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BABY BOOMERS DEBT CRISIS: WAITING FOR AN INHERITANCE TO BAIL YOU OUT?

BABY BOOMERS DEBT CRISIS: WAITING FOR AN INHERITANCE TO BAIL YOU OUT?Baby boomers debt crisis. The subject of inheritance is always highly charged – especially if you are in a Baby Boomers debt crisis. Parents seem to be divided into several camps. There are those who are self made and who believe that their kids will learn more from making it on their own than by receiving it on a silver platter. Others have spoiled their kids with a lavish lifestyle that only an equally lavish inheritance will be able to support. And there are those like billionaire Bill Gates who fall somewhere in the middle. This is his take on his wealth and inheritance for his children.

“It will be a minuscule portion of my wealth. It will mean they have to find their own way. They will be given an unbelievable education and that will all be paid for. And certainly anything related to health issues we will take care of. But in terms of their income, they will have to pick a job they like and go to work. They are normal kids now. They do chores, they get pocket money”.

Sadly there are many people who are living well beyond their means and waiting for an inheritance to bail them out of serious debt issues. They are living the life they believe is their right and as a result have an enormous mortgage, leased cars, maxed out credit cards and nothing but a mountain of debt to call their own.

  • An HSBC Bank report released in September, 2013, found 39% of working people are banking on some type of inheritance with the median value expected to be $77,213.
  • A report by Moneyville calculates that baby boomers are poised to inherit about $1 trillion over the next two decades as their parents and other close old relatives die.
  • According to MoneySense, 36% of the wealthiest families have received an inheritance; the average amount of that inheritance was $136,000.

However a BMO report shows that what many Canadians expect and what they may receive are quite different:

  • About 1.5 million Canadians are relying on their inheritance as the primary source of capital to fund their retirement.
  • On average, Canadians expect to receive a total of $150,600 in cash or cash equivalents, and $151,200 in non-cash inheritance.
  • In reality, inheritance sums received were significantly less – the average inheritance received was $56,000; certainly not enough to provide a solution to the question – Will I ever be able to retire?

Waiting for an inheritance to bail you out of a baby boomers debt crisis or other serious financial problems is clearly not a sound plan. If you have serious debt issues you need a professional. Contact Ira Smith Trustee & Receiver Inc. today. As professional trustees we can offer a sound financial plan and a way out of your baby boomers debt crisis for Starting Over, Starting Now. Take the first stop towards living a debt free life.

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JOINT ACCOUNTS: SHARING WITH YOUR SPOUSE IS GREAT, BUT NOT THIS

 

JOINT ACCOUNTS: SHARING WITH YOUR SPOUSE IS GREAT, BUT NOT THISIn many instances, marriage vows would be more accurate if the phrase were changed to “Until debt do us part”.

Sam Ewing

Joint accounts: Introduction

Sharing with your spouse is great, but not your PIN number or joint accounts. Some couples like to share everything in a marriage, but too much sharing, especially as it pertains to finances is not necessarily a good thing. We’re not saying that discussing finances is a bad idea; in fact it’s a great idea! But, sharing your PIN number is not recommended, and for good reason.

Joint accounts: Mixed feelings

Laurie Campbell, executive director of Credit Canada which deals with people with credit problems, says she has mixed feelings about people joining up their lives financially. “We see so much in here,” said Ms. Campbell. “You have to know what you are signing up for. We all go into these relationships with the best intentions thinking everything will be rosy. Unfortunately, it’s not the reality. What credit counsellors do is speak with couples who come to us, many of whom can’t even sit in the same room because of the damage they have done to each other’s credit. When involving joint accounts, the financially responsible spouse ends up paying for the financial sins of the other. If you have one person who is a saver and the other person is a spender, you’re in trouble,” said Ms. Campbell.

Joint accounts: Money can be the primary cause of divorce

The cause of about 1 in 5 of all Canadian divorces is primarily by money. Financial incompatibility was and still is a serious issue. According to a Harris Interactive poll recently released:

  • A third of American couples with joint finances say they have committed financial infidelity, with both sexes lying to their partners in equal numbers.
  • 67% of those couples had arguments as a result.
  • 42% said it caused less trust in the relationship.
  • 16% of cases, the lying led to divorce; in 11% it caused a separation.

