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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.

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SENIOR CREDIT CARD DEBT RELIEF OR DECLARE BANKRUPTCY-SENIORS IN DEBT, PART 3

senior credit card debt relief, should seniors file a consumer proposal, bankruptcy, personal bankruptcy, declare bankruptcy, trustee, bankruptcy alternatives, bankruptcy process, credit counselling, debt consolidation, consumer proposals, wagesLast week we discussed why the majority of seniors are in debt. This week we’ll be addressing if seniors should try and pay off their debts to obtain senior credit card debt relief or declare bankruptcy.

Life is very difficult for many seniors who anticipated that their golden years would be a carefree retirement. Instead, according to the Vanier Institute for the Family, Canadians over the age of 65 have the highest insolvency and bankruptcy rates in the country. With increasing expenses and a significantly reduced income and return on investments, more seniors are contemplating bankruptcy; but is it the best and/or only option?

While it’s true that bankruptcy can eliminate many of your debts, people typically file personal bankruptcy as a means of protection from creditors. If you are working, bankruptcy will protect you from creditors garnisheeing your wages. However, if you are retired and your sole source of income is your pension, then there are no wages to garnishee. It is very difficult for a creditor to garnishee a pension with one notable exception. If you owe the CRA (Canada Revenue Agency) for unpaid taxes, they are permitted to garnishee all types of pension income under Section 224.1 of the Income Tax Act. It is rare that the CRA will garnishee your pension income, but it is a possibility. If you have a significant tax debt and the CRA has threatened a pension garnishment, the bankruptcy process is an option that has to be considered.

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 in debt there are bankruptcy alternatives – credit counselling, debt consolidation, consumer proposals – which in many cases are better options than declaring personal bankruptcy. In our next blog, we will be considering various options, including should seniors file a consumer proposal?

Unfortunately too few Canadians are properly prepared for the financial reality of retirement. They get caught up in a downward financial spiral and some pass away leaving significant debt. The family is then left with the unpleasant options of paying the debt themselves or bankrupting the estate. If you are a senior in serious debt, consult a professional Trustee as soon as possible. Contact Ira Smith Trustee & Receiver Inc. for professional advice and an action plan that’s right for you. Starting Over, Starting Now we can give you the help that you need to deal with your financial problems, and peace of mind.

Watch for our next blog when we’ll be discussing some advice we have for seniors in debt.

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HELP FOR SENIORS IN DEBT-SENIORS IN DEBT, PART 2

help for seniors in debt, seniors in debt, debt, debt management, bankruptcy, trustee, trustee in bankruptcy, sandwich generation, grey divorce, seniors with credit card debt

Last week we discussed “What Do The Golden Years Really Look Like”?This week we’ll be addressing why the majority of seniors are in debt and provide help for seniors in debt.

Seniors are facing a myriad of financial issues that have made their anticipated “golden years” anything but golden.

  • The Sandwich Generation: Many are still part of the “sandwich generation” a phenomena caused by delayed marriage, postponement of children, and adults with increasingly long-lived parents. They’re borrowing to help their children, grandchildren and parents. As long as they have collateral and a good credit rating, banks will readily lend them money.
  • Grey Divorce: According to Statistics Canada, divorce among couples 65 years of age and older is becoming more common and grey divorce can create serious debt for boomer retirees.
  • Recession: Battered financial markets and anaemic economic growth have forced Canadians to make debt management and not retirement the primary focus of financial planning. Their investment returns may have been decimated by the recession and they borrowed hoping markets would stabilize.
  • Lifestyle Choices: Even though they’ve reached 65 and their incomes have been greatly reduced, they continue to live the same lifestyle that they lived prior to retirement. With reduced incomes, often coupled with increased expenses, they are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle they may no longer be able to afford. Seniors with credit card debt adapt by making only the minimum monthly payments on credit cards, which leads to a downward debt spiral, a journey that often ends with a trip to a trustee in bankruptcy.

The problem with carrying debt into retirement is that it must be serviced with less income than when working full-time. Mid-career people can start over, but retirees can‘t. If you are now facing serious debt issues contact Ira Smith Trustee & Receiver Inc. We can help you get your life get back on track. Starting Over, Starting Now you can take the first step towards an enjoyable retirement. Watch for our next blog when we’ll be discussing if seniors should try and pay off the debt or declare bankruptcy.

