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MY BILLS ARE HIGH: 6 THINGS TO IMMEDIATELY DO

my bills are too high

If you would prefer to listen to the audio version of this my bills Brandon’s Blog, please scroll to the bottom and click on the podcast

My bills are high: Introduction

It is very common when I sit down with a person who has come to my office for a free consultation to hear them say “my bills are high”. As a licensed insolvency trustee, my role is to first understand the person’s entire situation. It is quite possible that I can recommend a few alternatives to avoid bankruptcy.

The purpose of this Brandon’s Blog is to talk about the importance of budgeting and more things a person with financial problems can do before even considering the “B” word.

First thing – household budget

I will show you how to catch up when you are behind on your financial obligations by using a proper household budget plan process. I must warn you that there is no magic wand to wave to make things right. You will have to learn the budgeting technique and be willing to invest a great deal of effort, time and personal and family sacrifices. But it will be worth it. When you are back on track and living within your means, you will have a new stress-free outlook on life.

To start the monthly budget plan process, it does not matter if you use an electronic spreadsheet, a paper listing of income and expenses or a clean calendar. Whatever you are most comfortable using. The process will be the same.

The starting point is for you to list all your bills with their due dates. Don’t forget to make note of any special expenditures during any specific month, such as a spouse or child’s birthday present. Make sure you list all of your expenses regardless if you pay them by cheque, cash, credit card or online payment.

Next, list your monthly income by the date(s) during the month your wages or salary end up in your bank account. Make sure that you are listing your net take-home pay, net of income tax. That is the actual amount of income that you have to spend in any given month.

The 4 corners

Now that you know exactly how much money is coming in every month available for you to pay your expenses, you have to organize your expenses. You first need to know what I call your four corner expenses. These are the expenses that you will have to pay before anything else. This is true whether you continue working at the same place or you lose your job and are looking for new work. The expenses that I call the four corners are:

  • Rent or mortgage payment.
  • Food costs.
  • Heat and electric bills.
  • Clothing expenses.

These are your essentials. Nothing else can be considered before them. So fill in your regular monthly amount for each one. Total up the amount of your four corners expenses and deduct it from your take-home pay. The difference is what you have left over each month to spend on other expenses.

Now go down the list of the rest of your expenses. Car payments, gas and vehicle maintenance, insurance, cable, internet, credit card payments and anything else that you have listed. See what all those expenses total. If the total of those is more than you have leftover cash from the four corners exercise above, then you have to make adjustments. You either have to reduce your other expenses or you have to increase your income. Perhaps it may even be a combination of the two.

If you are behind on any of your payments, because your bills are too high right now, you are going to have to work into your budget increasing the amount of the monthly expenses that you are behind on. However, there is an exception. The exception is that you start with your four corners payments you are behind on.

It won’t help you to bring your credit cards current if the gas company is about to shut off your ability to heat your home. Bringing a life insurance payment current won’t help you if you are behind on your rent or mortgage payments. So again, your four corners payments have to be brought current first. Then you can focus on your other expenses.

Do not worry about anything else. You put it on hold due to the fact that at the end of the day, if you were to have lost your job, the four corners is what you require to make it through, not a credit card payment. You don’t need to fret about your credit rating decreasing since if you are starting this trip you are not looking to borrow more money that needs your credit score to be spot-on. That will come over time after you have your financial house in order.

You worry about taking care of your four corners first. That is a good mind trick to getting yourself out of the loop of being addicted to letting your bills go late. imagine if you would have lost your job you would have no other choice but to not pay the credit cards.

Balance the rest of your expenses

Now, normally when you’re behind on payments that mean that you don’t have enough money to cover all your bills and that is totally fine. I need to emphasize that is totally fine. You will be able to catch up eventually. Most people find ways to catch up by either:

  • Further reducing expenses.
  • Selling stuff.
  • Using an annual bonus.
  • Increasing income with overtime, a part-time job or side hustle.

You need to take care of business. That way you are treading water, not sinking in it!

Now, what about the non-four corners monthly payments that you are deferring. Yes, eventually the credit card company, such as, is going to start hounding you. You will have to explain your temporary problems, tell them what you are doing to correct things, and when you think you will really begin to resume payment. It doesn’t matter who the creditor is. The process of explaining the issues and getting a deferment or grace period is the same. Do not hide from your creditors. Explain the situation and show them that you have a solution for your common problem.

For additional ways to pay down your debt, take a look at my blog DEBT HELP NEAR ME: OUR TORONTO DEBT REPAYMENT CALCULATOR STRATEGY. In it I explain the two most common methods of paying down bills you are behind on; the debt snowball method and the debt avalanche technique.

If you budget properly and stick to your budget, you will get caught up and your credit will recover with time. Now that you actually have control over your expenses and you know to the day of every month what you earn and what you pay, you can then look at some alternatives if you cannot get current before a creditor stops waiting and is beginning to take action against you.

Once you have the budget process mastered and you are following your budget, you won’t have to say “my bills are high”.

Second thing – rebuilding credit

Rebuilding credit is essential. There are many points beyond your control that could have contributed to you’re getting behind on your bills and your resulting bad credit ranking – losing your job, an illness or a divorce. The most vital thing is to recognize what is within your control that got you into difficulty and ensure that you don’t repeat the same mistakes twice.

