Author: Brandon Smith

Brandon Smith is a licensed insolvency trustee and Senior Vice-President of Ira Smith Trustee & Receiver Inc. The firm deals with both individuals and companies facing financial challenges in restructuring, consumer proposals, proposals, receivership and bankruptcy.

They are known for not only their skills in dealing with practical solutions for individuals and companies facing financial challenges, but also for producing results for their clients with realistic choices for practical decision-making. The stress is removed and their clients feel back in control. They do get through their financial challenges and are able to start over, gaining back their former quality of life.

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THE 10 MOST COMMON CREDIT SCORE MISTAKES

canadian credit score calculator, credit score, credit scores, credit score mistakes, credit report, credit problems, credit history, bad credit, bankruptcy and insolvency act, bankruptcy alternatives, bankruptcy, consumer proposals, credit counselling, toronto bankruptcy, vaughan bankruptcy, trustee, woodbridge bankruptcy, what is bankruptcy, what is a consumer proposal, dave johnsonLast week we discussed how Your Credit Score Can Be Ruined Even If You Don’t Do Anything Wrong. This week we’ll be addressing The 10 Most Common Credit Score Mistakes.

What is a Credit Score? According to the Office of Consumer Affairs (OCA) “Your credit score is a judgment about your financial health, at a specific time. It indicates the risk you represent for lenders, compared with other consumers. Unfortunately, there is not an online Canadian credit score calculator tool.

There are many ways to work out credit scores. The credit reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay”.

What are the 10 Most Common Credit Score Mistakes?

1. Failing to check your credit report for errors: As we discussed in last week’s blog Your Credit Score Can Be Ruined Even If You Don’t Do Anything Wrong. Check your credit report at least annually. Mistakes on credit reports are more common than you may have imagined and you need to stay on top of the situation. If you do discover any errors, contact the credit bureau as soon as possible to correct the situation.

2. Not using your full legal name in financial documents: It’s possible that people with common names or similar sounding names could have their name attributed to a credit report that is not theirs, as was the case for Mr. Dave Johnson of Pembroke, Ontario. Use your full legal name on bank accounts, credit applications and other documents that become part of your credit history.

3. Paying your bills late and failing to make at least the minimum monthly payment: If you don’t pay at least the minimum amount due on time your creditors will eventually report your account as past due, which can damage your credit score. If there is a reason why you won’t be able to pay your bill on time, contact your creditor before your bill is due to work out an arrangement if possible.

4. Maxing out on your credit cards: If your credit cards are maxed out, potential creditors may question your ability to repay. If you are approved for a loan you may be charged a higher interest rate to compensate for what is viewed as a higher risk.

5. Not alerting creditors if you’ve moved: Your bill may arrive late and as a result your payments could be late, potentially damaging your credit score.

6. Registering for too many new credit cards: Consumers who often open new credit cards are viewed as a greater risk than those who don’t.

7. Closing older credit card accounts: Closing older credit card accounts shortens the length of your credit history and this can adversely affect your credit score.

8. Don’t co-sign for someone else’s loan: You could be liable for that person’s debt and damage your credit rating.

9. Don’t share your credit card or social insurance number with anyone: There are a lot of scams abound where people try by phone, email or mail to get your credit card or social insurance number. This can be a fast track to identity theft and financial disaster.

10. Ignoring the warning signs of credit problems: If you have trouble making the minimum payments on time and have maxed out all of your credit, you have serious debt problems.

Serious debt problems need professional help. Contact Ira Smith Trustee & Receiver Inc. and take the first step towards a healthy financial future. Starting Over, Starting Now a debt free life can be yours.

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YOUR CREDIT RATING CAN BE RUINED EVEN IF YOU DON’T DO ANYTHING WRONG

credit rating, credit score, collection agencies, collection agency, credit record, credit score mistakes, bankruptcy alternatives, Consumer Proposal, Bankruptcy, I came across this story not long ago about a man in Ontario who had his credit rating ruined by Rogers even though he has never had a Rogers account. I know this sounds unbelievable but Mr. Dave Johnson of Pembroke, Ontario has spent three years fighting a Rogers Bill that isn’t his. This story is a perfect example of why it’s so important that you are aware of your credit score and credit rating and check it periodically.