Joint accounts: Joint accounts does not equal a joint financial plan

In spite of advice to the contrary, a survey from the Chartered Professional Accountants found 69% of spouses or partners have shared their PIN. Yet a recent poll from TD Canada Trust found that only 36% of couples have a joint financial plan. For some couples a PIN number is symbolic of sharing in the relationship and for others it’s just convenient, but clearly it can be a recipe for financial disaster. Think twice before sharing your PIN number with anyone and that includes your spouse. The same is also true for co-signing a loan and using joint accounts not providing equal benefit to each spouse.

Joint accounts: What to do if you are facing serious debt issues

If you’re facing serious debt issues, contact Ira Smith Trustee & Receiver Inc. today. We’re not marriage counsellors, but we are credit counsellors. In addition to credit counselling we offer other bankruptcy alternatives such as, debt consolidation and consumer proposals as well as bankruptcy. Take the first step towards a debt free life, Starting Over, Starting Now.

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407 ETR FAIRNESS-ONTARIO COURT OF APPEAL ENSURES 407 ETR FRESH START

consumer proposal bankruptcy alternatives trustee bankruptcy and insolvency act vaughan trustee 407 407ETR bankruptcy ontario Ira Smith trustee Receiver Inc1
consumer proposal bankruptcy alternatives trustee bankruptcy and insolvency act vaughan trustee 407 407ETR bankruptcy ontario Ira Smith trustee Receiver Inc1

 

407 ETR407 ETR found out that bankruptcy law is complicated. It not only deals with the facts, but with the spirit of the law. Canada (Superintendent of Bankruptcy) v. 407 ETR Concession Company Limited, 2013 ONCA 769 (Bankruptcy and Insolvency Act CanLII) is a very interesting case.

It involves Matthew David Moore, a truck driver who owned two vehicles and was a frequent user of this toll highway. Mr. Moore owed the money for usage of the toll Highway which he failed to pay. In March 2005 and December 2006, 407ETR sent notices of his non-payment relating to two separate vehicles to the Registrar of Motor Vehicles for the Province of Ontario (the “Registrar”). As a result, when the vehicle permit for one of the vehicles expired in August 2005, it could not be renewed. However, Mr. Moore continued to use Highway 407 for another 18 months and as of October 2007, he owed $34,977.06.

In November 2007 Mr. Moore made an assignment into bankruptcy. The 407ETR was listed as a creditor but it did not file a proof of claim which would have enabled the 407ETR to make submissions at any hearing into Moore’s discharge from bankruptcy and to share rateably with Moore’s other unsecured creditors in the bankruptcy. After declaring bankruptcy Mr. Moore had an accident and retrained to become a car salesman, which is what he now does for a living. He gave evidence that he needs a vehicle permit in order to do his job and earn a living. In February 2011 Mr. Moore obtained a conditional discharge from bankruptcy. He requested an Ontario Ministry of Transportation (“MTO”) vehicle permit but the MTO refused his request due to his outstanding indebtedness to this Highway concession company. On June 21, 2011, Mr. Moore obtained an absolute discharge from bankruptcy. Even though he was discharged from bankruptcy, the MTO refused to issue Mr. Moore a vehicle permit. The alleged conflict, in this case, is between s. 178(2) of the BIA, which releases the discharged bankrupt from most claims, and s. 22(4) of the 407 Act, which permits 407ETR to initiate a process by which the debtor will be denied a vehicle permit until he or she discharges the debt to 407ETR. A lot of legal wrangling ensued and eventually, this matter went to appeal. The issues on appeal were:

(i) Does s. 22(4) of the 407 Act conflict with the operation of s. 178 (2) of the BIA?

(ii) Does s. 22(4) of the 407 Act conflict with the purpose of the bankruptcy and insolvency system because it (a) thwarts the objective of providing the bankrupt with a fresh start or (b) creates a new class of debt that survives bankruptcy and frustrates Parliament’s intention to treat all unsecured creditors equally?

What was the 407 etr ruling?

