to have annulled.
Other offences, such as neglecting to fully disclose the history of accrued debt or filing false information, are usually punishable by conditional sentences, house arrests, community service, probationary sentences, making supplementary payments to the trustee and/or delaying the discharge from bankruptcy.
by admin | Uncategorized
Much is written about the increased levels of debt being carried by Canadians these days, but very little is addressed about that level of indebtedness being carried over into our retirement years. And that’s troublesome because if you are struggling with debt in your working years, how will you be faring when your income may be fixed?
That’s one of the reasons you see many seniors still working. Don’t notice them? Think Walmart greeters, or the ladies at the LCBO outlet doing product sampling. It is estimated that you need about 70% of what you make right now in order to live out your life comfortably after retirement, but the government will basically offer up less than today’s minimum wage yearly earnings. Unless you’re currently living on a minimum wage salary, you won’t get enough.
One of the factors leading to carrying indebtedness into our retirement years is the realization that the Canadian Pension Plan (CPP) and Old Age Security (OAS) benefits were not enough to pay out to a retiring workforce which was living longer than in past years. As a result, the government started taking more of our earnings to sack away for retiring workers (including you, when it comes time). The good news is that it also started charging an equal amount to your employer, in effect doubling your contribution (though your payment at retirement may not be double what it would have been had it been only you contributing), but that still won’t likely be enough.
So as a double whammy, you have less disposable income while you’re working (leading to increasing debt in order to purchase some of the things you want, but may not necessarily need) and less pension income coming in when you retire (meaning you have less to spend on servicing your debt).
There may also be escalating health care costs with little or no relief from private health care insurance, the loss of a spouse (leading to the loss of a secondary income source), and mortgages that aren’t paid off, often due to adult children requesting help with their own debt.
Another factor in seniors’ debt is diminished mental and physical fitness. It doesn’t necessarily affect everyone, but that won’t stop others from trying to take advantage of it. Roof maintenance or snow removal contractors, for example, may take advantage of seniors’ inability to perform manual work for themselves by financing expensive contracts for few services (or in some cases, no services).
And that diminished mental capacity may also play harder on our human hope of striking it rich for a quick fix to our monetary woes, causing some seniors to spend more money at casinos or bingo halls.
As we’ve often detailed here, the fix happens while you’re earning money, not when you’re scrambling to make ends meet. So, to prevent carrying a debt load when you’re retired, concentrate on trying to eliminate debt today, while sacking more money away to insure a higher income in your retirement years.
And look for changes in spending habits, which could signify your retired parents or friends may be dealing with financial difficulties — increase in credit card use, for example, or in the frequency of trips to the casino — and suggest ways to reduce expenses, such as less-expensive accommodations or reductions in services such as cable.
by admin | Credit Repair, Debt Management, Uncategorized
Planning for Christmas used to be a lot easier before the mass-media marketing storm. And since just about everybody watches TV or listens to radio or (increasingly) surfs the internet, it’s becoming a lot harder to avoid overspending on Christmas.
And never mind the gifts. There are lots of other items on which we spend money this time of year — table settings, home decorations, food and drink. Christmas time is easily the most financially stressful time of year.
“I want this” or “we should get that” have become common phrases in the month leading up to Christmas, and with the most expensive items take up most of the airtime and many people following the “buy now and pay later” philosophy, it’s small wonder most people are constantly paying for Christmas after the fact, rather than budgeting for it ahead of time.
We’ve touched on this subject in previous posts, but it basically comes down to setting a bit of money aside ahead of time so that you can spend it on Christmas and move into the new year with a positive step.
One of the easiest ways to save is what we’ll call the 52-week savings, whereby you put a dollar value on each week of the year and put that money away in a jar, in a separate bank account, wherever — the first week after Christmas, when money is tight, you put away a dollar; the following week you put away two dollars and the week after that three, and so on. As you come up to the month before Christmas, you will find over $1,200 to spend on the holidays. If you took the initiative and started saving a month before Christmas for next year’s holiday season, you will have closer to $1,400.
And although that will make Christmas and the following month a lot less stressful, you should also realize that you don’t have to spend a lot of money on Christmas because one of the reasons we spend a lot is that we also don’t budget our time for shopping. Then, in a rush to avoid the throngs, we gladly fork over whatever the retailers want in order to be done with it.
By giving yourself the time to shop and evaluate what’s available, you not only ensure you’ll obtain everything you want to make your post-Christmas less stressful, but you may also find lower prices or cheaper alternatives to make this Christmas merrier.