Rogers like many large companies outsources the collection of accounts that are in default to collection agencies. According to the Government of Canada you must be notified in writing that your file has been given to a collection agency. In this case Dave Johnson never received notification from the Rogers collection agency that his account was in default because he never had a Rogers account. Never-the-less, in 2010 he received a $5,400 bill from a Rogers collection agency working for Rogers Wireless. Mr. Johnson knew he wasn’t in arrears and contacted the collection agency letting them know that he didn’t have a Rogers account and that somewhere there was a clerical error. The collection agency seemed to be very reasonable and Mr. Johnson believed that the matter had been cleared up. Big mistake! The $5,400 debt to Rogers Wireless ended up on his credit record and as a result of this, leading to a poor credit rating:

  • He was turned down for credit cards.
  • He wasn’t allowed to co-sign for his son’s mortgage.
  • He couldn’t use the equity in his home.

In the process of trying to clear his name and restore his credit, and his credit rating, Mr. Johnson discovered that another man, also named David Johnson, has also been wrongly pursued for the very same bill. The reality is that the Rogers collection agency clearly didn’t have a file with accurate information of the debtor. They were going after anyone and everyone who had the same name, which unfortunately for the David Johnsons in Ontario, is quite common.

Rogers is not taking any responsibility for this problem. They are blaming the Rogers collection agency. In case you think that this is an isolated incident, CBC News received dozens of complaints last year about how collection agencies aggressively pursue unpaid debts. Howard Maker, Commissioner of Telecommunications Complaints, has confirmed that he is aware of this ongoing problem.

If you are being legitimately pursued by collection agencies because you’re experiencing serious financial difficulties and you are concerned about your credit rating, contact Ira Smith Trustee & Receiver Inc. We can help and Starting Over, Starting Now you will gain back your former quality of life. Watch for our next blog when we’ll be discussing Common Credit Score Mistakes.

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WHY ARE CANADIANS NOT AVOIDING BANKRUPTCY?

bankruptcy, personal bankruptcies, consumer proposals, bankruptcy alternative, insolvency, avoiding bankruptcy

There are many reasons why Canadians are struggling with debt and ultimately not avoiding bankruptcy. However it is widely agreed upon that lower interest rates have encouraged us to purchase big ticket items like cars and houses. The good news is that according to a CIBC report, personal bankruptcies have returned to pre-recession levels, to four insolvencies per 1,000 adults, from an all-time high reached during the recession of six per 1,000. However, that doesn’t really tell the story because the number of Canadians striking consumer proposals has grown to 40% of total insolvency cases, from about 15% in 2006 – an increase that underscores a major shift in how consumers are avoiding the full bankruptcy route. In fact consumer proposals now make up 50% of total insolvencies in Ontario.

According to the Office of the Superintendent of Bankruptcy (OSB) here are the top 10 reasons that Canadians go bankrupt:

  1. Overextension of Credit: 22%
  2. Seasonal Employment: 15%
  3. Job Loss: 12.8%
  4. Medical Problems: 11.3%
  5. Relationship Breakdown: 10.3%
  6. Money Mismanagement: 9.2%
  7. Failed Business: 9.1%
  8. Failure to Pay Taxes: 3.6%
  9. Gambling Addiction: 2%
  10. Inadequate Pension: 1.4%

The Bank of Canada’s Review of Household Insolvency in Canada (Winter 2011 – 2012) reports that the largest unsecured liabilities are credit card debt and bank loans.

 

LIABILITY TYPE – BANKRUPTCY/ RENTER

PERCENTAGE

Individuals/Doctors/Lawyers/Gov.

24.71

Credit Cards (bank/trust co. issuers)

18.99

Bank Loans (except mortgages)

17.26

Taxes

16.59

Credit Cards (other issuers)

8.19

Finance Co. Loans

7.92

Real Property Mortgages

3.28

Student Loans

2.83

Payday Loans

0.23

LIABILITY TYPE – BANKRUPTCY OWNER

PERCENTAGE

Real Property Mortgages

56.55

Individuals/Doctors/Lawyers/Gov.