“For these reasons, I would allow the appeal and, as requested by the appellant, set aside the order of the motions judge. In its place, I would substitute an order that:

(1) the discharge of Moore dated June 21, 2011, released him from all claims provable in bankruptcy, including the toll highway debt as at November 10, 2007, and

(2) the Ministry of Transportation is hereby directed to issue license plates to Moore upon payment of the usual licensing fees.

Further, I would declare that s. 22(4) of the 407 Act is inoperative to the extent that it thwarts the purpose of providing a discharged bankrupt with a fresh start.”

This decision ensured that bankruptcy did provide Mr. Moore with a fresh start. If you are experiencing serious financial problems and are looking for a fresh start, contact Ira Smith Trustee & Receiver Inc. today. You can even do some self-study with our bankruptcy faqs. Upon review of your situation, we will provide you with a solid plan for moving forward. Starting Over, Starting Now you can get your life back on track and live a happy and productive life.

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PAYDAY LOANS ARE NOT THE ANSWER TO YOUR FINANCIAL PROBLEMS

PAYDAY LOANS ARE NOT THE ANSWER TO YOUR FINANCIAL PROBLEMSPayday loans. The holidays are over and it’s time to pay the piper. Your mail box is full of credit card bills and you don’t know where the money is going to come from, so you think about payday loans.

You’ve got the TV on and low and behold, what could be playing but a commercial for a company offering payday loans promising to be the cure for what ails you. Just make a call, drop into a payday loan store or go online and like magic, your money problems will be over with payday loans. Not so fast! That’s not exactly how it works. And, it will not solve your money problems; it will create new ones. Instead of owing the credit card companies money, you will owe the payday loan companies money. Payday loan companies don’t lend money because they are charitable. They lend money at exorbitant rates because they know that you can’t borrow anywhere else and you will get caught in the cycle of endless payday loans.

Here is a typical example of how payday loan companies do business. The Cash Store charges annual interest of 59.9% to new borrowers. As a result the provinces have been going after payday loan companies to protect the consumer. The December 2013 amendment by Ontario is the second time that year The Cash Store and their payday loans faced regulatory scrutiny from the province, according to Moody’s. In February, the Ontario Ministry of Consumer Services was preparing to revoke the company’s payday loans licence when it substituted a new one-year line of credit product to continue lending. Payday loans are most often taken out by low-income people willing to pay high interest rates to avoid falling behind on their bills or to cover emergency expenses, according to studies commissioned by the Canadian government and the Canadian Payday Loan Association.

If you have to go to a payday loan company, you have serious debt issues and you need professional help. There is nothing to be ashamed of. You’re like many people who have been living paycheque to paycheque until one day you either lose the paycheque or it just isn’t enough to pay the bills. Contact Ira Smith Trustee & Receiver Inc. today. We will evaluate your situation and discuss the options with you which may include bankruptcy alternatives such as credit counselling, debt consolidation and consumer proposals in addition to bankruptcy. Starting Over, Starting Now you can live a debt free life.

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REDUCE DEBT: 5 NEW YEAR’S RESOLUTIONS TO REDUCE DEBT IN 2014

REDUCE DEBT: 5 NEW YEAR’S RESOLUTIONS TO REDUCE DEBT IN 2014Reduce debt now to have a Happy New Year! This is the time of year that we vow to take charge of our lives and get healthy, lose weight, join a gym, find love, get a new job…. I’d like you to expand your thinking to include your “financial health” and reduce debt. According to RBC, Canadians are getting deeper in debt – non-mortgage debt in Canada jumped 21% in the past year alone to $15,920 per capita. Don’t become a statistic. Here are 5 New Year’s Resolutions to reduce debt in 2014.

1) I will live within my means: With interest rates low, you may be lured into taking advantage of what you perceive as a great deal. Borrowing, even with low interest rates, is only a good deal if you can afford to make the payments. There are many multimillion dollar houses in foreclosure and many repossessed luxury cars. Buy what you can afford. You can reduce debt this way.

2) I will create a budget and stick to it: A budget can be your best friend. RBC reports that Canadians’ total debt burdens, including mortgages, now stand at 163% of household income, or $1.63 owed for every $1 earned. This is a recipe for financial disaster. A budget will show you what your income is and what you can really afford. You may have to go a strict spending diet in order to get your finances back under control and reduce debt.