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CANADIAN SENIORS IN DEBT, PART 1 – WHAT DO THE GOLDEN YEARS REALLY LOOK LIKE?

Canadian seniors in debt, seniors in debt, debt, Freedom 55, bankruptcy, insolvency, financial freedom, trusteeHow did you imagine retirement? A paid off house or condo, winters in Florida, summers on the golf course? You may be one of the fortunate few that actually get to live this retirement dream, but the reality that many seniors face is bleak. Sadly many Canadian seniors in debt are finding themselves drowning in debt without enough income to pay it off.

  • 1/6 of seniors report that they owe more than $100,000. Statistics Canada
  • 59% of retired Canadians say they’re carrying debt. And 19% of those say that their debt level has increased over the past year. New CIBC poll
  • Canadians over the age of 65 have the highest insolvency and bankruptcy rates in the country. Vanier Institute for the Family
  • Average debt for consumers aged 65 and over climbed 6.5% over the past year, the biggest year-over-year increase in the period for any age group. Equifax
  • Canadians are entering retirement more indebted than ever. Toronto-Dominion Bank Economic Overview Report dated February 13, 2013
  • Half of Canadians say they are not financially prepared for their retirement. CIBC 2012 Poll

 

What happened to the Freedom 55 pipe dream that we bought into? The Freedom 55 concept is 29 years old. It was a clever marketing plan that was established in 1984 after consumer research revealed that Canadians were becoming increasingly concerned about their futures and retirement plan. For today’s seniors Freedom 75 may be closer to reality, but reality isn’t nearly as attractive as the fantasy of an early retirement and financial freedom.

If you are experiencing serious debt problems contact Ira Smith Trustee & Receiver Inc. today. We can help. Starting Over, Starting Now you can take your first real steps to financial freedom. Watch for our next blog – Seniors in Debt, Part 2 – when we’ll be talking about why the majority of seniors are in debt.

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IF MY EX DECLARES BANKRUPTCY, HOW WILL IT AFFECT ME?

joint accounts, divorce, bankruptcy, bankruptcy process, bankruptcy and insolvency act, debt, trustee, divorce and bankruptcy,ex declares bankruptcyIn last week’s blog we talked about Divorce And Bankruptcy – Which Comes First? Sadly, divorce and bankruptcy are indelibly intertwined. The number one reason couples get divorced is financial issues and 1/3 of all people in Ontario facing bankruptcy are there because they are also going through a divorce or a separation. The issue of divorce and bankruptcy is a potential minefield and there are many issues that can arise if you are already divorced and your ex declares bankruptcy.

Will I still owe for debts and credit cards that I co-signed with my ex? Unfortunately, yes. You will be held responsible for any debts that you did sign for. In fact after your ex files for bankruptcy he/she will no longer be responsible for the debts, but the debts for any loans and credit cards will be 100% yours.

My divorce decree assigned the debts to my ex, so why are the creditors coming after me for payment? A divorce decree is a legally binding agreement between you and your ex but it in no way binds any creditors. If you’re a co-signor with your ex on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex.

Will my ex’s bankruptcy affect my credit score? Your ex’s bankruptcy process can affect your credit score if:

  • You and your ex still have joint accounts
  • You are now responsible for debts that you co-signed for

What will happen to my alimony and child support? The good news is that any support – alimony or child support is non-dischargeable (the debt can’t be eliminated) in bankruptcy by the Bankruptcy and Insolvency Act. However, as a result of the bankruptcy process, if your ex is having trouble in making these payments in full and on time, there will be an obvious affect.

If you’re experiencing serious debt problems, contact Ira Smith Trustee & Receiver Inc. as soon as possible. There is help available and Starting Over, Starting Now we can help you to live a life that is not consumed by financial stress.

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MARITAL BREAKDOWN AND BANKRUPTCY: WHICH COMES FIRST?

Bankruptcy, bankruptcy and divorce, Bankruptcy and Insolvency Act, bankruptcy faqs, Consumer Proposal, credit counselling, Debt, debt consolidation, debt relief, divorce, family law, if my ex files bankruptcy how will it affect joint accounts, if my ex files for bankruptcy how will it affect joint accounts, marital breakdown and bankruptcyJust like the old conundrum, “which came first; the chicken or the egg” how would one answer, marital breakdown and bankruptcy: which comes first? It has no definitive answer because excellent arguments can be made for both sides. The same holds true for “divorce and bankruptcy; which comes first”?