13.52

Bank Loans (except mortgages)

11.26

Credit Cards (bank/trust co. issuers)

6.29

Finance Co. Loans

4.52

Taxes

4.34

Credit Cards (other issuers)

3.10

Student Loans

0.31

Payday Loans

0.11

Many Canadians are dealing with serious debt issues. Whether you decide to declare bankruptcy or opt for a bankruptcy alternative – Credit Counselling, Debt Consolidation, Consumer Proposals – you need the help of a professional trustee. Contact Ira Smith Trustee & Receiver Inc. as soon as possible for advice and a plan to tackle your financial difficulties. Starting Over, Starting Now you can live a debt free life.

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THE DANGERS OF JOINT CREDIT CARDS

bankruptcy and insolvency act and a joint account, debt, debts, credit cards, joint credit cards, credit card companies, bankruptcy, credit ratings, credit score, trustee, senior with credit card debtI recently met with a widow whose husband passed away deep in debt. Her late husband was very secretive about his finances and his widow only learned of how dire their position was when she became the executrix of his estate. After fending off collection calls relating to the estate, she learned she was liable for some of his debts. Why? Because her husband had applied for joint credit cards on his accounts, in his wife’s name. Needless to say, this woman, who never used the credit cards, was horrified to learn that she was now a senior with credit card debt rendering her insolvent.

It may seem pretty common for spouses to use a joint credit card, but consider the financial ramifications.

• Regardless of who incurs the debt on a co-issued credit card the primary and secondary card holders are jointly and severally liable. This means that the credit card companies view both parties as fully responsible for the entire account balance regardless of who is responsible for the expenses.
• If one card holder declares bankruptcy, the debts are enforceable against the other cardholder(s).
• Even if just one joint account holder acts irresponsibly, both credit ratings suffer. According to Clifton M. O’Neal, senior manager with TransUnion credit reporting, a 90-day delinquency can actually have a greater impact on an innocent party with relatively few accounts and no other credit infractions. The new delinquency may not make as much difference to the culprit’s credit score, if he/she holds other accounts with many more serious problems.

Joint credit cards may seem like a good idea for tracking expenses and collecting loyalty points, but they can also be a recipe for financial disaster. If you are experiencing serious financial problems as a result of a joint credit card, don’t delay. Contact Ira Smith Trustee & Receiver Inc. as soon as possible. We can help with your serious debt issues and Starting Over, Starting Now you can live a debt free life.

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SERIOUS ILLNESS AND MEDICAL DEBT CAN RUIN YOU FINANCIALLY ON BOTH SIDES OF THE BORDER

bankruptcy, file bankruptcy, medical debt, healthcare costs, credit card debt, group insurance, personal insurance, trustee, bankruptcy faqs, bankruptcy trustee, bankruptcyIn Canada we wrap ourselves in a blanket of socialized healthcare and believe that our provincial medical plans will protect us from financial ruin. People are unaware that serious illness and medical debt can ruin you financially on both sides of the Border. We feel immune from the financial disaster that afflicts many Americans who experience a serious illness. We are bombarded in the news about the financial devastation that many Americans are going through with very little commentary about how Canadians are affected. According to the National Debt Relief Organization in the U.S.:

  • 1.7 million Americans will be forced to file bankruptcy due to medical debt.
  • Over 11 million Americans will burden themselves with more credit card debt to cover their healthcare costs.
  • 56 million Americans will struggle with healthcare related bills.

As Canadians are we immune from the financial devastation of a serious illness? The answer is NO! According to Sun Life Financial:

  • Nearly half of Canadians facing a major health incident like cancer or a stroke are struggling financially as a result of their illnesses.
  • 40% of those surveyed earlier this year reported feeling financially strapped after a serious health event or diagnosis, while 53% of 45 to 54 year olds have been hit hard by unforeseen healthcare costs.
  • Only 13% had money set aside for uncovered healthcare costs.
  • Too many Canadians underestimate out-of-pocket health costs, especially when it comes to prescription drugs.
  • Over the past 12 months Canadians spent an average of $1,354 on medical or healthcare products and additional services; but few set aside money to cover health costs, with more than 81% putting nothing aside.
  • 20% had no group insurance, personal insurance or health expense savings to help absorb the shock.
  • 22% turned to credit cards or personal lines of credit, another 22% tapped into personal savings, 12% borrowed from a loved one and 5% were forced to either remortgage or sell their home.