3) I will not max out my credit cards: It’s easy for spending to get out of control when you’re using credit cards. Spending takes on a whole new meaning when you actually use money to pay for things. If you want to buy something, pay for it with cash. Keep those credit cards out of sight for day to day spending and use them for emergencies only. This will allow you to reduce debt.

4) I will monitor my credit report. As we discussed in a recent blog – YOUR CREDIT RATING CAN BE RUINED EVEN IF YOU DON’T DO ANYTHING WRONG – it’s very important that you monitor your credit report and take immediate action if there are any errors. Don’t wait until your credit rating is ruined and you no longer have the ability to borrow.

5) I will start an emergency fund: I know that you’re going to say that you can’t afford to save; but telling you that you can’t afford not to save. Do you really need the expensive lattes and cappuccinos every day? Sell the stuff sitting in your garage or basement collecting dust. One man’s junk is another man’s treasure. See if you can negotiate a better deal on your cable TV package or cell phone plan. Can you cut out a few restaurant dinners and cook at home instead? All of these little things will help you establish your emergency fund while you reduce debt. And, remember, this money is for emergencies, not an all inclusive get away to Mexico.

If you’re experiencing serious debt issues, take control of your life and contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now there is a way out of debt. Let us show you how. Let’s all make 2014 a great year and a year where you reduce debt!

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DEBT SETTLEMENT COMPANIES FINALLY TAKEN TO TASK IN ONTARIO

bill 55, debt settlement, debt settlement companies, debt settlement industry, debt settlement services, trustee, credit counsellorsDebt settlement companies have been preying on consumers for far too long. We’ve warned you about them in two previous blogs – Beware of Debt Settlement Companies and The Latest on Debt Settlement Companies. In 2010, after a decade of massive growth in the U.S. debt settlement industry, the FTC brought in new regulations that effectively banned debt settlement companies and forced many of them to migrate north of the border. Currently there are 18 companies and 34 credit counselling providers offering debt settlement services in Ontario. With ever mounting numbers of complaints about unsuspecting consumers being taken advantage of by unscrupulous debt settlement companies, the Ontario government has finally taken action and passed Bill 55.

What will Bill 55 do? It creates new standards of conduct for debt settlement companies:

  • Banning them from charging upfront fees
  • Limiting the amount of fees consumers are charged and prohibiting the payment of fees before services are provided
  • Requiring clear, transparent, and detailed contracts that include information about the effect of the contract on the consumer’s credit rating
  • Requiring credit counsellors to disclose information to the consumer about how their organization is funded
  • Establishing a 10-day cooling-off period, providing consumers more time to consider their agreements with companies
  • Allowing the licences of non-compliant companies to be revoked

Bill 55 is certainly a great step toward protecting consumers from debt settlement companies. Hopefully it will be restrictive enough that they will disappear from the landscape as they did in the U.S.

Please stay away from debt settlement companies! If you are having serious debt problems, contact Ira Smith Trustee & Receiver Inc. We are professionals, federally regulated, licensed and subject to a strict code of ethics. Our fees are regulated by the Federal Government and are usually much less than the debt settlement companies who make unsubstantiated claims. We can help. Starting Over, Starting Now you can live a debt free life.

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DON’T BE MISLEAD BY ADVERTISING GIVING FINANCIAL ADVICE

tax lawyer, trustee, trustee in bankruptcy, bankruptcy trustee, bankruptcy, bankruptcy alternatives, credit counselling, debt consolidation, consumer proposals, financial restructuring, bankruptcy faqs, insolvency, tax lawyer in canadaHave you heard the radio advertising spots by a tax lawyer in Canada who is trying very hard to make you believe that he is The Rock Star in the world of tax problems and that he and only he can help you? One commercial ends with, “Don’t call a Trustee, call me”. Isn’t it amazing that without knowing anything about you and without a consultation, he knows exactly what your problems are and how to fix them? And, he has no way to know if a Trustee is all you require to solve your serious debt issues. However, fear based advertising must be working for him because he spends fortunes on it.

