Welcome to our weekly blog on financial matters focusing on debt, debt reduction and alternatives to bankruptcy. Our blog is written by our Senior-Vice President, Brandon Smith, who is a licensed trustee in bankruptcy, hence the title, Brandon’s blog.
Brandon writes on topics of interest for individuals and businesses. We hope that you enjoy Brandon’s blog, visit every week to see the new Brandon’s Blog and spend time on our website learning from the information we provide about bankruptcy, debt consolidation, debt settlement, consumer proposals, restructuring and receivership. We also hope you will spend some time on our website – www.irasmithinc.com, finding out more about our Firm and people.
At Ira Smith Trustee & Receiver Inc., we want to help people for Starting Over, Starting Now, living a debt free life.
I regularly write articles about debt help. Trends over the past few years about the increase in Canadian average household debt has gotten me thinking. We can get vaccinated for measles, mumps, rubella, influenza and a host of other diseases. Now it seems that without even getting a shot, Canadians have developed immunity to the dangers of debt.
How could this happen to what was traditionally a nation of savers? Did we just throw caution to the wind? Why did we stop heeding the warnings from the Bank of Canada, financial institutions, the Parliamentary Budget Office (PBO) and the credit reporting agencies?
Articles about debt help: Immunity to debt
Everyday there are headlines about the alarming levels of personal debt and how many Canadians are teetering on the brink of financial disaster. Have we stopped hearing the message or heeding the warnings? It seems that as we borrow more and take on more debt that our attitude to debt changes.
“People who don’t have any debts tend to be strongly opposed to debt… but if you put them into a situation where they are forced to acquire it, their attitudes change in the direction of toleration,” said Stephen Lea, an emeritus professor of psychology at the University of Exeter in the U.K. who has decades of experience studying the psychology of debt. As people acquire debt, Lea has found they also change their attitudes towards indebtedness. That’s an example of what psychologists call dissonance reduction. According to Mr. Lea, we really have developed immunity to debt.
Articles about debt help: Home prices and feeling immune to debt
There are more reasons why Canadians seem to feel immune to the dangers of debt. With house prices skyrocketing, home owners feel rich. And it seems that if Canadians are working and making their payments promptly, they feel in control of their finances. If interest rates continue to stay low, Canadians will continue to borrow more and more without realizing the dangers of accumulating debt.
Articles about debt help: Is there a solution to our immunity to the dangers of debt?
Saul Schwartz, who has studied personal debt as a professor of public policy at Carleton University believes that government should focus on policy actions that would rein in the lenders who are enabling all our borrowing because all the warnings are being ignored. I don’t know if that’s the answer but as a professional licensed insolvency trustee I can tell you that many Canadians felt immune to the dangers of debt until they faced a financial crisis.
Articles about debt help: What should you do if you are not immune to your debt load?
Take action before you find yourself in the throes of a financial crisis. Ira Smith Trustee & Receiver Inc. has helped many Canadian companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. Don’t delay. Give us a call today. Financial problems can be solved with immediate action and the right plan.
“I will certainly not invest one red cent in your shop … no severance, no sale,”
A (typical comment) posted on the Sears Canada Facebook page before the company blocked new comments and made old ones vanish.
Well there has been a lot of Sears Canada News today and in the last month. The company sought bankruptcy protection only last June 22, 2017. It has been only a little over 1 month, but there has been so much media attention it seems a lot longer.
Sears Canada news today: Social media backlash
We’ve seen on social media that Sears Canada is facing a backlash when it comes to how they’re handling this liquidation. Notice that I am using the word liquidation, as opposed to restructuring. This is in spite of they are currently operating under the Companies’ Creditors Arrangement Act (Canada) (CCAA). This statute is designed as a restructuring statute.
Sears Canada news today: Why KVETCH about a KERP?
It comes just as the company began its liquidation sales at those fifty-nine stores they’re looking to close. There is a boycott in Canada that is gaining some traction on social media. People are upset with Sears Canada’s senior management. They obtained on the first Court application, approval from the Court on their plan to pay themselves retention bonuses. These bonuses would be paid under the terms of what is commonly called in complex corporate restructurings a “Key Employee Retention Plan” (KERP).