There are many strategies that you can use to restore your credit score. Here are a few suggestions:

  • Continue with the budget plan I showed you above and continue to pay down your debt.
  • Pay your expenses in a timely manner
  • Contact a creditor instantly if you are having a problem making payments to advise them and work out a payment plan that you can honour.

If you do not qualify for any type of loan, apply for a secured credit card and stop using the normal credit cards that got you into trouble.

Third thing – credit counselling

The first two things I have mentioned are for those who can do it on their own. If you discover yourself experiencing money problems and feel that you need the help of an expert, credit counselling is a great place to start.

A certified credit counsellor professional, can look at your current situation and offer you many alternatives for taking care of the debt.

Credit counselling can solve debt problems. It will also give you the skills to properly budget, pay down your debt and then go on to live debt free. Credit counselling solutions consist of the budgeting process and credit repair that I have already talked about. It also will include lessons on how to use debt wisely. It may also include a proper debt administration program.

Debt administration programs are made to aid you to repay debt. You enlist willingly in a debt administration program; it is not court mandated. When you enlist, a debt counsellor will contact your creditors and ask for their participation in lowering your debt. Your lenders might agree to decrease the amount of debt owing or eliminating or reducing the interest owing. Not all financial debts are covered under a debt monitoring program. Secured debts are generally not included. This is because the creditor can repossess the house or car if you do not make your payments.

One word of caution. We have had cases where certain debt administration firms failed to provide any type of purposeful solution for the people. They charged costs and didn’t give any kind of results. We suggest that you contact what you believe to be a reputable credit counselling firm, you do not retain them until after getting and vetting a couple of references of people who have gone through the program you are considering and you receive positive reviews.

Fourth thing – debt consolidation

Debt consolidation is a loan that allows you to settle all your financial obligations to several or all of your lenders simultaneously, leaving you with just one loan payment. Your debt consolidation loan interest rate must be less than the average interest rate of the debts you are settling.

Not all debts can be included in a debt loan consolidation financing. Secured financial debts like your home mortgage or car loan cannot be included; however unsecured debt like credit card debt and other regular monthly bills that you are now behind on can be.

In order to qualify for a debt loan consolidation, you will require to have an acceptable credit score and sufficient income to show to the lender that you can make your new month-to-month payment in addition to your other regular monthly expenses. Debt consolidation is something you ought to consider before you are in more significant financial troubles. If you have a poor credit score you will certainly not qualify.

There are many benefits to a debt loan consolidation financing that include yet are not limited to:

  • Interest rates are less than the rates of interest on credit cards
  • Your unsecured creditors will be paid in full
  • You will have the benefit of making only one monthly payment
  • You ought to be able to keep a good credit report rating

Fifth thing – consumer proposal

Your financial problems may have gotten to the point where you just don’t have enough time to get current using one or a combination of the 4 things I have already explained. Worse, you may have gotten breathing room and accommodation from your creditors. However, you were not able to keep current on your new payment plan. If this is the case, do not fret because there is a solution.

By using a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee), you can reach a binding deal with your creditors to settle your debts at less than the amount you owe in total. The process for this debt settlement plan is called a consumer proposal.

Consumer proposals are options to avoid bankruptcy. A consumer proposal is available to people whose total financial debts do not go beyond $250,000. This limit is not including financial obligations for mortgage or line of credit loans registered against your principal home.

Consumer proposals have formal rules governed by the Bankruptcy and Insolvency Act (BIA). Dealing with a Trustee you make a proposal to:

  • Pay your creditors a percentage of what you owe them over a specific time period (not more than 5 years).
  • Extend the time you need to pay off the debt.
  • It could be a combination of both.

Payments are made to the Trustee who is the administrator of your consumer proposal. The Trustee then uses that money to pay each of your creditors their part of the payments.

The advantages of a consumer proposal are:

  • You maintain all of your possessions
  • Collection actions against you by unsecured creditors, such as garnishments are stopped
  • Unlike informal debt settlement, the consumer proposal is a legal process where every one of your creditors must heed your restructuring
  • You do not have to claim bankruptcy

Sixth thing – bankruptcy

If you have left things too late, or other reasons why none of the 5 things I have already described will work for your situation, then the sixth thing is bankruptcy. Personal bankruptcy is meant to allow the honest but unfortunate person shed themselves of their debt. That way you can start over fresh and new.

Our goal as a Trustee is to ensure that you understand the bankruptcy process and how it can be used to get your life back on track.

We will first help you understand the 5 things I have already described that might be available to you to avoid bankruptcy. If bankruptcy is the only solution, we will guide you back on the roadway to financial health and wellness. We design solutions to ease the stress you meet and bring you:

  • Relief from bothering calls from debt collectors.
  • Freedom by extricating you from garnishments.
  • Provide you the ability to live better than just hanging on one paycheque to the next.
  • Improve your credit scores.
  • Give you an improved and enhanced wellness and well-being.

My bills are high: Do you have too much debt and need help?

If so, call the Ira Smith Team today. We have years as well as generations of experience aiding individuals and companies needing financial restructuring. As a licensed insolvency trustee, we are the only professionals accredited and followed by the Federal government to provide debt restructuring options.

You can have a no-cost appointment for us to gather the necessary information to advise you on how to fix your debt difficulties. We can end your pain so that you will begin your clean fresh start, Starting Over Starting Now.