Each case has to be decided upon its own merit. Although marital breakdown and bankruptcy, and bankruptcy and divorce, often go hand in hand, marital breakdown doesn’t always lead to divorce if the marriage can be salvaged. As family and parental rights lawyers UT have made clear, bankruptcy and divorce are two separate legal processes that can be at odds with each other.

There are however a few indisputable facts:

  • The number one reason for marital breakdown and couples getting divorced is financial issues. Divorce.com
  • In a recent study one out of every seven people who declared bankruptcy in Canada listed separation, divorce or marital breakdown as a contributing factor to their financial problems.
  • One-third of all people facing bankruptcy are there because they are also going through marital breakdown and divorce in Ontario or a separation. Gail Vaz-Oxlade
  • Bankruptcy doesn’t eliminate all divorce debts. E.g. It does not eliminate alimony or child support.
  • Declaring bankruptcy on joint debts, even debts in divorce, will impact the other borrower.

If causing the least disruption on the children of the family during a marital breakdown and bankruptcy is of prime importance to the spouse with the debts (and presumably that will be the same as the spouse making the support payments), it makes sense to have at least the support provisions of the divorce proceedings agreed upon, including the making of the support order and then file for bankruptcy. Marital breakdown and bankruptcy process will not disturb any bona fide arrangements for support, but keep in mind it will affect property not already dealt with by the family law court.

One such area comes up in this common question: “If my ex files for bankruptcy how will it affect joint accounts?”. Family law proceedings are the one area of provincial law that is left relatively untouched by the Bankruptcy and Insolvency Act, which is a federal statute. However, the Supreme Court of Canada has confirmed that in Provinces that are an equalization jurisdiction (as opposed to a division of property jurisdiction), in a unanimous decision, the court upheld defining equalization payments as debts that are a claim provable in bankruptcy, meaning they are wiped off a person’s slate by the bankruptcy process.

Marital breakdown and bankruptcy is an extremely complicated process, made even more complicated when combined with divorce and requires the expertise of a licensed Trustee to work with your family lawyer to assess your individual situation and provide practical solutions and an action plan. If you have serious debt problems, are contemplating bankruptcy and divorce, or just wish to know more about marital breakdown and bankruptcy, just in case, check out our bankruptcy faqs and then contact Ira Smith Trustee & Receiver Inc. as soon as possible. Starting Over, Starting Now we can help you get your life back on track, even with marital breakdown and bankruptcy looming. Watch for our next blog when we’ll be addressing more issues related to marital breakdown and bankruptcy, and divorce and bankruptcy.

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THE LATEST ON DEBT SETTLEMENT COMPANIES

debt settlement, debt settlement companies, debt reduction, debt relief, debt negotiation, bankruptcy, bankruptcy alternative, credit counselling, debt consolidation, consumer proposalBack in February we did a blog warning the public to Beware of Debt Settlement Companies. At the time the U.S. Federal Trade Commission had effectively shut down debt settlement companies, but no action had been taken in Canada. Although there have been numerous consumer alerts issued about debt settlement companies by the Financial Consumer Agency of Canada (FCAC), many people are still falling victim to them. Consumers are 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.

Finally this spring the Ontario Ministry of Consumer Services publicly declared it is moving ahead with tough legislative measures to protect consumers from these unscrupulous companies know as debt settlement companies, debt reduction companies, debt relief companies and debt negotiation companies. The Ontario Ministry of Consumer Services intends to introduce legislation that will:

  • Ban companies from charging upfront fees for debt settlement services
  • Limit the amount of fees consumers are charged
  • Require clear, easy-to-understand contracts
  • Establish a 10-day cooling-off period, providing consumers more time to consider their agreements
  • Allow the licenses of non-compliant debt settlement companies to be revoked

The best advice that we can offer is beware! There are currently 60 debt settlement companies operating in Ontario just waiting to take advantage of your situation.

If you are experiencing serious debt problems, there is help available. Contact Ira Smith Trustee & Receiver Inc. We are licensed by the Government of Canada and subject to a stringent code of ethics. As trustees in bankruptcy we will evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. If ultimately consumer proposals or bankruptcy is the best option for you, you will have to use a trustee in bankruptcy. Contact us today and take your first step towards living a debt free life Starting Over, Starting Now.