The retailer introduced that, as part of a Court-supervised restructuring procedure. It is shutting 59 of its 255 shops and letting go 2,900 workers. None of them will get severance pay. Sears also will stop payments to the employees’ defined benefit pension plan. The retailer recently accepted to delay that pension plan payment issue till September 30th.
Sears also accepted the compromise with the former employees to maintain paying health benefits for an extra 3 months until the end of September. This is so the people could have that time to get alternate coverage. It is still not great though. The employee pension plan will remain underfunded. The employees will have to look for a new health plan. To date, there is no provision for former staff to receive any sort of package.
Sears Canada news today: What exactly is a KERP?
It is normal in complex corporate restructurings to set up a KERP. The concept of a KERP began in US corporate restructurings in the 1990’s. The theory is that to have a successful restructuring, senior management have specific knowledge and ability. If they walked away from the company in bankruptcy protection, such as to accept a senior position elsewhere, the company would have a much more difficult and costly time in restructuring. Hence the idea was born that those essential managers should be promised a bonus to create the most value possible in the restructuring for the stakeholders. This is in addition to their normal compensation.
Often KERPs are now viewed as either:
a standard item that senior management expects to receive; or,
a greedy money grab negatively affecting other stakeholders.
I have not yet read any material to show why the Sears Canada bankruptcy protection case is so complex. I have not read how Sears Canada could not liquidate without existing senior management. It is earlier and current senior management who have not created a retail vision niche for Sears Canada for years.
Sears Canada news today: Time to “come back”
Thankfully, all CCAA protection orders have a standard “come back” clause. The reason for this is that not every stakeholder receives notice of the company applying for the bankruptcy protection order. Any stakeholder can come back to Court to oppose any part of the original order they did not receive notice of. They could not tell the Court of their position, and now want to come to Court with their complaints.
The Court appointed a law firm to represent the interests of the employees and former employees. As part of their motion material filed with the Court, they are asking the Court to amend the Sears Canada KERP. They state:
the amounts are excessive under the circumstances; and
the KERP does not incentivize senior management to enhance the value of Sears Canada.
It will be very interesting to follow this.
Sears Canada news today: It didn’t have to be this way
You may recall that Target Canada took a slightly different route towards its former employees when it decided to liquidate and leave Canada. It also liquidated under the CCAA. In our blog “TARGET CANADA CLOSING: $5.4 BILLION AND COUNTING”, we told you about the liquidation and that Target US established a trust fund for payment of the Target Canada obligations to its employees. For sure personal hardships occurred. At least they tried to soften the blow.
So now, while Sears Canada wants customers to come and buy at the liquidation sale, they have a PR nightmare on their hands.
Sears Canada news today: No comments please
It is so bad, that Sears Canada is not permitting public messages on its Facebook page. Most the messages from the public so far are negative against the company. CBC News recently noted that Sears Canada’s Facebook page was riddled with remarks from Canadians objecting exactly to what was happening to the company’s employees. Sears Canada has removed those comments from its Facebook page as well as blocking new comments.
Picture courtesy of CBC News
Sears Canada news today: Certainly a funny way to stay in business
You must wonder if Sears Canada really wants to restructure, or if they are just liquidating their inventory. They are also trying to sell whatever other assets they can. If it was a true restructuring, you would think that senior management would want to see more customers who would be loyal to (the new) Sears Canada when it would exit bankruptcy protection.
So instead of growing a loyal customer base, Sears Canada’s actions have spawned a strong and growing “Boycott Sears” momentum. They’re going to have to deal with that. It’s going to be interesting to see exactly how this plays out while Sears Canada currently is shopping for a buyer.
According to Sears Canada, the unhappy remarks did not motivate it to close the public articles or to remove many of the bitter statements. Regardless, the former employees are still faced with now with the question “how do you collect salary owed to you from an employer that goes out of business”.