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BANKRUPTCY HELP: SIGNS YOU NEED HELP

bankruptcy help

If you would rather listen to the audio version of this bankruptcy help Brandon’s Blog, scroll down to the bottom and click on the podcast.

Bankruptcy help: Introduction

When people ask for bankruptcy help, they really don’t want to talk about bankruptcy. What they are really asking for is help in eliminating the pain, suffering and stress they are going through dealing with their unmanageable debt. They want solutions to avoid bankruptcy. In this Brandon’s Blog, I discuss the debt danger signals and provide solutions to avoid bankruptcy.

As a licensed insolvency trustee (formerly known as a bankruptcy trustee), we are the only professionals licensed and monitored by the Federal Government. We provide options and proposed solutions to people and companies with too much debt. Our main goal is to help people and companies AVOID bankruptcy while solving their debt problems.

Bankruptcy help: 10 signs that you need help

  1. Your total debt has increased over the past year. You may be making minimum payments on some debt, paying down other debt, but increasing your debt in total. You have not accomplished anything in reducing your debt in the past year and this means you need help.
  2. Justified purchasing a new vehicle even though your existing one is fine, just not new. Taking on more debt just because of a “want” but not a “need” is irresponsible. You need help.
  3. Bought a new house with a larger mortgage, or mortgages, because you expect your income to rise in the future. Wages and salaries are not increasing in any real way. They are flat. Voluntarily carrying a larger debt load hoping that sometime in the future your income will catch up to your cash needs is not a responsible way of handling your affairs. You need help with your debt.
  4. Have borrowed money to go on a vacation. You should never go into debt to purchase something that is going to vanish in a week or two. The vacation will be gone but the debt will remain. If you can’t afford a vacation, you can’t go on one.
  5. Justify purchases based on what your peers are buying. Again, going into more debt because you want things your friends are buying is not a good reason. Their situation is not your situation. Maybe they can afford those things but you can’t. Maybe they can’t afford those things and will end up in bankruptcy. You just don’t know. Again, you can’t go into debt for “wants”.
  6. You have no emergency fund saved up. Recent surveys have shown that Canadians may be a few hundred dollars away from a financial disaster. Many Canadians are living paycheque to paycheque. You don’t know when a medical emergency, job loss or the need to replace a major appliance will happen. You need an emergency cash fund to cover those emergencies. If you have too much debt and no emergency fund savings, you need debt help.
  7. No retirement savings. It is never too soon to start planning to save a certain part of your take-home pay for retirement. A proper household budget will allow for such savings. If you are constantly battling your debt and have no money for savings, you need debt help.
  8. You quit your job without having another one lined up. This is probably the most irresponsible thing you can do. It may seem obvious to you, but trust me, I have seen it. The best way to land a better paying job or position is when you already have one. Trying it any other way is pure folly, especially when you have too much debt. Your regular monthly debt payments will not wait for you to have your income stream rolling again. Keep in mind that I am not talking about someone who is downsized and was given a package. I am talking about someone who quits without having new employment ready to go to.
  9. You are always borrowing from one source to pay down another. There isn’t enough money from your earnings to make your required debt payments. The fact is that you are borrowing from Peter to pay Paul. You’re in trouble and need debt help.
  10. You ignore your partner’s bad money habits or worse, financial infidelity. Your money habits may be impeccable. However, ignoring your partner’s money problems will bring you down too. You both need debt help.

Bankruptcy help: How we provide debt help

The first thing we offer is a free first consultation. You explain to us the financial issues you are facing. Then we talk to you about your family assets, liabilities and income. We then describe to you some possible options to help you overcome your debt problems. More information will be needed from you, but at least we start by setting your mind a bit at ease by telling you that your situation is not hopeless and we can give you solutions. All of the solutions we offer, except maybe one, are all so you can avoid bankruptcy.

The takeaways we want everyone to get from this free consultation is that you feel:

  1. We have empathy for your situation.
  2. A rapport has been built.
  3. We are the kind of people you can see yourself working with.
  4. You trust us.

If you wish to go ahead with our solving your financial and debt problems, the next step is that we have you complete our standard intake sheet called the Debt Relief Worksheet. A fully completed worksheet, complete with backup documents, allows us to drill down into all the issues and come up with our definitive recommendations.

Bankruptcy help: What are some possible solutions

The range of possible solutions depends on when we get to speak with you. Most people wait until they have no more credit line to use. Sometimes it takes a major event like the Canada Revenue Agency garnisheeing their bank account or wages before they realize they have a debt problem. The earlier you recognize there might be a problem and come speak with us, the more options we will have for you to solve your debt problems.

The range of options might include:

Credit counselling

Credit counselling is in fact debt therapy. We give advice with a host of concerns connected to debt consisting of budgeting, debt remedies, working with your lenders as well as restoring credit scores.

Debt consolidation

Debt consolidation is replacing all of your debts with new single financing at a lower overall interest rate so that you only have one debt to focus on reducing.

Consumer proposal

A consumer proposal is an official deal made to your creditors under the Bankruptcy and Insolvency Act (Canada) to customize your repayments; e.g. paying a lesser amount every month for a longer amount of time and paying in total less than you owe. Another benefit is that the interest clock stops the moment you file your consumer proposal.

