Tag: credit card debt

Categories
Brandon Blog Post

CANADIAN REAL ESTATE BUBBLE BURST: WHEN?

Canadian real estate bubble, Canadian real estate bubble burst, The Suites at 1 King West, receivership, Court-appointed receivership, real estate, statistics, financial crisis in Canada, residential construction, debt-to-income ratio, financial crisis, residential mortgage debt, Canadian Bankers Association, Canadian real estate industry, living paycheque to paycheque, credit cards, credit card debt, credit report, bankruptcy alternatives, credit counselling, debt consolidation, consumer proposals, personal bankruptcy, starting over starting now, debt settlement, debt settlement companiesWill the Canadian real estate bubble burst has been the subject of several articles in the newspapers recently quoting Canadian and American economists. So far from what I have read, half of the economists quoted say there is not a Canadian real estate bubble, with statistics to show that there is a healthy real estate market and therefore we will not have a Canadian real estate bubble burst.

The other half of the economists, provide statistics to show that there is a Canadian real estate bubble, it has reached the same unsustainable levels as was the case in 2008 in the United States and that there will be a Canadian real estate bubble burst to drag all of us down.

Although my Firm has done many real estate receiverships, the most famous so far being the Court-appointed receivership of the highly publicized The Suites at 1 King West, built by Harry Stinson, my crystal ball is no better than yours. I cannot tell you if:

  1. a Canadian real estate bubble burst will not happen since we are in a safe real estate market where Canada is attractive to immigrants from around the world looking for a safe haven for their money, and they truly believe Canadian real estate is it; or
  2. real estate prices are unreasonably high and that there will be a Canadian real estate bubble burst.

As far as the economist’s statistics, which are being used to prove both sides of the argument, all I can do is quote British Prime Minister Benjamin Disraeli when he said there are “Lies, damned lies, and statistics“, to describe the persuasive power of numbers, particularly the use of statistics, to bolster weak arguments.

In our recent blog, FINANCIAL CRISIS IN CANADA: CAN REAL ESTATE PRICES TRIGGER ONE?, we reported that:

  1. 7.5% of the Canadian workforce is in the construction industry, while 7% of the Canadian economy is based on residential construction – both record highs;
  2. the Canadian unemployment rate rose from 6.9% to 7.2%;
  3. the Canadian debt-to-income ratio has soared to a record 164%, above levels experienced in the U.S. before the financial crisis; and
  4. the Canadian Bankers Association reports that 70% of all household debt in Canada is made up of residential mortgage debt.

But there is one certainty I can tell you about. Even if there is a slowdown in the Canadian real estate industry, and not a Canadian real estate bubble burst, residential construction workers and real estate agents will suffer. A slowdown in residential construction, and less residences being sold, does not bode well for these two groups. So it will be the severity of the slowdown, and the effect on real estate prices, to know whether or not there actually is to be a Canadian real estate bubble burst.

So, what can they do to stop a Canadian real estate bubble burst? The answer is nothing. However, they should always have arranged their affairs so when there is a slowdown, they were always:

  1. living within their means by spending less than they earn so that they would not have problems living paycheque to paycheque;
  2. using proper budgeting techniques to make sure they were paying down a portion of their debt with every pay;
  3. paying themselves first by maintaining a program to make sure that they were putting away a portion of every pay into savings for investment so that they would be able to weather any downward blips in their income;
  4. making sure their income tax was paid up on time so that they would not have any large amounts outstanding from past years in a time when their incomes were reduced;
  5. only charging to credit cards what they would be able to pay off in full every month so as not to incur credit card debt with high interest costs; and
  6. reviewing their credit report to make sure their credit rating was accurate, and if they were experiencing any credit problems availing themselves of a proper credit counselling agency, NOT one of the debt settlement companies.

So as you can see, there is no magic pill that you can take to solve your financial problems if there is a Canadian real estate bubble burst, an illness, an emergency, or when life just throws a curve ball at you. The best time to have guarded against financial challenges, if you truly were worried about a Canadian real estate bubble burst, was before it happened.

If you’re financial well-being, and that of your entire family depends on the value of your real estate always rising, and you will be doomed if there is a Canadian real estate bubble burst, whether you wish to admit it or not, you have serious financial problems. Before disaster strikes as a result of a Canadian real estate bubble burst or otherwise, contact Ira Smith Trustee & Receiver Inc.

We can review your situation with you, in a no charge initial consultation meeting, and provide you with real options. If we meet early enough, we can discuss various bankruptcy alternatives such as credit counselling, debt consolidation or consumer proposals, all in order to avoid personal bankruptcy. We will go over all of your options, and encourage and help you to implement the one that is right for you.

Together we can solve your problems with immediate action and the right plan so that Starting Over, Starting Now will become your reality.