Sears Canada news today: What to do if you or your company have too much debt
If your company or you are experiencing financial problems, contact Ira Smith Trustee & Receiver Inc. We’re here to tell you on your restructuring and other options to avoid bankruptcy. If necessary, we can also talk to you about your bankruptcy options.
We can help you put your financial house back in order and set you on a path to debt free-living. You’ll be amazed at the difference one phone call to Ira Smith Trustee & Receiver Inc. can make.
Contact us today. We are a licensed insolvency trustee and will listen to your issues and offer compassionate, professional assistance to aid you to avoid bankruptcy.
With our help, you can regain control of your life, Starting Over, Starting Now.
Prenuptial agreements make families stronger: Introduction
Every time we hear about another celebrity divorce, there’s talk about their prenup. But prenups are not new, nor are they only for the rich and famous. In fact, prenups have been around for thousands of years and historians believe they were first used in ancient Egypt. Prenuptial agreements make families stronger by hopefully, stating clearly what happens if divorce occurs.
The reality is that with the divorce rate as high as it is (over 40% in Canada and over 50% in the U.S.) prenups make good financial sense for everyone. I know it’s not romantic to plan for when divorce or death happen, but should the worst happen, you’ll be prepared and protected. In this blog, we focus on married couples, but keep in mind most of this applies to people living in a cohabitation arrangement too. We are not lawyers and this blog is not meant to give legal advice. We recommend you seek the advice of an experienced family law lawyer in dealing with any situation.
Prenuptial agreements make families stronger: Prenuptial agreements definition
What is a prenup? A prenup, or prenuptial agreement, is a legal agreement entered into before marriage. It establishes the financial and property rights of each spouse if divorce or death happens.
Prenuptial agreements make families stronger: Why prenups in Ontario?
Why should I get a prenup? As we discussed in our earlier blog, very few couples have had serious discussions about their finances before getting married. Many were not aware of the other’s debts or what their soon-to-be-spouse earned.
Even if you’ve avoided the discussion until now, a prenup will put everything on the table. It legally requires both parties to show all of their assets (including any debt) and will help you formalize your plans for the future. A prenup gives you control instead of the courts “just in case”.
Prenuptial agreements make families stronger: The practical reasons
There are many practical reasons why you should get a prenup. If divorce or death happens it can:
Dictate how one spouse’s property can be passed on to children from a previous marriage
Indicate whether one of the parties is to receive alimony
Ensure that upon your death that your assets are distributed according to your wishes
Prevent your spouse from owning a part of your business
Decide who gets custody of the dog, cat or other pets
Prenuptial agreements make families stronger: Don’t be destroyed financially
Prenuptial agreements make families stronger: they aren’t just for the rich and famous – prenups in Ontario are for you too! They can protect you from the financial ravages of divorce.
We’ve seen many couples destroyed financially due to divorce and we could help them get back on track. The Ira Smith Team can help you too. Give us a call today and Starting Over, Starting Now we can set you on a path to debt free living.
Note: We are not lawyers and this blog is not meant to give legal advice. We recommend you seek the advice of an experienced family law lawyer in dealing with any situation.
Canada, the United States and much of the globe has remained in an extended period of reduced rates of interest. But the Bank of Canada, led by Governor Stephen Poloz and the US Federal Reserve, led by Janet L. Yellen as Chair of the Board of Governors of the Federal Reserve System, are the independent bodies in Canada and the US, respectively, that set base rate targets for the financial markets. They have now begun to slowly raise interest rates, so interest rates Canada 2017 are on the rise.
Interest rates Canada 2017: They are on the rise
On July 12, 2017, Governor Stephen Poloz announced the benchmark interest rate increase to 0.75 per cent from 0.5 per cent. Most economists expect that rates will continue to climb at least one more time before the end of the year.
Changing interest rates can impact our ability to service our debt on variable rate or prime based interest rate loans. One way to keep our debt load under control is to adjust our spending and saving behavior to pay down debt appropriately.
Interest rates Canada 2017: They are on the rise – so how much debt should I try to pay off?