If none of the above 3 possible solutions to avoid bankruptcy will work for you, then you are a candidate to file for bankruptcy so that you can end the pain and stress your debts are causing you. This way you can be Starting Over, Starting Now.

Bankruptcy help: Do you have too much debt?

Do you have too much debt? Are you stressed that future interest rate increases will make currently affordable payments completely unaffordable? Is the pain, stress and anxiety hurting your wellness and health?

If so, speak to the Ira Smith Team today. We have decades and generations of helping people and companies looking for financial restructuring. As a licensed insolvency trustee (formerly called a bankruptcy trustee), we are the only experts licensed and supervised by the Federal government to provide insolvency services.

Call the Ira Smith Team today for your free consultation and to make sure that we can begin assisting you to return right into a healthy, balanced, hassle-free life.

 

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FINANCIAL DISASTER PREPAREDNESS: 4 STEP PLAN TO STOP FINANCIAL DISASTER

Financial disaster preparedness: Introduction

The people drowning in debt are always scared of the thought of speaking to a licensed insolvency trustee (formerly known as a bankruptcy trustee (Trustee). The purpose of this Brandon’s Blog is to allow me, a Trustee, to give you some basic points on financial disaster preparedness in a non-scary way. Hopefully, it can help you avoid a financial disaster.

On the 27th day of the United States Federal government closure, many federal employees that are already under money stress and anxiety are not surprisingly asking whether an insolvency proceeding is the only alternative.

These people did not ask for this. Although they will eventually receive all their back pay, that doesn’t help their cash flow today.

Some personal bankruptcies are started by events beyond somebody’s control. The US government shutdown is such an example. Alternatively, unlike the shutdown, a number are completely within an individual’s control.

Here are four ideas on just how to maintain your finances from falling off the edge right into insolvency.

Financial disaster preparedness: #1 – Keep an eye on your credit cards

Try to pay your monthly credit card bill, and all your expenses, on or before their due date. If timely payments cannot happen, pay it back asap or arrange a repayment strategy to decrease late charges as well as interest charges.

Never ever carry over a credit card balance. Attempt to pay your balances, including all your expenses, promptly.

Similarly, be conscientious what your credit history is. Almost every person will certainly have a time in their lives when they’ll need to borrow cash for some major expenditure.

Your credit score will affect the borrowing rates you are offered. Knowing one’s credit history can aid people to make a better decision on when to jump, or hold back, on a choice to borrow.

Financial disaster preparedness: #2 – Know your monthly expenses (and savings too)

When I do credit counselling and speak to people about loan basics, I discuss spending behaviours and always talk about the difference between wants and needs. I always encourage people striving for economic self-reliance to begin with a straightforward exercise: document every single expense in a month.

By mapping out all the spending, people can rank where their cash should, as well as shouldn’t, be going. For example keep an eye out for the daily latte, which is a habit because, it builds up, A more expensive specialty coffee is a want, not a need. A less expensive plain coffee could suffice.

There is one routine I always urge. Make a routine that you will set aside a particular percentage of your income for an emergency fund. The same goes for socking away, at the very least a little, to an RRSP. Work these savings into your budget.

In my experience, all consumer insolvencies commonly entail inadequate financial savings to cover the unanticipated. This is a common problem among Canadians that I have previously written about in my blogs.

Credit cards are also a significant cause of personal insolvencies. Many of our personal insolvency clients use credit cards to supplement their income. Rather than budgeting, they use their credit cards for various expenditures that they really cannot afford and are unable to pay down their credit card balances.

Financial disaster preparedness: #3 – Boost your financial literacy

There are various ways to begin early in life to prevent financial disaster problems. If these guidelines sound familiar, that’s because they are. However, yet few individuals appreciate them. That’s partly because they’re not taught it in the schools.

Canadians have a financial literacy problem. Many people think that some people are born rich and others aren’t. The reality is that those who are well off just have a more realistic understanding about spending and saving within one’s earnings.

Financial literacy, like civics education, needs to be a requirement in all elementary school, high school and university educational programs.

Financial disaster preparedness: #4 – Preserve your financial self-reliance


Those who lived through the great depression understand how fragile funds can be. Clipping coupons and looking for the most affordable prices is just part of their normal behaviour.

Insolvency filings have been at their lowest point since 2007, and there are varying explanations for the decline.

During the last decade, Canadians have amassed debt. Now that interest rates are rising, it is expected that personal insolvency filings will rise. Personal insolvencies will be more a part of our world as a result of unexpected disasters and negative decisions.

Corporate bankruptcies will always be a part of the system as markets change and businesses experience threats they cannot survive.

We must all be financially vigilant. I hope these tips will help you in avoiding any form of financial distress.

Financial disaster preparedness: What about you?

Do you have excessive debt? Are you in need of financial disaster preparedness? Does your business have way too much financial debt and is in danger of shutting down? Are you concerned that the future rate of interest hikes will make currently workable financial obligations totally uncontrollable? Is the pain, stress and anxiety currently adversely influencing your health and wellness?

If so, contact the Ira Smith Team today. We have years and generations of helping people and businesses seeking financial restructuring. As a licensed insolvency trustee, we are the only specialists certified and overseen by the Federal government to offer financial restructuring solutions.

We provide a free consultation to assist you to solve your problems. We know the discomfort financial obligations causes. We can end it as soon as possible from your life. This will permit you to start a fresh start, Starting Over Starting Now.