Categories
Brandon Blog Post

BAD CREDIT HAS COSTS – IMPROVE YOURS NOW!

bad creditBad credit makes it impossible for you to get the credit you need in order to live your lifestyle. Making payments late or missing payments will result in a bad credit score. There is the possibility that your credit rating can be ruined even if you don’t do anything wrong.

Credit is something we take for granted but it can affect every aspect of our lives. Open your wallet and count the number of credit cards in it. Do you have a mortgage? Car loan or car lease? Bank loan? What do they all have in common? Credit. So you see, you cannot afford to have bad credit.

How can a bad credit score cost you money?

  • Anytime you apply for financing your credit rating is checked. If you have an excellent credit score you will pay less interest than someone with a moderate credit score. Over the term of your loan a less than stellar credit score can cost you thousands of dollars, particularly with a mortgage. Or, if your credit rating is poor, you may be refused financing. Too many potential credit grantors checking your credit score actually worsens your credit rating. If it is a poor credit score to start with, then too much checking pushes you that much closer to having bad credit.
  • Did you know that a poor credit rating can affect your car insurance premiums? Car insurance companies sometimes consider people with bad credit as high risk drivers. Having a poor credit rating can cost your hundreds of dollars per year in car insurance premiums.
  • Credit card debt can cost you up to 20% in interest.

Other ways that bad credit can affect you?

  • Some landlords and property management companies run credit checks when you apply for a rental unit and will not rent to people with bad credit. A bad credit score may result in you being denied housing.
  • You may not be able to turn on utilities in your name if you have a bad credit score or you did not pay your utilities in a timely fashion previously.

With bad credit, but with the need to obtain more credit to meet your expenses, it will force you to look for bad credit loans online, payday loans or brick and mortar bad credit loan companies. These lenders advertise guaranteed bad credit personal loans and take advantage of and attack the already vulnerable with their lending practices and high cost loans.

Order a copy of your credit report from Equifax or TransUnion. Bad credit can be repaired with professional help and a plan so that you can be Starting Over, Starting Now. There are several bankruptcy alternatives that can be used for people with bad credit needing help and avoid bankruptcy. Contact Ira Smith Trustee & Receiver Inc. today, get your life back on track.

Categories
Brandon Blog Post

BANKRUPT: EVEN A PRESIDENT CAN BECOME ONE

BANKRUPT: EVEN A PRESIDENT CAN BECOME ONEBankrupt. This word still carries a stigma with it, but did you know that 4 American Presidents became bankrupt? So even a President can become bankrupt. They’re really not so different from average working people who find themselves drowning in debt. In fact American presidents became bankrupt at a rate at least 20 times the national average. And, their financial downfall was largely due to ill conceived real estate speculation, poor crop yields on the lands that they held, and high risk business deals that ended badly.

Which American presidents became bankrupt?

  1. Thomas Jefferson (1801-1809), America’s 3rd President: Jefferson inherited debt from his father-in-law. He managed his own money poorly and by all accounts lived a very opulent lifestyle which sadly, his main source of income – Monticello – was inadequate to support. As a result Thomas Jefferson struggled with debt issues for most of his life and went bankrupt several times. He died owing $107,000. After he died, his estate was auctioned off, and his surviving daughter was forced to rely on charity.
  2. Abraham Lincoln (1861-1865), America’s 16th President: Abraham Lincoln’s business venture in his 20s left him in financial ruin. He opened a general store in the 1830s with a partner, but it was a financial disaster. Lincoln sold his share in the store before it went bankrupt but his former partner died not long after and Lincoln became liable for the outstanding debts. The sheriff seized his only assets which were a horse and some surveying equipment to repay some of his creditors. It took another 17 years for the insolvent debtor to satisfy his remaining obligations.
  3. Ulysses Simpson Grant (1869-1877), America’s 18th President: Ulysses S. Grant lived well beyond his means. After leaving office he and his wife went on a very costly round-the-world tour. In 1881, Grant’s son, Buck, convinced his father to invest $100,000 with one of his associates, Ferdinand Ward. The money was mismanaged and embezzled, resulting in the bankruptcy of the firm of Ward and Grant. Ulysses S. Grant went bankrupt and ultimately had to sell his civil war memoirs to provide for his family.
  4. William McKinley (1897-1901), America’s 25th President: Although William McKinley did nothing personally to bring financial ruin upon himself; he co-signed a $100,000 loan for a friend who later went bankrupt. This in turn forced McKinley to declare bankruptcy on the $100,000 debt while he was Governor of Ohio in the 1890s.