A friend recently decorated three Christmas trees (hers as well as those of some family members) very cheaply. Instead of buying the pre-packaged beads or bows, which she may not have completely used, she picked up the exact number of items she needed at the dollar store, figuring she saved about $25 on each tree, by the time she tallied up what she would have spent on tinsel, lights, balls and other shiny or dangly bits. And each of her trees looked amazing and unique.
Picking up artsy supplies at the dollar store also allows you to make unique and thoughtful gifts for some people on your list. Granted a home-created birdcage, for example, may not be a suitable replacement for the Skylanders Trap Team portal your six-year-old would like, but for some of the harder-to-buy-for people, it would make a welcome and cherished centrepiece for the Christmas table.
As with many things, Christmas doesn’t have to be a stressful time leading up to it and then afterward when we realize we overspent. All it takes is budgeting, both financially and in terms of time, whereby you take something that as a whole seems quite ominous and break it down into smaller, easier-to-work-with bits.
Have a wonderful Holiday season.
by admin | Credit Counseling, Credit Repair, Debt Management, Uncategorized
People gotta eat, right? And many probably don’t realize how much they spend on groceries because you don’t always think about your spending when it comes to the staples of life. There are things that you can do to lower your monthly grocery bill, though, so it doesn’t break your budget.
First of all, make a list and withdraw the cash with which to buy the groceries. You are more likely to spend less when you’re paying with the cash you have in hand than when you whip out a card and pay “whatever it costs.” Take along a calculator (every new Smartphone has a calculator app, so you always have one with you) and tally up as you go to make sure you stay on budget.
And don’t shop when you’re hungry. Those items you don’t really need look awfully good when your stomach is rumbling for them.
One of the best strategies is to buy what you need when you intend to use it, not doing a big shop when you have lots of money (on payday, for example) and then hoping what you bought lasts for the next two weeks, because there’s bound to be wastage.
Think about this: food is one of the few things on which you spend money, that you are prepared to throw away — not all of it, but some of it — and we don’t really think much about it. For example, we cook up gallons of pasta and load up plates and quite often we don’t eat everything that’s served, with the scraps going into the garbage or the bigger portions set aside as leftovers that don’t often get consumed before their fridge life expires.
Meats are often sold by weight, so you’re not saving by buying in bulk unless you find a drastically reduced price. But if you don’t have the means to freeze meats (preferably individually wrapped, so you can defrost what you need later, rather than defrosting the entire package), don’t buy in bulk.
When it comes to fresh items such as produce, buy what you want to consume right away (or within a couple days). There isn’t a lot of discount on produce for buying in bulk, and it doesn’t store exceptionally well, so you’re best to buy it as you use it.
If you want the convenience of having your vegetable of choice to complement a meal, buy frozen vegetables and cook what you need when you need it. Also, look at options in portion sizes. Broccoli crowns, for example, usually allow you to consume everything you buy, whereas broccoli stalks likely result in considerable wastage if you only consume the crowns. Also, mini-cucumbers allow you to use what you want as you go along, rather than cut up half an English Cuke and hoping you can finish the rest before it goes off.
And since many of today’s stores match prices, don’t drive around to save a couple pennies on a product you want. And use coupons. Coupons are big savers on items you’re going to buy anyway and if you find a deal on something and the coupon applies to all quantities, you could save a bundle on bulk buys. You may also be able to combine price matching with in-store coupons for extra savings.
Finally, be aware that you’re going to pay extra for convenience. Think about those single serving coffee makers. You can spend $6 for a box of cups that will allow you to make 12 cups. However, you can buy a reusable cup for $3 and fill it up with your favourite ground coffee for about the same price, and enjoy exponentially more cups of coffee for your expenditure.
Finally, remember that nutritious eating is better controlled by you than somebody at a big corporation, which may put in ingredients in their food you may not want in yours. Stay in control of the food you prepare and that will likely also keep you in control of your food budget.
by admin | Credit Counseling, Credit Repair, Debt Management, Uncategorized
Clothing is one of those items that many people don’t include in their monthly budgets but should consider including it in their yearly budgets, and that involves saving during the year for a once (or twice) yearly event.
Winter clothing is a particularly important item for which to budget because we seem to wear out our winter-wear so much more quickly. Maybe it’s the harsh environment or maybe it’s because we feel so uncomfortable one year with an item or article of clothing that we resolve to replace it before the onset of the following winter.
Summer clothing doesn’t seem to be replaced as often, and when it does, it’s usually for style reasons, rather than functionality. Besides, we don’t wear as much clothing in the summer as we do in the winter, so there’s less to spend on.
By the time you get boots to replace the salt-ravaged ones from last winter, a set of replacement gloves for the ones you stored away somewhere and now can’t find, and maybe a heavier coat than the one the wind blew through last year, you’re easily several hundred bucks down.