Call the Ira Smith Team today so that we can start helping you get back into a healthy and balanced, stress-free life.

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DEBT RELIEF CANADA: CAN YOU DIPLOMATICALLY AVOID BANKRUPTCY?

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Debt relief Canada: Introduction

This is always a hot topic. I am asked often how does debt relief Canada work? I recently wrote blogs about professional athletes who made a lot of money in their careers and who are now broke, or worse, bankrupt.

I am going to tell you about former tennis star Boris Becker. He is trying to avoid bankruptcy, diplomatically.

First some background information. The inviolability of diplomats is among the oldest rules of international law. During the Greek Empire, it was unlawful to abuse, apprehend or detain a country’s agent. In contemporary times, there is polite resistance from court territory as a matter of global regulation. The purpose of this is to make certain the reliable efficiency of diplomatic features preventing the holding authority from intervening with the diplomat’s job.

Debt relief Canada: Diplomatic immunity

Diplomatic immunity separates into 3 categories. The resistance of the consular office properties and residential properties. The buildings, cars, archives and diplomatic communications. While the holding authority has a task to shield the diplomatic properties from any type of damages, the embassy remains immune from any kind of law enforcement actions. The authorities cannot enter the consular office other than to safeguard human life for instance of a severe emergency.

The 2nd kind is within the premises. The resistance of the employees functioning in the consular office from the local court’s jurisdiction. Mediators are immune from any kind of type of law enforcement like arrest, search as well as apprehension.

The 3rd kind is that the diplomat, as well as his/her family members, are additionally immune in the hosting country from paying taxes other than the settlement for solutions like electricity or water.

Article 29 of the Vienna Convention on Diplomatic Relations states that diplomatic immunity could only be forgoed by the sending out government.

Debt relief Canada: The Boris Becker story

It likely raised a few eyebrows when Boris Becker revealed he was pursuing a 2nd profession in diplomacy In April 2018 as the Central African Republic’s attaché for Sports/Humanitarian/Cultural Affairs in the European Union.

The statement came while Becker had a claim made against him over a loan he presumably owes to exclusive financial institution Arbuthnot Latham, after the sports celebrity’s bankruptcy in 2017. His lawyers claim that his diplomatic function grants him immunity under the 1961 Vienna Convention on Diplomatic Relations. They state this indicates he cannot be subject to any kind of lawful procedure in the courts of any nation. Additionally, they say this protection is for as long as he stays an identified diplomatic representative.

The Boris Becker method of debt relief

His legal representatives have also provided those claims to Britain’s High Court, saying that British Foreign Secretary Boris Johnson in addition to the Central African Republic would need to decide whether any kind of suits could continue. This takes the bankruptcy of a previous tennis star transforming it into a politically delicate matter. The Court process against Becker might lead various other countries can potentially make use of the situation. In the same fashion British diplomats abroad could lose immunity if certain countries wished to make a point.

Becker’s defence method has actually likewise set off inquiries over his motivations as well as timing in accepting a polite duty with the Central African Republic— a nation in the midst of a bloody civil conflict and humanitarian situation. It appears now the Republic has more important matters to focus on. Its social and sporting activities ties to Europe cannot be a current priority.

The former tennis champ condemned the choice to start bankruptcy procedures versus him as unjustified and unjust and introduced he would look for payment for the totally unneeded affirmation of bankruptcy that he was pushed into.

Debt relief Canada: The precedent story of Sheikh Walid Juffali

The Article 29 of the Vienna Convention on Diplomatic Relations I previously referred to, has actually long been controversial. In 2014, the little Caribbean island of Saint Lucia named Saudi business owner Sheikh Walid Juffali its irreversible representative. Moreover, this appointment occurred after his former spouse Christina Estrada separated from him and instituted divorce proceedings.

Britain’s High Court ruled that his diplomatic status was totally fabricated. Britain’s Foreign Office slammed the judgment when stating it can result in problems with British diplomats’ immunity abroad. The Court said that Sheikh Walid Juffali, a permanent resident of Britain, is not protected by his diplomatic status. Estrada’s award was about $100 million.

Applying the very same reasoning in Becker’s instance would negate any diplomatic immunity claim by the long-time British homeowner.

What if you can’t claim diplomatic immunity?

Boris Becker’s uses a very novel and entertaining defence to avoid lawsuits to recover debts. However, most of us don’t have the ability to get diplomatic status from a country and then claim immunity. We deal with creditors suing us on our debts. We have to take a less dramatic and more common sense approach. Here is my list of options for those looking for debt help in Canada.

Debt relief Canada: Credit counselling

This addresses debt troubles without bankruptcy and supplies you with the skills to live debt totally free. Credit counselling solutions consist of budgeting, just how to use debt intelligently, restoring credit as well as debt management programs.

Debt management programs are developed to aid you to settle your debt. You enlist willingly in a debt monitoring program; the court did not mandate it. When you enlist a credit counsellor will call your financial institutions and ask for their collaboration in minimizing your debt. Your creditors could agree in ways like minimizing the amount of debt owing. A debt management program cannot cover all debts. It cannot cover secured debts. A mortgage, line of credit registered against your home or an auto loan are examples of debts not covered.