When the Bank of Canada signals a rise in its benchmark rate, or a Governor Stephen Poloz speech on interest rates signalling an increase, the Canadian banks then raise:
its prime rate of interest;
the interest rate on variable rate loan products;
the interest rate on loans based off the prime rate;and
the interest rate on fixed rate loan products such as mortgages.
When those interest rates rise, we should try to look at paying down some debt so that our total cost of borrowing does not increase. We try to figure out how much debt to pay down by using the following formula:
New Debt Balance = Annual interest expense from older interest rate divided by the new interest expense of the new rate
We use the annual rate of interest of our portfolio before the rate hike due to the fact that we understand that’s what we could currently manage to pay every year. Simply take the weighted average of all the various rates of interest that we’re paying, and separate it by the complete amount of debt we have.
$ 100,000 x 3% = $3,000
Using the example above we understand the annual interest expense I was originally paying was $3,000. So, we could use the formula to figure out how much debt I ought to be reducing to maintain my capacity to service my obligations.
Annual previous interest cost/ the new expense (%) of borrowing = New Debt Balance
$ 3,000/ 3.25% = $92,308
This implies that to keep paying $3,000 a year in interest, I must have a debt balance that’s around $92,300. Because I in fact have $100,000 of debt I have to make some difficult choices.
Interest rates Canada 2017: They are on the rise – so it is now decision time
I could either pay down my debt by $7,692 ($100,000 – $92,308), or accept paying more interest each year as well as make my regular monthly payments. The first alternative implies I will need to sacrifice personal costs to conserve more to pay down my debt. The second choice enables me to spend even more now, however will cost me an extra $250 yearly (in this example, 0.25% x $100,000) that I’m providing to the bank with nothing in return.
It really depends on what the purpose of borrowing in the first place was. Debt to pay for consumer purchases, you would want to try to reduce the debt as quickly as possible.
When you incur debt for investment purposes, then you might prefer to pay a little more tax deductible interest. If a stock’s price typically follows earnings, and earnings will grow, then the stock price should eventually grow as well.
The rate of interest we pay is simply one reason. Changes to our income, financial investment income, household scenarios, place, as well as situations around tax obligations all comes into play when making a choice about debt.
Interest rates Canada 2017: The effect of higher interest rates on the economy
Higher interest rates end up causing a slower economic climate. As people rush to pay for debt or spend more cash to service their present financial debts they must spend much less on consumer goods. Every person should set up a financial portrait that captures their scenario precisely so they can plan for further interest rates in the following 12 months.
Interest rates Canada 2017: What should you do if you have too much debt?
I hope that you have found this vlog helpful. If you’re looking for ways to end your financial debt callIra Smith Trustee & Receiver Inc. Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you stroll in the door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress free life.
They say that love is more important than money. Have you ever tried paying your bills with a hug?
Nishan Panwar
How to Make Marriage Last Forever: Love or Money?
Love may be the reason you marry, but sadly it’s not enough to keep you married. I’m sorry to deflate your romantic bubble but, the answer to how to make marriage last forever is money, not love. Money will predict how successful your marriage will be and if it will last.
The No. 1 cause of stress in relationships is money, according to a survey by SunTrust Bank. Having financial arguments is the top predictor of divorce, a separate study by Kansas State University found.
How to Make Marriage Last Forever: The CIBC survey
Jamie Golombek, managing director of tax and estate planning for CIBC, said in a report about a recent survey that financial disagreements are a strong predictor of divorce. This is particularly so among younger couples who are more prone to experience financial stress in their relationships.
The CIBC survey produced some surprising insights:
66% of Canadian couples enter marriage or a common-law relationship in debt
46% said their top financial goal within the first two years of living together was to save up for a vacation (considering that 66% of couples are in debt, this boggles the mind)
33% of couples have had a serious joint discussion about finances before getting married or moving in together
43% of people don’t even know how much their partner makes (Fidelity survey) yet 72% of those same couples said they communicate exceptionally or very well about financial matters
How to Make Marriage Last Forever: Are You A Couple With Too Much Debt?