Things really haven’t changed much since the 1800s; living beyond your means, making bad business investments and co-signing a loan are still common causes of people becoming bankrupt. Any of this type of debt, along with credit card debt, can cause you to live paycheque to paycheque. If you are considering bankruptcy contact a professional trustee as soon as possible. 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 Starting Over, Starting Now. There is life after bankruptcy. Contact us today.

Categories
Brandon Blog Post

CREDIT CARD DEBT IS MORE THAN A 4-LETTER WORD

 

CREDIT CARD DEBT IS MORE THAN A 4-LETTER WORDCredit card debt. There’s a lot of discussion about it in the news these days and the news is all bad; but the reality is that there is good debt and bad debt. As you will read, debt, including credit card debt is more than a 4-letter word. However, no one is denying that debt is a serious issue for many Canadians. According to the Canadian Institute of Chartered Accountants surveys conducted in December and June, 2012:

  • 50% of Canadians think reducing debt is a high priority
  • 48% of Canadians would have difficulty making mortgage payments if interest rates rose significantly
  • 43% of Canadians carried over a balance on their credit cards
  • 17% of Canadians borrowed to cover day-to-day living expenses

According to Statistics Canada, between 1984 and 2009, household debt (which includes credit card debt) in Canada more than doubled from $46,000 (in 2009 dollars) to $110,000. In February 2011 the Vanier Institute of the Family reported that the average Canadian family had hit $100,000. If there is such a thing as good debt and bad debt, what’s the difference? The distinction is based on the purpose for which it is taken on. Good debt can be defined as anything that builds your assets or increases the potential for you to earn more money. Bad debt is typically incurred to purchase things that have no value or quickly lose their value and usually carries a very high interest rate – which more often than not is found in credit card debt.

Some examples of good debt:

  • Mortgage
  • Real estate
  • Student loans from the provincial or federal government
  • Investment loans

Some examples of bad debt:

If you are having trouble paying the monthly bills, and have out of control credit card debt, it really doesn’t matter if you have good debt or bad debt; it’s time to see a professional trustee. Ira Smith Trustee & Receiver Inc. will evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution are bankruptcy alternatives like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Starting Over, Starting Now you can be debt free with the help of a professional, licensed trustee in bankruptcy. You can even do some advance study with our bankruptcy faqs. Contact us today.

Categories
Brandon Blog Post

LINES OF CREDIT (LOC) CAN BE JUST AS DANGEROUS AS A CREDIT CARD!

line of credit, lines of credit, loc, credit line, credit card debt, credit cards, interest rates, lower interest rates, financial trouble, credit cards to build credit, credit line increase, financial trouble help, line of credit vs loan, lines of credit for bad creditWe are constantly bombarded with messages about the dangers of credit card debt, but no one is talking about Lines of Credit (LOC). The reality is that Lines of Credit and credit cards are just financial products. They are not in and of themselves problematic; how we use or abuse them is the issue. A Line of Credit can be just as dangerous to your financial well-being as a credit card.

What is a Line of Cre​dit? A Line of Credit is a type of loan that lets you borrow money up to a preset limit.

How does a Line of Credit work? You can withdraw or transfer funds from your Line of Credit at any time by:

  • Making a withdrawal at your financial institution or at a banking machine
  • Writing a cheque
  • Telephone or online banking

Once you pay off or pay down your Line of Credit, you can access the funds up to the limit you are allowed. You pay interest on the amount that you borrow from the day you take the money out of your Line of Credit and you must make a minimum payment on the balance every month.

How do you get a Line of Credit? You can apply for a Line of Credit at a financial institution. They will determine your credit worthiness and your credit limit (how much you will be allowed to borrow on your Line of Credit).

Financial institutions have been promoting the use of Lines of Credit and it’s not a big surprise; they make money when you borrow money. And although Lines of Credit do come with lower interest rates than most credit cards, they can be just as dangerous to your financial future. The lower interest rates have lulled many people into making purchases that they may not have otherwise made. Then the reality of paying off the Line of Credit becomes a reality and where is the money going to come from?

According to Equifax, “More and more Canadians, it seems, are turning to their credit line, with balances increasing across the country”.

David Chilton, author of The Wealthy Barber and The Wealthy Barber Returns has very strong, negative opinions about Lines of Credit. “LOCs are the “worst thing” that’s happened to Canadians in the last 20 years. If I was prime minister, I’d shut them down.” Chilton said at a 2011 conference of the Canadian Pension & Benefits Institute as reported in the National Post newspaper. “It’s unbelievable how people are abusing these things.”

Borrowing without a solid repayment plan will get you into financial trouble every time. Are you experiencing serious debt issues as a result of your Line of Credit or credit cards? Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now we can help you live a debt free life.

Categories
Brandon Blog Post

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

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

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

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

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

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

Categories
Brandon Blog Post

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.

Categories
Brandon Blog Post

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.

Call a Trustee Now!