Debt relief Canada: Debt consolidation

Debt consolidation is getting a loan that enables you to settle your financial debts to a number of or all your unsecured creditors, leaving you with simply one loan. Usually, this approach is ideal to deal with your unsecured debts. The theory is that the debt consolidation loan will have a lower annual interest rate than many of your unsecured debts.

Debt relief Canada: Proposals

Consumer proposals and Division 1 proposals are alternatives to bankruptcy. Although similar in many areas, there are some major distinctions. Consumer proposals are readily available to people whose overall financial debts do not go beyond $250,000, not consisting of debts secured by your house. Division 1 proposals are for both companies as well as people whose financial obligations go beyond $250,000 (excluding the mortgage on their primary residence).

Proposals are governed by the Bankruptcy and Insolvency Act (BIA). Collaborating with a licensed insolvency trustee you make a proposal to:

✥ Pay your creditors a percentage of what you owe them over a certain
 amount of time, without any interest

✥ Extend the time you need to repay the debt

✥ Or a mix of both

Proposal payments are made to your trustee. The trustee uses that money to pay each of your creditors. You can take up to 5 years to complete a proposal.

The last resort: Bankruptcy

As a last resort, you can declare bankruptcy. The Government of Canada licences and supervises us. We can look at your circumstance and discuss with you the options available to you to avoid bankruptcy. We can also advise you what is involved in the bankruptcy option and administer it for you.

Do you have too much debt?

I can’t provide you diplomatic immunity from your debts. However, If you’re thinking about a consumer proposal or are looking for ways to end your financial debt, or you need CRA debt forgiveness, call Ira Smith Trustee & Receiver Inc. We understand the stress and pain your financial problems are causing you. We feel your pain and we can end it for you.

Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you walk through our door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress-free life.

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DEBT FORGIVENESS CRA: CANADA REVENUE AGENCY BEATS DONOVAN BAILEY

debt forgiveness craDebt forgiveness CRA: Introduction

Last week we told you about professional athletes who earned enormous fortunes and blew it all on lavish, unsupportable lifestyles. The end result was bankruptcy. There is another group of professional athletes who also earned millions and ended up using a bankruptcy alternative to avoid bankruptcy, but not because they blew it all. They were trying to shield their money from taxes through complex offshore tax structures. However, the Canada Revenue Agency (CRA) reassessed them and now they had a huge tax bill and needed debt forgiveness CRA.

CRA debt forgiveness: Donovan Bailey tries to race Canada Revenue Agency

This is certainly not a new phenomenon. The newspapers and tabloids often feature stories about famous people who the tax department reassesses for using complex tax structures designed by agents, managers, accountants, and lawyers. In this case, our very own Olympian, Donovan Bailey, had to file a proposal under the Bankruptcy and Insolvency Act (Canada), as a result of an offshore tax scheme to try to beat the CRA. And, sadly, he’s not the only one.

Debt forgiveness CRA: Her Majesty outruns the offshore tax scheme

The offshore tax scheme that nearly bankrupted Donovan Bailey was designed to lessen the amount of income tax to be paid. Donovan Bailey made a “charitable donation”. It went through a complicated series of transactions. The money made its way back to Mr. Bailey, through an offshore account. It was supposed to come back in tax-free.

The problem was that the tax authority reassessed Donovan Bailey. They said the charitable donation was no more than a sham to avoid paying taxes. Instead of tax-free money Donovan Bailey found himself in debt to the CRA to the tune of $2.3 million in unpaid taxes and ended up in bankruptcy court.

Debt forgiveness CRA: CRA gets tough

The CRA has vowed to get tough on tax evaders and the tax professionals who help them. CRA threatens with increased fines and jail sentences. They have a strategy to root out high-risk wealthy Canadians and corporations that stash cash in offshore accounts to avoid taxes. And, they’re spending $444 million on these measures, and expect to recoup $2.6 billion in added revenue over five years.

Debt forgiveness CRA: What to do if you have too much debt

No one likes to pay taxes, but trying to hide money from the CRA could land you fines, jail time and/or bankruptcy. If you’re considering bankruptcy because of income tax debt or for any reason, we can show you bankruptcy alternatives to get CRA debt forgiveness. We can end your debt pain through a consumer proposal, debt consolidation, and credit counselling. Contact a professional that you can trust – Ira Smith Trustee & Receiver Inc.

The Ira Smith Team has a cumulative 50+ years of experience dealing with diverse issues and complex files. We deliver the highest quality of professional service. Don’t settle for less. Give us a call today and Starting Over, Starting Now you can overcome your financial difficulties.

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INTEREST ON CREDIT CARDS CALCULATOR: WHAT A LOSS OF YOUR INCOME MEANS

interest on credit cards calculator

Interest on credit cards calculator: Introduction

As Benjamin Franklin so wisely stated in 1789, in this world nothing can be said to be certain, except death and taxes. Life is full of surprises – not all of them pleasant. Are you financially prepared in the event that life deals you a low blow – job loss, injury or a health crisis? And, if so, would you turn to credit cards to support your lifestyle? Do you really know how to calculate the interest on your credit card balances? Below I will explain how an interest on credit cards calculator works.