If you’re a couple in debt, reducing debt should be your top priority. A heavy debt load can affect your life choices. A poor credit rating can negatively impact many things including your ability to buy/rent a house or apartment, lease/purchase a car.
Now is the time to have that serious conversation about your finances and contact a professional trustee on how to deal with your debts. The Ira Smith Team can help you free yourselves from debt and be able to realize your dreams for the future Starting Over, Starting Now. We’re just a phone call away.
Consumer proposal Ontario process: Livan Hernandez now
Livan Hernandez made a lot of money as a pitcher in major league baseball. Yet, according to court documents, in July 2017 he applied for Chapter 13 bankruptcy in Florida. He filed in federal court at Fort Lauderdale. The purpose of this blog is twofold: 1. to show that even if you have made millions in your career, you can still get into debt trouble; and 2. the consumer proposal Ontario process (Proposal, Plan or CP) which are similar to Chapter 13 US bankruptcy filings.
Hernandez, according to Baseball Reference, made more than $53 million in his job. He states that he owes up to 49 lenders between $500,000 and $1 million and he has $50,000 or less in assets.
The court documents show that most of the creditors he owes are banks and credit cards. He also owes the IRS.
Hernandez pitched for 17 years in the majors, on 9 teams. He played in 2 World Series, winning and making Series MVP honours with the Florida Marlins in 1997 and losing with the San Francisco Giants in 2002.
Mr. Hernandez would have attended at the Chapter 13 trustee office to file under the US Bankruptcy Code. A chapter 13 bankruptcy is also called a wage earner’s plan. It enables people with regular income to develop a plan to repay all or part of their debts. The Canadian equivalent is our CP.
Consumer proposal Ontario process: The rich and famous have problems too
We have written about the rich and famous having debt problems before. Our previous blogs on this topic include:
Consumer proposal Ontario process: Just what is a consumer proposal?
This vlog offers the answer to one of the most asked Plan questions. A CP is available to people under the Bankruptcy and Insolvency Act (BIA). Teaming up with a licensed insolvency trustee (LIT) offering to administer your Plan you make an offer to:
pay your creditors part of what you owe them over a period not greater than 60 months;
lengthen the time you have to pay back your debts; as well as
stay free from bankruptcy
Payments are made to the LIT. The LIT uses that cash to pay each of your creditors. The CP must be finished within 5 years.
Consumer proposal Ontario process: Who qualifies?
To meet the BIA requirements for a CP, you need to be an individual, not a company. Your overall financial debts need to not exceed $250,000 (not consisting of debts from a home mortgage, home equity line of credit or line of credit, secured by your principal residence).
You should also meet the insolvency requirements. This implies that:
your debts are greater than the value of your assets;
if you sold your assets you would not have appropriate funds to repay your monetary commitments totally;
you are unable to pay your debts as they come due
Making simply the minimum monthly payment as disclosed on your credit card statements do not count as repaying your debts.
Consumer proposal Ontario process: What is the cost of a consumer proposal?
Your Plan repayments cover the expense for the consumer proposal. There are no different prices either for doing a consumer proposal or fees paid to the LIT to administer your Plan. The fee the LIT earns is calculated per the BIA.
Consumer proposal Ontario process: How long will my consumer proposal take?
A CP can last for no more than 5 years. Nonetheless, you can reduce the term either by 1. increasing the amount of your month-to-month repayment agreed to with your creditors in your Plan or; 2. by giving a round figure settlement all at once (if you could get an adequate amount from either a financial institution or family).
Consumer proposal Ontario process: What are the actions involved in a consumer proposal?
A CP allows you to pay all or part of your unsecured debt in regular monthly payments over an established period (again, not exceeding 60 months).
In composing your Plan, the LIT has to make sure that your CP provides a better outcome for your creditors compared to what they could expect to receive in your personal bankruptcy.