Don’t take advice from an advertisement. If you have legal issues, absolutely you need a lawyer in Canada. But, the reality is that Canadian bankruptcy law doesn’t differentiate between tax debts and other kinds of unsecured debt, therefore most people can declare bankruptcy on taxes owing. In fact, 50% of the people who file a consumer proposal or declare personal bankruptcy include some form of tax debt. If you are experiencing serious debt problems you must consult with a Trustee before declaring bankruptcy; no doubt you will have many questions about the bankruptcy process. The Trustee will evaluate your case and advise you on all of your alternatives – credit counselling, debt consolidation, consumer proposals, and bankruptcy. Bankruptcy and consumer proposals are administered by a Bankruptcy Trustee, not a lawyer. In fact you cannot declare bankruptcy through a lawyer unless the lawyer is also a Trustee in Bankruptcy.

There are cases in which you may need a lawyer:

  • Tax debts are generally discharged in bankruptcy like other debts. However, if you have tax debts and the CRA (Canada Revenue Agency) is opposing your discharge, it is recommended that you seek legal assistance.
  • In most cases Trustees do not act as your advocate. If you believe you need an advocate, you should consult a lawyer. Communication between you and your lawyer is confidential and privileged.

This is not an advertisement and we’re not telling you that we are Rock Stars. Ira Smith Trustee & Receiver Inc. is 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 approach every file with the attitude that corporate or personal financial problems can be solved given immediate action and the right plan. Our bankruptcy law is complicated. Canada (Superintendent of Bankruptcy) v. 407 ETR. Also check out our bankruptcy faqs. If you’re having serious debt issues, and yes, even tax debt, contact us today. We can provide you with realistic choices for practical decision-making.

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PARK LANE CIRCLE-PEOPLE WHO LIVE IN GLASS HOUSES CAN’T CHANGE THE RULES

40 Park Lane Circle, a mansion located in Toronto, was for sale in a proposed auction and has become quite the source of notoriety these days, although nothing and no one can rival Mayor Rob Ford in the headline grabbing department. Pictured below, it’s being referred to as the Bridle Path’s own Palace of Versailles. Located at 40 Park Lane Circle, it was most recently listed for$13.98 million.

PEOPLE WHO LIVE IN GLASS HOUSES CAN’T CHANGE THE RULES TO SUIT THEM-40 PARK LANE CIRCLE

40 Park Lane Circle, Toronto

COURTESY: CONCIERGE AUCTIONS

In the 40 Park Lane Circle case at hand (which our Firm was not involved in), the Receiver two months earlier made application to Court and obtained Court approval to conduct an auction of the main asset, a luxury home worth millions of dollars at 40 Park Lane Circle which is in a very fancy neighbourhood of Toronto. After the fact the Receiver was presented with an offer for the Property from a set of purchasers. Unfortunately the Receiver’s report did not explain how the offer came about, specifically whether the offerors were aware of the Court-approved auction process at the time they made the offer. The Receiver made a motion to discontinue an auction sale process and approve an offer to purchase the 40 Park Lane Circle real property. After the recent decision of the Honourable Mr. Justice Brown of the Ontario Superior Court of Justice (Commercial List) in HSBC Bank Canada v. Mahvash Lechcier-Kimel, 2013 ONSC 7241, the Receiver’s motion was denied and the auction was allowed to proceed. According to the latest reports the bidding is now closed and the sale is pending.

As Court Officers, we live in glass houses. Every action we take is on display for all to see. All stakeholders to the process are watching how we conduct the administration, and invariably, a party who thought they should be obtaining a better result for themselves will not be satisfied. Accordingly, the sales process has to be seen to be fair, even handed and transparent. The case of 40 Park Lane Circle is very interesting as it highlights that a fair, open and transparent marketing process in accordance with the seminal “Soundair” case is more important in the eyes of the Court, than what might be thought of as the highest potential offer.