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FAMOUS CELEBRITY BANKRUPTCIES HAPPEN TOO

bankruptcy. bankrupts, debt free, financial problems, financial stress, trustee, robin williams bankrupt, ed mcmahon, ed mcmahon bankrupt, robin williams, bankrupt, rich and famous, celebrity bankruptcies

Most of us look at the rich and famous and wish we could live their lives. We see multi-million dollar mansions, driveways full of Porches, Maseratis, Jaguars, and Bentleys, exotic vacations on magnificent yachts and private islands, and private planes. Who wouldn’t want to live that lifestyle? But, there is a deep, dark secret – many of these high flyers can’t sustain the income to fund these lifestyles and like many mere mortals, go bankrupt. Famous celebrity bankruptcies happen too. Here are some of the more rich and famous bankrupts:

Samuel Clemens – “Mark Twain”Michael Jackson
Abraham LincolnDorothy Hamill – Gold Medal Skater
Johnny Unitas – Football Hall of FameMilton Hershey – Founder Hershey’s
H.J. Heinz – Founder HeinzMarvin Gaye
Mick Fleetwood – Fleetwood MacWalt Disney
Larry KingBurt Reynolds
PT BarnumTom Petty
David CrosbyDionne Warwick
Ed McMahonHenry Ford
M.C. HammerLarry King
Toni BraxtonNatalie Cole
Robin Williams

 

  • 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce within two years of retirement.
  • The National Endowment for Financial Education says that 70% of all people who suddenly receive large amounts of money will lose it within a few years.

We believe that if someone earns a lot of money, that makes them wealthy; but that is far from the truth. If these high earners are spending as much as they make or more, they are on a path to disaster. Many people that you consider to be wealthy are living from month to month. The truth is that high earners and low earners alike can be irresponsible about money. Managing money wisely, living within your means, saving, and budgeting are the necessary elements to living a debt free life.

Bankruptcy is not a shame; it’s a fact of life and everyone can be touched and affected by it. It’s never too late to live a financially healthy life. If you’re experiencing serious financial problems, contact Ira Smith Trustee & Receiver. We are here to help put you on a path to debt free living.

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THE RELATIONSHIP BETWEEN YOUR CREDIT SCORE AND INSURANCE RATES

Last week we took a light hearted look at how people are using credit scores to find love. This week we are discussing a more serious matter -the relationship between your credit score and insurance rates. Sadly many consumers have seen their premiums rise as a result. CBC-TV’s “Marketplace” spoke with several people who saw home insurance premiums double after their insurance company began including credit scores as a way to calibrate risk. How prevalent a practice is this? About 55% of Canada’s largest insurers now use credit scoring. And of that segment 42% did not disclose the practice to customers, according to the Canadian Council of Insurance Regulators.

The insurance companies who use credit scoring are trying to put a positive spin on it. According to Desjardins, insurance companies check your credit score only to offer you the best premium possible. The Cooperators offers a slightly different slant. “Credit score is simply a reflection of a person’s level of responsibility and behaviour when it comes to managing their financial obligations.” Donald Hanson of the National Association of Independent Insurers stated, “Research indicates that people who manage their personal finances responsibly tend to manage other important aspects of their life with that same level of responsibility and that would include being responsible behind the wheel of their car or being responsible in maintaining their home.” Cheap down payment auto insurance companies have found that there is a correlation between higher scores and safe driving but I have not seen the research to back up this claim.

Many disagree with the use of insurance credit scoring citing that a driver’s record doesn’t change with his/her credit score, nor does the area where their house is located. Therefore, there is no evidence that the risk factor will change with a high or low credit score. In fact credit scoring has been a controversial topic in Ontario as it is in other parts of the country. The practice is no longer allowed in some provinces, and some groups, including The Insurance Brokers Association of Ontario (IBAO) have been lobbying for several years to have it banned in Ontario. Whether you agree or disagree, the fact that insurance credit scoring exists only goes to show how important it is for all of us to maintain good financial health. Unfortunately, there is not a Canadian credit score calculator tool that anyone can use.

If your credit score is adversely affecting your life, contact Ira Smith Trustee & Receiver. Starting Over, Starting Now you can take the first steps towards financial health.

Call a Trustee Now!