The typical actions of a LIT assisting you in your CP are:
learn from you about your assets and liabilities;
work with you to create a strategy that you both believe will serve the requirements of both you and those you owe;
draft the Plan;
send the Plan to the Office of the Superintendent of Bankruptcy;
mail out the CP to your creditors who will have 45 days to accept or reject it.
The creditors can accept or reject your consumer proposal at a meeting of creditors if such a meeting was held. Usually, under a Plan, there is no need to hold a meeting.
Consumer proposal Ontario process: Can a consumer proposal stop debt collection agencies as well as prevent my wages from being seized?
Yes. As soon as the filing of a CP happens, all creditors must stop all legal action against you, including seizure activities (aside from any family law responsibilities under a proper settlement arrangement or court order).
Consumer proposal Ontario process: In a consumer proposal, will I turn over my residence as well as my auto?
Typically lending institutions who register a mortgage or various other security for financing are outside the CP procedure. It is the equity you have in your residence or auto that must be considered when you initially work out a budget and what type of Plan strategy you are going to make with your LIT.
If you have enough earnings to keep paying the mortgage against your home and/or your car loan as well as you wish to maintain the properties, you can do so. Again, your equity needs to be taken into consideration in the offer you make to your creditor. Also, your income, as well as costs, need to be evaluated to make certain you can pay for all these expenditures plus the regular monthly payment under your CP.
KEEP IN MIND: If you were to surrender your home or auto after declaring your Plan, you will not be spared the responsibility for any shortfall on your mortgage or auto loan given that the surrender took place after the filing of your CP.
Make certain that if you are giving back your home or auto to your lender, you await the bank to acknowledge that you have turned them over. Additionally, wait till they have begun their enforcement BEFORE you file your CP. That way any shortfall they experience will be a debt caught in your Plan
Consumer proposal Ontario process: Will I need to surrender my charge cards?
Typically, you must be prepared to give each of your charge cards to the LIT and you will not be able to ask for a brand-new credit card till after your Plan is completed. You can take advantage of a guaranteed/secured charge card.
If my creditors reject my CP or I fail to fully do it, will I automatically become bankrupt?
We highly recommend you to put your best foot forward when submitting your CP. We also recommend that you make your payments constantly on time. If your Plan is rejected by your creditors or you drop 3 payments behind, your CP will go into default. If that were to happen, you will no more have protection from your creditors and their collection initiatives.
Consumer proposal Ontario process: What should I do if I have too much debt?
If you’re thinking of a debt settlement program or are seeking methods to solve your debt problems and avoid bankruptcy, call Ira Smith Trustee & Receiver Inc. Our method is for every single person is to create an outcome where Starting Over, Starting Now comes true, starting the minute you walk in the door. You’re simply one call away from getting back on the road to leading a healthy, balanced and tension free life.
Parents never stop wanting to help their children but there is a growing trend which can compromise the retirement of some seniors. It seems that many adult children are still financially reliant on their parents and treating them like an ATM. This makes delayed retirement a new trend.
Parents are paying for their adult children’s rent, cars, cell phones and even vacations, with money they often have to borrow. “There are quite a lot of our members, indeed, who have taken out loans to help their children and grandchildren because they have a better credit rating,” says CARP Vice President of Advocacy Susan Eng.
Delayed retirement a new trend: Grown children have a message for parents
A report by CIBC demonstrates clearly how helping adult children financially can negatively impact retirement plans.
66% of parents are dipping into their nest eggs to support their adult children
47% of parents said they have had to cut into their personal savings to help their children
44% said they have had to limit travel or spending on themselves
25% of parents are giving their adult children $500 or more each month
71% helped their children by offering free room and board in the family home
Unfortunately, it seems that parents supporting adult children is becoming the new normal. But, how far should a parent go to financially support their adult children? Many are delaying retirement. Others are borrowing money and accumulating debt which will certainly compromise their retirement.
This is a problem that can’t be solved with a quick fix. As a first step we strongly recommend budgets for both the parents and the adult children. This may help to get the spending under control.
Delayed retirement a new trend: What can you do if you have too much debt?