What is the “Soundair” case and why is it so important? The criteria to be applied when considering the approval of a sale recommended by a receiver were first set out by the Ontario Court of Appeal in Royal Bank vs Soundair Corp. and hence referred to as the “Soundair principles” which are used when deciding whether a receiver who wishes Court approval to sell a property has acted properly, a Court is to consider and determine:

a) whether the receiver has made a sufficient effort to get the best price and has not acted improvidently;

b) the interests of all parties;

c) the efficacy and integrity of the process by which offers were obtained; and

d) whether there has been unfairness in the working out of the process.

As Trustees & Receivers, we are often asked when selling an individual’s or a corporation’s assets in a Court supervised administration, why can’t the Receiver or Trustee deviate from the Court approved process, or why can’t the Receiver or Trustee share with the party paying the costs of the administration the appraisal information. The answer, which we have always known to be the case, is that the Court and its Officer, be it a Receiver or Trustee, must ensure the integrity of the sales process. By the decision of the Court, the 40 Park Lane Circle property sale is no different.

Our firm has been involved in numerous cases where assets were sold in a Court supervised process. Ira Smith Trustee & Receiver Inc. is 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 pride ourselves on our openness, transparency and maintaining the integrity of the process. Contact us today.

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FINANCIAL ADVICE THAT YOU SHOULD NEVER FOLLOW

bankruptcy, bankruptcy and insolvency act, credit history, credit rating, credit report, financial advice, insolvency, rebuilding credit, restructuring, student debt, toronto bankruptcy, trustee, vaughan bankruptcy, what is a consumer proposal, what is bankruptcy,woodbridge bankruptcyPeople mean well and many can’t resist giving advice, but when it comes to financial matters ONLY take financial advice from a qualified professional. Here are some classic examples of financial advice that you should never follow.

  • Don’t declare bankruptcy because it will ruin your credit rating. While it’s true that bankruptcy remains on your credit report for quite a while, if you aren’t paying your credit cards and other loans on time, your credit rating is probably already shot. With an insolvency process, we can provide you with easy ways to start rebuilding your credit fast. Without such a process, you will never get out from under your debt and won’t be able to rebuild your credit rating.
  • Credit cards will get you into trouble. Credit cards won’t get you into trouble if you charge only what you can afford to pay off. In fact, credit cards can help you to establish a credit history which future lenders will use when you want to take out a loan or a mortgage. Without a credit history you may find it very difficult to borrow money.
  • A house is always a great investment. Houses are not immune from market fluctuations. The prices of real estate are tied to changing demographics, interest rate spikes and the economy. There is no guarantee that your house will have increased in value at the point in time when you need to sell. Depending on the state of the real estate market when you purchase a home, there is always a possibility that your home may not increase in value and may even decrease in value from time to time, so don’t purchase the house because you need the increased value to be liquid on a specific date.
  • You can live for free if you buy an investment property and rent it out. Television shows on the Home & Garden channel have gone to perpetuate this bad advice. It’s not as easy as it seems on a one hour TV show and it’s a difficult and potentially financially hazardous route to take. Renovations almost always go over budget, so count on spending more than you planned on. Not every tenant is a jewel. Some are extremely difficult and can cost you a lot of time and money. Once you become a landlord you will have to manage your property. You just don’t find a tenant and expect that the property will manage itself. Expect to be called whenever something is not perfect and your tenant will expect immediate action. Be prepared for unexpected expenses.
  • Asking all your friends where can I get a loan with bad credit in Toronto. The lenders that would lend money to someone with debt problems and bad credit already charge extremely high upfront fees, very high interest rates and usually, you will never be able to pay off the loan and perhaps you will even fall behind on interest payments. The collection efforts of these types of lenders are not subtle or pleasant.
  • Student debt is good debt. Debt is debt, and borrowing more than you can repay is never a good idea. The Canadian Federation of Students estimates that average student debt is almost $28,000. According to the Canada Student Loan Program, most students take 10 years to pay off their loans. Does this sound like a good idea? We are certainly not advocating that students don’t pursue post secondary education, but keep the debt to a minimum by going to a more affordable college or university. Work part time during the school terms and full time during vacations.

When you need financial advice seek out a professional. Taking bad advice can be costly. If you are experiencing serious debt issues contact a trustee for advice. Ira Smith Trustee & Receiver Inc. is 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 will give you sound financial advice that you can count on.

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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.

Call a Trustee Now!