Interest on credit cards calculator: And the survey says

According to a recent survey by Forum Research:

A Manulife Bank survey of Canadian homeowners reports that:

  • 9% have access to $1,000 or less
  • 14% have not put away any funds

Interest on credit cards calculator: An alarming Canadian trend

These two surveys bring to light an alarming trend. With no emergency fund, or any savings to fall back on, many Canadians who find themselves in a crisis with a sudden loss of income turn to living off credit cards. According to Bankruptcy Canada:

  • Only 25% of Canadians pay off their credit card debt in full each month which means that 75% of Canadians carry a balance on our credit cards each month
  • This can result in paying several thousands of dollars each year in interest

Interest on credit cards calculator: How the interest is calculated

The annual interest rate on credit cards ranges from 19% to almost 30%. Credit card companies actually calculate interest on a daily basis. Therefore, if you do not pay the full balance on time by the due date, the interest actually compounds on a daily basis. That is why once balances are overdue, or you are only making the minimum monthly payments, you can never get catch up. The daily compound interest accrues too quickly.

The Financial Consumer Agency of Canada provides a free online credit card payment calculator. Check it out by clicking here.

Interest on credit cards calculator: What to do if you can’t keep up with your credit card payments

In fact, it can take a lifetime to pay off a credit card balance of a few thousand dollars if you’re only making the minimum payments. Living off credit cards is not the answer; getting professional help is. You need a trustee now. Many people fear that bankruptcy is the only option for serious financial problems, but that’s just not true. Although bankruptcy is an option, there are bankruptcy alternatives to consider:

Ira Smith Trustee & Receiver Inc. is here to help. We approach every file with the attitude that your financial problems can be solved given immediate action and the right plan. Give us a call today and Starting Over, Starting Now you can put your financial problems behind you and look forward to living a debt free life.

 

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PAYDAY LOANS AROUND ME: DO PAYDAY LOANS CAUSE A BANKRUPTCY?

payday loans

Introduction

We’ve been sounding the alarm bells about payday loans long and loud, but it seems that many Canadians are still unaware of their dangers. According to the Financial Consumer Agency of Canada (FCAC), many loan users are unaware of the high costs of these loans compared to their alternatives. This includes all such loans around me and you. This just goes to confirm what we already knew – there’s a great need to continue to raise consumer awareness about the costs of, and alternatives to, payday loans.

What the FCAC survey shows

The FCAC recently conducted a survey on payday loans and the results were quite insightful and at times quite surprising:

  • They are an expensive way for consumers to borrow money. The annual percentage rate (APR) is typically 546%.
  • Fewer than 43% of respondents understood that this kind of loan is more expensive than available alternatives. This suggests that many do not have enough knowledge to consistently make the borrowing decisions that best serve their financial well-being.
  • The use of these loans has more than doubled in Canada recently to 4% of Canadian households.
  • 45% of respondents reported typically using such loans for unexpected, necessary expenses.
  • 41% used them for expected, necessary expenses.
  • Users are primarily those with low-to-moderate incomes (more than half lived in households with annual incomes under $55,000).
  • 20% of respondents who used this kind of loans reported household incomes exceeding $80,000.
  • 7% of respondents who used them reported household incomes over $120,000.
  • Many of the users surveyed indicated that they rarely sought financial advice even when they felt it was necessary.

Why not go to a bank or credit union?

Why didn’t respondents access credit from a bank or credit union?

  • 90% said payday lending was the fastest or most convenient option.
  • 74% said payday lending was the best option available to them.
  • 55% said payday lending offered the best customer service.
  • 27% said a bank or credit union would not lend them money.
  • 15% said they did not have time to get a loan from a bank or credit union.
  • 13% said they did not want to get money from a bank or credit union.

Can payday loans lead to bankruptcy?

Payday loans are a huge problem. In fact, the Canadian Payday Loan Association reports that nearly 2 million Canadians use payday loans each year. And many borrowers often find it very difficult to repay the full loan amount with the interest and fees. Now they’re trapped. They take out another payday loan to pay off the first payday loan and then take out another and another. It’s not difficult to imagine payday loans causing bankruptcy.

Are you caught in a payday loan trap?

If you’re caught in the payday loan trap, borrowing more money is not the answer – professional help is. Seek the advice of a professional trustee. Contact Ira Smith Trustee & Receiver Inc. today. You need answers, options and realistic plan for recovery and you need help now.

We’ll 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. Starting Over, Starting Now we can help you become debt-free.

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CREDIT CARD DEBT TRAP: OUR REVOLUTIONARY 4 STEP PLAN TO START BECOMING CREDIT CARD DEBT FREE IMMEDIATELY

Credit card debt trap: Introduction

Many people I help are caught in a credit card debt trap. It’s always good to repay your credit card debt, and now could be a better time compared to ever before to do so.

I have previously written about the Canadian household debt crisis as Canadians take on more debt and average canadian household debt levels increase. Rates of interest are beginning to increase so combining the two creates a mix that can place people in a bind.

Credit card debt trap: A storm is brewing

In December, Statistics Canada reported that the Canadian household debt ratio struck a brand-new high. The ratio of household credit-market debt to disposable income (the key gauge for measuring Canadians’ debt loads) rose to 171.1%.

“Everyone has this sense that there is a storm brewing,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling in the U.S.

“All indications that we’ve seen are that people are carrying higher balances from month-to-month and more are behind on their monthly payments. That’s not a healthy mix.”