For parents that now find themselves getting deeper and deeper in debt our best advice is to contact a professional trustee. The Ira Smith Team can help. We have a cumulative 50+ years of experience dealing with diverse issues and complex files and we deliver the highest quality of professional service. There is a way out of debt and back to financial peace of mind Starting Over, Starting Now. Give us a call today.
Below is our list of 5 stupid credit check failed reasons stopping you from getting that loan you can repay. You likely recognize that not paying your credit card on schedule or missing out on a settlement could harm your credit score. That is probably the most common credit check fail. So, those reasons are not on our list of credit check failed reasons. There are much less clear methods to sink your rating. You could be doing some without understanding the influence you’re triggering.
Below are 5 unexpected methods you could be damaging your credit score:
Credit check failed reasons: Decreasing your credit line
You might assume that you’re increasing your credit score by reducing your credit line on your credit card. However that could be having the other impact. Credit score use is the second-most vital credit score aspect, after history of credit card repayments.
Your credit use is your compared with just how much you’re using. When you lower that proportion, that is a good thing. Many professionals suggest maintaining it around 30 to 35 percent.
By reducing your authorized credit amount, you’re really increasing your credit use proportion.
Toronto financial advisor Seun Adeyemi says that most people are not aware that cancelled credit lines, even after making full repayment, can hurt your credit score.
Here is an example. Say you have 2 credit cards:
a Visa with a $1,500 balance as well as a $4,000 credit limit;
as well as a MasterCard with $1,500 outstanding and a $6,000 credit authorization.
Your credit usage is just 30 percent since you’re making use of $3,000 of your readily available $10,000.
If you reduced your credit limit to $4,000 on that MasterCard, you’re currently utilizing $3,000 of a readily available $8,000. This presses your credit usage to over 35%.
credit check failed reasons
Credit check failed reasons: Leasing an automobile with a debit card as opposed to a credit card
When you’re leasing, it’s a great deal less complicated when you make use of a credit card.
Utilizing your debit card will lead to a pull on your credit report. While it could be a soft pull– implying it does not harm your debt– there’s a chance it might be a hard check. A hard check does affect your credit rating.
The procedure changes slightly in the auto rental business. Making use of a debit card will certainly result in a soft credit inquiry. However, when using a debit card to rent a car, there will probably be a hard pull on your credit rating at the first time (when you check-in and get the car).
There would not be a credit check if you use of a credit card for renting a car.
An included incentive of renting your car with a credit card as opposed to debit: Many credit cards offer vehicle rental insurance coverage. This saves you even thinking about taking the car rental company’s costly insurance package.
Credit check failed reasons: Not paying your library fines (yes, libraries still exist!)
Not paying your penalties might lead the library to withdraw your privileges, as well sending your past due account to a collection company. When a collection agency obtains your overdue account, if you don’t pay, it will be noted on your credit report that you are in collection and have not paid. This will adversely influence your credit score.
credit check failed reasons
Normally, you need to owe around $40 or more before the account being sent to collections. To prevent all this, check your public library’s plan on fines, as well as, obviously, paying your late charges in a prompt fashion.
Credit check failed reasons: Not paying your parking tickets
When it concerns vehicle parking tickets, you have 2 choices:
you could pay them; or
go to Court and fight them.
Just what you do not want to do is disregard your parking tickets.
If you do choose to or forget to pay them, after a specific duration, your account will certainly go to collections. The policies on vehicle parking penalties differ by city. For instance, in Toronto, the use of debt collectors starts when your vehicle remains in plate rejection. This is when you could not restore your plate sticker label or acquire brand-new plates– for 2 years. Also, your tickets outstanding balance is more than $300.
Credit check failed reasons: Owing the taxman
If you have an outstanding amount payable on your income tax return, it’s important to settle that financial obligation to the Canada Revenue Agency (CRA). Overdue tax obligations could cost you in penalties and interest. It will also make it more challenging to get loans.
When submitting your tax return, any amount owing is due on April 30th, or the next Monday if April 30 falls on a weekend.