Are you facing financial ruin as a result of a serious illness? Contact Ira Smith Trustee & Receiver Inc. as soon as possible. Also do some self-study using our You can do some self-study by checking out our bankruptcy faqs. We can help you get back on your feet financially and let you concentrate your efforts on getting well.

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IS CANADA’S 1% IMMUNE FROM INSOLVENCY OR BANKRUPTCY?

bankrupt, bankruptcy, insolvent, insolvency, financial plan, 1 percenters, trustee, canadian bankruptcyThere has been quite a bit of buzz recently about Canada’s high income earners, affectionately referred to as the “1% or 1 percenters”. According to a National House Survey in 2011, to be considered in such illustrious company you have to earn a minimum of $191,100. However, the average income among the top 1% was $381,300 while the average Canadian earns $38,700. The typical member of the 1% club is male, married or living common-law, between the ages of 45 and 64 and lives in Toronto, Montreal, Calgary or Vancouver.

Earning $191,100+ may sound rich to the average Canadian but they would probably be shocked to know that many 1 percenters have ZERO savings or investments and are living paycheque to paycheque. Many are living lifestyles far beyond their means with sky-high mortgages, luxury vehicles, wining, dining, exotic travel, personal grooming, household staff… They are candidates for Canadian bankruptcy. There is no correlation between money earned and money saved. Living a high flying lifestyle can be intoxicating and very difficult to give up. Sadly, those seeking luxury are younger than ever. American Express Cardmember and merchant data reports that Canada’s Generation Y (born from 1983 onwards) as the biggest spenders on fine dining, luxury and travel. Living on a financial high wire is risky business. It equates to flirting with disaster. These 1 percenters are no different from the celebrities who blow through millions in earnings per year and declare bankruptcy. Few are super rich enough to become immune from insolvency and bankruptcy.

In fact it doesn’t take much for some 1 percenters to become insolvent or bankrupt – a downturn in the market, an illness, job loss, bad investment… If you’re walking a financial high wire, it’s time to come down to safety. Contact Ira Smith Trustee & Receiver Inc. We’ll evaluate your situation and come up with a realistic financial plan so that Starting Over, Starting Now you can live a happy, productive life without the fear of falling off a financial high wire.

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EMPLOYERS CAN BE FORCED INTO BANKRUPTCY BY CRIMINAL PENALTIES

www.irasmithinc.com, consumer proposal, toronto bankruptcy, bankruptcy, bankruptcy trustee, bankruptcy (4)Ground Breaking News for Employers: On September 4, 2013, the Court of Appeal for Ontario held that, in appropriate cases, courts can essentially fine a company into bankruptcy for a Criminal Code conviction. The Court of Appeal released its decision in the sentence appeal in R. v. Metron Construction Corporation (“Metron”) as a result of tragic circumstances.

What circumstances brought about this ground breaking decision? In September 2009 there was a tragic worksite accident that left 4 workers dead and one who survived with serious injuries. Metron was restoring concrete balconies on 2 high-rise buildings in Toronto. They had arranged for a number of swing stages for the project; however 2 of the swing stages from an Ottawa-based supplier did not have any markings, serial numbers, identifiers or labels describing maximum capacity, as required by law and industry practice. They were delivered without manuals, instructions or design drawings and, contrary to legal requirements, were not accompanied by a written report from a professional engineer stating that the swing stage had been erected in accordance with design drawings. There were 2 lifelines for the swing stage to which workers could connect their fall harness. The normal practice was that only 2 workers would be on the swing stage at any one time. On December 24, 2009, 6 workers were on a swing stage at a height of approximately 13 storeys. The swing stage collapsed and 4 workers were killed, 1 survived with serious injuries and 1 who was actually connected to a fall arrest system was not injured.