When it comes to winter clothing, most style-conscious advisors will tell you to spend your money on being stylish underneath your utilitarian exterior shell. Besides, it’s better to dress in layers because layers trap air between them, and air is one of the best insulators.
So, you may thing you need to spend a couple hundred dollars on a winter coat, when spending a hundred on a wind-proof shell with a bit of insulation may do you just as well for braving the cold between the door and the car, and then is set aside when you’re in the climate controlled indoors (at the restaurant, at the mall, at the office, etc.) and people can see your fabulous taste in the clothes you wear beneath the utility of your outerwear.
Sweaters provide an added layer of insulation underneath the winter-proof outer shell, and a slightly heavier shirt or long-sleeved T-shirt will add the layer beneath that, next to the skin.
As an added benefit, lighter winter outerwear will allow you to prolong the use of your fall fashions through the cold weather months, and then switch over to your spring clothes as winter nears its end. It also allows you to deal with the fluctuation in temperature on those inconsistent days where you leave the house in below-zero temperatures and then go out for lunch after temperatures have climbed into the fives — you can leave the sweater behind and just go with the winter shell over your Tee, or you can leave the wind-protection behind and just go with your fall sweater.
In short, spend the bulk of your fashion budget on the clothes in which people are going to see you most often, and when you really think about it, they usually only see you in your winter coat for several minutes a day.
And as with any large expenditure, it makes it easier to pay for it when you’ve worked it into a budget. The best way to budget for necessities —clothing, shelter, food, etc. — is based on past experience. Thus, keeping track of past expenditures will allow you to set a budget for future purchases (whether you choose to pay less for it or work in an allowance for inflation).
Set a yearly budget point, divide it by 12 or 26 or 52 (depending on whether you want to put money away on a monthly basis, bi-weekly or weekly) and put that money away to spend when the chill starts blowing in from the north.
by admin | Credit Repair, Debt Management, Uncategorized
If you run your own business, you’re familiar with Entertainment Expenses. That’s the category to which you can assign money you spend entertaining clients or potential new clients, with the final resolution that you drum up some business.
The idea is that you spend a little to make your clients feel appreciated, and they give you back more than the cost of a dinner, sports tickets or a break at a café. Canada Revenue Agency generally allows you to claim 50% of a reasonable dinner/entertainment bill. The idea is that you consume half of what your total bill is, and they’re not going to pay for your meal. There are exceptions for occupations such as long-haul truck driver or bike courier, because they are required to eat in order to continue doing their jobs. For the average entrepreneur, the CRA doesn’t usually bat an eye if you spend $650 per year on entertaining.
But what about in terms of your household budget? Should you factor in some “entertainment” expenses if for nothing else than to feel as if you’re not spending everything you make on the drudgery of staying afloat financially?
Most experts agree that you should. But how much of your monthly budget should you assign to it?
If you work with the CRA figure, a person may think about spending $55 a month on entertainment (movies, fast foods, afternoon lattes, etc.). That’s for one person. If you want to budget for your wife or children, you may want to expand on that. Most experts agree that you shouldn’t be budgeting more than 5% of your paycheque, though, since there are other things that should take priority in your spending (utilities, debt repayment, rent, etc., and yes, even savings).
So, if you’re bringing home $1,000 every two weeks, for example, and you’re effectively covering off your house payments and debts, you may consider putting $50 into the “fun” jar.
You may think that doesn’t allow you much fun outside of your everyday routine, and so vacations are out of the question, but vacations are probably best included in your long-term planning, a separate budget category that is taken care of by your savings.
Your savings is money for your future, so in effect you’re stocking money away today for future fun — short-term financial pain for longer-term financial fun, if you will. Some people put savings away for their retirement and forget about having fun until then. There are examples of couples investing heavily in their retirement, with hopes of traveling the continent in a motor home, only to have one of the spouses pass away suddenly and the surviving one wishing they had spend more money on living with each other now, rather than waiting for a tomorrow that now will never come.
Say you put away 10% of your paycheque into a high-yield savings account (which these days is about 3%). At the end of the year, you’ll have over $2,600. That’s a pretty good vacation for two every couple years, even at today’s prices, and you’re still contributing toward your retirement (albeit, not much).
As with any budgeting, the idea is to make your paycheque cover the essentials and plan for the things you want to do, rather than build up more debt living unsustainably.
So, figure out what you can afford to put away for “fun” and be regimented in making sure you put that money away. And be patient about spending it. The money will eventually be there to take off for Cuba, or buy a big screen TV, or just have a meal at a fancy restaurant and perhaps spend the night away at a downtown hotel. You just have to wait for it to arrive.