Credit check failed reasons: Not paying CRA is a self-inflicted indirect hit
Not paying your taxes does not directly hit your credit rating. However, two standard questions on any loan application are:
what is the last year you filed your income tax return for; and
how much do you owe to CRA for personal tax.
Not being current in your filing, or having an amount owing to CRA, will limit your chances to get that loan you are applying for.
When applying for a mortgage or home equity line of credit, most lenders ask for a duplicate of your Notice of Assessment from the previous 2 years. If the potential lender sees that you owe the CRA a great deal of money, they might offer you a higher rate of interest than the posted rate or worse, refuse your application.
Credit check failed reasons: What to do if you can’t repay your debts – even if you still have an OK credit score
Maintaining a good credit score is more than just paying your credit card on schedule, yet it does not need to be made complex. You should always aim to pay any type of arrears in a prompt style, as well as understand how every activity or transaction can affect your credit score.
If you are having problems repaying your debt, don’t be afraid to seek professional help. Don’t be enticed by the commercials for debt settlement. A recent study by the federal government shows that people who first go to a debt settlement company, end up paying more to settle their debts than if they just went to see a . That same study shows that ultimately, the debt settlement program alone does not work and the person ends up filing a consumer proposal with a licensed insolvency trustee.
credit check failed reasons
The Ira Smith Team has helped many people in debt get back on track and living debt free lives Starting Over, Starting Now. Take the first step and give us a call today.
We can’t stress enough how important a household budget form is to your financial security planning process. Many Canadians are under the mistaken impression that budgets are only for people in debt.
Nothing could be farther from the truth. Everyone, regardless of your net worth or the amount of debt you’re carrying needs a budget. It’s the only way to control your money and make sure that you and your family are financially secure and achieving long-term financial security.
Financial security planning process: 6 great reasons why you need a household budget form
Still not convinced? Here are 6 great reasons why you need a household budget form:
A budget gives you control over your money: A budget is a list of all revenues and expenses. It allows you to plan how you want to spend your money. Instead of money just flying out of your wallet, you make intentional decisions on where you want your money to go. You’ll never have to wonder at the end of the month where your money went or look for a hole in your wallet.
A budget keeps you focused on your financial goals: Budgeting will allow you to meet your financial goals – paying down debt, funding a retirement savings plan, buying a house… – as long as you follow it religiously. With a budget you’ll know exactly what you can afford and you can divide your money appropriately. E.g. If your immediate goal is to save for the down payment of a house, then you may have to forgo that vacation you wanted to take. Your budget will tell you exactly what you can or can’t afford.
A budget will make sure that you don’t spend what you don’t have: Credit cards are a great convenience but they also make it really easy to spend because there is no cash exchanged in the transaction. Many Canadians rack up serious credit card bills and land up deep in debt before they realize what’s happened. When you use and stick to your budget you have to account for everything you spend, even if it’s a credit card purchase. You won’t wake up deep in debt, wondering how you got there.
A budget will prepare you for the unexpected: Every budget should have a rainy day fund for those unexpected expenses. It’s recommended that you should budget for three months worth of expenses for when there may be an unexpected lay off or other unplanned for major expense. Don’t be alarmed; you don’t have to put away all the money at once. Build your fund up slowly.
A budget reduces stress: Many Canadians panic every month about where the money will come from to pay their bills. A budget will give you peace of mind. It shows you how much you earn and what your expenses are. If need be you can reduce unnecessary expenses or take on extra work to live within a balanced budget. No more panicking at the end of the month.
A budget can help you afford the retirement you’ve been dreaming of: Saving for your retirement is very important and your budget can help you save for your future. Set aside part of your income every month for retirement savings. Start early and consistently stick to it. The money you save now will dictate the kind of retirement you can expect.
Financial security planning process: What to do if you don’t have a household budget form and know you need one
A budget is your ticket to financial security. If you don’t have one yet, start budgeting today. Below you will see the link to download our free household budget form.
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I hope that you have found this vlog helpful. If you’re looking for ways to end your financial debt callIra Smith Trustee & Receiver Inc. Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you stroll in the door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress free life.
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