After an investigation by the Ministry of Labour and the police it was determined that three of the four deceased, including the site supervisor, had recently consumed marijuana. It was also determined that the swing stage collapsed because its design was defective and it was unable to tolerate the combined weight of six men and their equipment. Many charges were laid by The Ministry of Labour against multiple parties under the Ontario Occupational Health and Safety Act (“OHSA”). After its own investigation, the Toronto Police Service also laid numerous criminal charges.

Employers Beware!

  • It appears possible that the criminally negligent behaviour of a single, low-level official could lead to a sentence that sends a company into bankruptcy, notwithstanding the absence of systemic conduct or the involvement of highly placed officials.
  • There is no due diligence defence to a criminal negligence charge and the corporate level at which the criminally negligent behaviour occurred is irrelevant and cannot diminish corporate culpability.
  • A corporation cannot diminish its culpability based on the hierarchical position of the criminally negligent individual(s) within the organization.
  • Criminal negligence is a different and more serious offence than a breach of health and safety legislation and is expected to result in more severe sentences.

If your small company, entrepreneurial corporation, or a multi-faceted complex organization has found itself in financial difficulty for any reason, Contact Ira Smith Trustee & Receiver Inc. immediately. Our practitioners are available seven days a week do deal with your urgent needs. Starting Over, Starting Now we’ll put an immediate plan in place and start the process for dealing with the longer-term situation.

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WILL I EVER BE ABLE TO RETIRE?

will i ever be able to retireWill I ever be able to retire?” is a common question amongst the Boomers generation. Last week we discussed the problem of living paycheque to paycheque. This week we’ll be addressing whether or not you will ever be able to retire. That’s right; there is a distinct possibility that many of you may never be able to retire. A new HSBC study reports that 17% of Canadians believe that they will never be able to retire, while a growing number of Canadians believe that retirement is getting further and further away and therefore the answer to their will I ever be able to retire question is NO.

  • 40% say they did not prepare well enough and of that group that doesn’t have enough money, 40% only came to the realization after they retired
  • 72% of retirees experienced a fall in income, yet only 48% had a similar drop in spending
  • 14% of people were funding a dependent in retirement while 32% of people not fully retired made the same claim

A BMO study reports that Baby Boomers are about $400,000 short of their retirement goals. Another reason why the answer to their will I ever be able to retire question is no. The money has to come from somewhere and as a result the BMO survey reports that:

  • 71% of Boomers plan to work in retirement and therefore feel that the answer to the will I ever be able to retire question will never be yes
  • 44% will sell off their valuable goods such as antiques or possessions they don’t use in order to raise funds otherwise the answer to their will I ever be able to retire question will never be yes
  • 33% plan to sell their home to help make ends meet otherwise the answer to their will I ever be able to retire question will always be no

According to Sun Life Financial’s annual Unretirement Index poll:

  • Only 27% of respondents believe they’ll retire by 66, a nearly 50% decline from the previous year
  • Economic uncertainty and poor financial planning are being cited as key reasons why a majority of Canadians surveyed say plans to retire by age 66 are more of a fantasy than a reality and their answer to the will I ever be able to retire question is no

Are you one of the many Canadians who haven’t been able to save for retirement? Is life a financial struggle to pay the monthly bills? Are you relying on credit to maintain your lifestyle? Are you forced to use expensive credit, such as an online bad credit loan or a bad credit line of credit? Do you feel that it is no longer worth spending your time thinking about the will I ever be able to retire question because your reality is too depressing?

If so, you are living in a financial danger zone. Consult a professional Trustee as soon as possible. Contact Ira Smith Trustee & Receiver Inc. for sound advice and a realistic financial plan to turn your life around. Starting Over, Starting Now we can solve your financial problems and put you back on track to living a debt free life. We want to help you answer a resounding YES to your will I ever be able to retire question.

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ARE YOU LIVING PAYCHEQUE TO PAYCHEQUE?

starting over, staring nowWe’ve been discussing the serious issue of seniors in debt, but seniors are not the only ones experiencing serious financial challenges. Those of us still working are facing different, but equally daunting challenges.

