Tag: Bankruptcy and Insolvency Act

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THE 10 MOST COMMON CREDIT SCORE MISTAKES

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

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

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

What are the 10 Most Common Credit Score Mistakes?

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

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

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

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

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

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

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

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

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

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

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

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EMPLOYERS CAN BE FORCED INTO BANKRUPTCY BY CRIMINAL PENALTIES

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

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

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

Employers Beware!

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

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

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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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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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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 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.

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GOOD CREDIT SCORES HAVE SEX APPEAL

credit score, credit scores, online dating, credit score dating, credit counselors, credit historiesWhat do you mean by good credit scores have sex appeal? We all know that if you want to borrow money, buy a house, purchase or lease a car…… you need a good credit score. But, did you know that now you may need a good credit score to find love? We live in the age of online dating and there are niche market online dating sites for just about everything – religion, age, weight, location, hobbies….. Now there are actually websites called CreditScoreDating.com and DateMyCreditScore.com for those who believe that a good credit score is a prerequisite for a good date. This is not a strange, “out there” anomaly; credit counselors report that many of their clients come to them because their romantic partners refuse to get married before they eliminate their debt. And, according to the New York Times, more people are adding credit scores to their social filters. People with poor credit histories, low scores, or no scores might be starting to find it more difficult to find long-lasting love.

In the 60s potential dates wanted to know your astrological sign. Now they’re asking for your credit score. Is this progress? Will the matchmakers of the future be financial planners and accountants? Do you think that credit scores should play a significant role in choosing a mate?

Contact Ira Smith Trustee & Receiver Inc. We’re not matchmakers, but if you have serious debt issues and a poor credit score, we can help. Starting Over, Starting Now you can live a debt free life and perhaps find love.

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DEBT AND DEATH – DON’T LET YOUR DEBT HAUNT FUTURE GENERATIONS

debt and death, debt, credit card debt, bankrupt, credit report, trustee, toronto bankruptcy, insolvency, Bankruptcy and Insolvency ActDeath and taxes are certain; but serious debt is optional. The importance of budgeting and living debt free cannot be overstated. In our last two blogs – Is the Ultimate Indignity to Bankrupt a Deceased Person Part 1 and Part 2, we discussed the problems that can arise when there is debt and death. Sixty-seven percent of Canadian adults don’t understand what will happen to their debt when they die, according to a recent survey from the Lawyers’ Professional Indemnity Company. Don’t let your debt haunt future generations. Of course there are times when disaster strikes – serious illness, unexpected loss of a job, divorce – but most serious debt is directly related to consumer spending. According to BMO:

  • 59% of Canadians recently surveyed say they shop to cheer themselves up; mood-lifting impulse purchases cost Canadians $3,720 a year.
  • Canadians plan on spending an average of $3,073 on summer travel this year. People can get carried away on a trip and splurge on things they would never otherwise spend on.
  • Technology sucks people into to spending on the latest and greatest innovation; whether or not they need it.

Almost 50% of Canadians who have credit card debt say they always or often carry an outstanding balance, according to a survey by Harris/Decima. It may surprise you to know that 1 in 20 Canadians report that they will never be able to fully pay off the debt.

Debt can have far reaching effects, but it’s something that we don’t often stop to think about in the course of living our lives. In addition to affecting your ability to borrow, did you know that:

  • You can be turned down for a job because of negative items on your credit report.
  • The stress of serious debt can create a myriad of health problems.
  • One of the major causes of the breakdown of marriages is serious debt.

Starting Over, Starting Now you can make the changes in your life required to live a debt free life. If you are overwhelmed by serious debt, contact Ira Smith Trustee & Receiver Inc. today. We can help.

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DEATH OF A DEBTOR – THE INDIGNITY TO BANKRUPT A DECEASED PERSON PART 2

death of a debtor, bankrupt, bankruptcy, debt, debts, estate, financial sense, executor, Bankruptcy and Insolvency Act, bankruptcy alternatives toronto, bankruptcy alternatives canada, bankruptcy alternatives vaughan, bankruptcy alternativesIn last week’s blog we discussed the dilemma that arises when your parent(s) passes away in debt. This week we’ll be addressing your options, what your obligations are, and what you can do for the death of a debtor.

If your parent(s) pass away in debt and there are insufficient assets to pay off the debt, after paying the testamentary costs you really have only 2 options:

  1. Pay the debts from your own resources
  2. Let the estate go bankrupt

Emotionally you may want to pay the debts because you believe that it’s the right thing to do. But, before you make a decision you should know that there is no liability for a child to take on the debts of the parent(s). Although there is still a stigma attached to bankruptcy, the reality is that the debts are not yours, so why should you assume this burden and possibly place your own family in financial jeopardy?

Bankrupting the Estate makes financial sense. If your parent(s) pass away in debt you won’t receive a penny until the debts are paid. And, Estates can be complicated, especially if there are existing small business services still active or there are exes or common law spouses involved. It is the responsibility of Estate Executors to pay debts and expenses first. The Executor can side step the minefield of issues involved by bankrupting an insolvent testamentary Estate. If you or another family member is the Executor of your parent(s) Estate, there are some important facts that you should be aware of:

1. The Executors have a personal liability for all acts done, and for all acts not done that they should have.

2. By trying their best, they may be opening up the door for lawsuits from creditors or heirs for matters not properly handled. This is especially true where the family member, who is not skilled at financial, insolvency or testamentary matters, is Executor because he or she has been named, but really has no expertise in this area.

3. By putting the Estate into bankruptcy, which requires prior approval of the Bankruptcy Court, the Executor is relieving him or herself of personal liability because the Estate will now be handled under the Federal statute and all creditors will be handled properly and in priority under the law under the administration of the trustee in bankruptcy.

4. The Executor will relieve him or herself of dealing with creditor collection calls.

5. Section 136. (1)(a) of the Bankruptcy and Insolvency Act (Canada) states:

136. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

(a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;…

If your parent(s) pass away in debt, contact Ira Smith Trustee & Receiver Inc. as soon as possible. We will evaluate your situation and provide you with sound financial advice on how best to proceed Starting Over, Starting Now.

Call a Trustee Now!