You have a job and you work hard. You pay all of your bills on time and you pay your taxes. What could be wrong with this picture? You could be one missed paycheque from financial disaster. A recent report shows that Ontario has the second highest percentage of people living paycheque to paycheque in the country.

A Canadian Payroll Association (CPA) survey found that the majority of Canadian workers continue to live paycheque to paycheque, with 57%saying they would be in financial difficulty if their pay was delayed by even one week. Although a financial planner will generally recommend that people have approximately three months of expenses as an emergency fund, if you are living paycheque to paycheque, survival is on your mind; not saving. And, the reality is that retirement may be just a dream – 43% of Ontarians expect to postpone their retirements.

How did so many people end up living from paycheque to paycheque?

  • Rising cost of living expenses
  • Living expenses now include Internet, cable, cellphone/Smartphone, wireless data…
  • Increasing educational costs
  • Unstable economy
  • Easy access to credit contributes to overspending

What can you do now to end the “living paycheque to paycheque” cycle? Don’t wait for financial disaster to strike! Contact a professional Trustee today. Ira Smith Trustee & Receiver Inc. will evaluate your situation and come up with a solid financial plan so that Starting Over, Starting Now you can get your life back on track. You won’t ever have to experience the stress of living paycheque to paycheque again.

Watch for our next blog when we’ll be discussing if you’ll ever be able to retire.

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ADVICE FOR SENIORS WITH CREDIT CARD DEBT-SENIORS IN DEBT, PART 4

debt, seniors in debt, bankruptcy, personal bankruptcy, trustee, bankruptcy alternatives, credit counselling, debt consolidation, consumer proposals, insolvency, restructuring, starting over starting now, seniors trying to start over, seniors with credit card debtLast week we discussed whether or not seniors should try and pay off their debt or declare bankruptcy. This week we’ve got some great advice for seniors in debt, seniors with credit card debt, seniors looking for Starting Over, Starting Now.

Seniors in debt is a serious problem that continues to get worse:

  • According to Statistics Canada, one in three retirees over 55 and two in three over 55 who aren’t yet retired are in debt.
  • A recent TD Bank study has shown that older Canadians have increased their debt load by 15% (an average of $6000/person) from the previous year. Seniors living in Alberta, Ontario and Quebec had the highest rates of debt accumulation in 2012.
  • According to Boomers and Retirement, a new survey by TD Ameritrade, the average Baby Boomer is about a half-million dollars short on retirement savings.

The most important piece of advice we can give seniors trying to start over is to eliminate debt! Carrying debt into retirement is a recipe for disaster. Once you retire and begin living on a fixed income you will no longer have the funds required to service the debt; this is especially true for seniors with credit card debt at high rates of interest. Here are 5 tips for seniors in debt:

  1. Postpone retirement if at all possible and pay down as much debt as you can. If working fulltime is not an option, consider part-time work.
  2. Pay down credit card balances as quickly as possible. They are generally the highest-interest loans that seniors carry. You can also call the credit card company and ask for a lower interest rate. They will sometimes agree.
  3. Limit the number of credit cards that you have.
  4. Stay away from debt settlement companies! Consumers are continuing to be taken in by false claims offering to settle your debts for pennies on the dollar quickly and easily. The reality is that when something seems too good to be true, it usually is. Debt settlement companies exist for only one reason – to take your money! They will not help you solve your debt problems. There is no instant or quick fix for serious debt issues.
  5. Protect yourself against fraud and/or abuse. Run away from get rich schemes. There are many scammers out there who have duped seniors out of their life savings and continue to seek out new targets.

As we discussed in Seniors in Debt, Part 3, the right debt relief option you ultimately decide upon will depend on whether or not you have assets, who you owe money to, and how much you owe. For seniors trying to start over there are bankruptcy alternatives – credit counselling, debt consolidation, consumer proposals – which in many cases are better options than declaring personal bankruptcy.

If you’re planning to retire soon or you have already retired and find yourself dealing with serious debt, consult a professional Trustee. Contact Ira Smith Trustee & Receiver Inc. We are a full service insolvency and financial restructuring practice serving companies and individuals throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. We can help.

Call a Trustee Now!