Climbing debt levels could suggest people really feel better about the economy. Our concern is that people could be over-extending themselves. Both the US Federal Reserve and the Bank of Canada expect to raise rates later this year, so the cost of lugging credit card debt is most likely to increase.

What can you do try becoming credit card debt-free? Our revolutionary 4 step plan can help get you there.

Step 1. Credit card debt trap: Take control

It isn’t easy to take a difficult look at your financial position, but it is a necessary one. Analyze your financial obligations, and the rates of interest connected to each debt, as well as minimal repayments. Track your costs to get a feeling of what your credit card charges get you every month.

This is the first step in understanding your expenses and cutting back on the ones that are not necessary. To understand where you are going, you should understand where you have actually been.

Step 2. Credit card debt trap: Minimize rates

The typical interest rate on a bank card is about 19 percent. That’s quite high, so you might wish to think about transferring your credit card debt to a card with a reduced or zero-interest first offer rate to help pay it off much faster.

A word of caution: you’ll most likely need to pay a transfer cost in doing so. Also, you will need to pay off the debt prior to that promo rate finishes. Otherwise, the balance at that time is charged a higher interest rate, probably the same or higher than the card you transferred the debt from.

Although I don’t hold out a lot of hope, you can ask your credit card firms if they will decrease your interest rate.

credit card debt trap
credit card debt trap

Step 3. Credit card debt trap: Plan choice

If you simply cannot earn enough to fund your repayments, think about a non-profit credit counselling service. Do not go to any of the debt settlement companies that advertise regularly on television or social media.

All they do is charge you a fee to take down basic information, and then send you to a licensed insolvency trustee. Going first to a licensed insolvency trustee will do more good for you in a first free consultation than the debt settlement company will.

There are 2 typical debt settlement approaches– avalanche as well as a snowball. The avalanche method of getting out of the credit card debt trap works by placing all your money towards your highest possible rate of interest debt. As soon as that’s settled, you begin repaying the following most costly debt till it’s all gone.

In some cases, the snowball approach offers much more inspiration. With this technique, you repay the tiniest debt initially, to increase your spirits. You make use of that energy to pay off what is not the smallest outstanding debt and so on. You are picking up steam like a snowball rolling downhill.

It does not matter which method you use. The important thing is that you start now and stick to it.

Step 4. Credit card debt trap: Adhere to it

Remember your single emphasis ought to be lowering debt, so do not plan any kind of elegant getaways or huge acquisitions in the meantime. You could backslide or strike some roadway bumps yet do not allow that to sap your inspiration.

Now for the tough part. When possible, save some money to aid with unforeseen expenditures that you would normally place on your credit card. This will lessen the amount you would have to charge by paying with cash.

Credit card debt trap: A lengthy and painful trip to get out of it

It’s an incredibly lengthy and painful trip to get out of the credit card debt trap. It also can be a very lonely one. People don’t get into the credit card debt trap overnight, so you can’t get out of it without some hard work.

The Ira Smith Team has helped many people stay the course and be stimulated by their successes. We have helped many people avoid bankruptcy.

Contact the Ira Smith Team today. Your first consultation is free. We will be there with you every step of the way to help you out of the credit card debt trap so you can begin living credit card debt-free. If it isn’t credit card debt you are worried about, but rather other kinds of debt trap you may be caught in, we can help free you from those too.

To deal with debt you need the help of a debt professional – a trustee. Dealing with debt is not something that you can put off any longer. Start the New Year off right by calling Ira Smith Trustee & Receiver Inc. today and make an appointment for a free, no-obligation consultation.

We can give you back peace of mind and put you on the road to debt free living Starting Over, Starting Now.

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credit card debt trap
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SECRET DEBT IN MARRIAGE: MANY CANADIANS ARE NOT CRAZY WITH THEIR LOVED ONE’S FINANCES

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Secret debt in marriage: Introduction

Now that Valentine’s Day is over, we need to not lose that loving feeling. Many Canadians are not crazy with their love one’s finances. They may wish to book a financial date evening. Many are keeping debt secrets from their partner, or fear they are hiding financial information from them. Perhaps now is the time to come clean with secret debt in marriage.

Secret debt in marriage: A recent survey

A brand-new survey identified that Canadians in a relationship (whether living separately, common law or wed) wish they can change a minimum of one of their partner’s financial behaviours. But their loved one could be oblivious. Many reported seldom or never ever talking money or budgeting with them.

Secret debt in marriage: We have previously written about this tender subject

Spouses or partners holding secret debt in marriage is nothing new. We have previously written on the topic, and others involving couples, including the following blogs:

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secret debt in marriage

Secret debt in marriage: Couples best practices

When it concerns taking care of debt as a couple, I recommend complete and honest disclosure. Work together to check your debts and make a household budget. Plan together how your household income will allow you both to pay ordinary monthly expenses, pay off debt and hopefully, save for emergencies and retirement.. Budgeting discussions are not easy, but if you can prepare a realistic one and stick to it, your relationship will find a new level of love.

Secret debt in marriage: What if you find out that talking and budgeting is not enough?

Although we are not social workers or marriage counselors, we are expert in helping people work through their financial challenges.

That is why the Ira Smith Team always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:

The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.

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ONTARIO BANKRUPTCY DISCHARGE CERTIFICATE: CANADIAN BANKRUPTCY LAW

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Ontario bankruptcy discharge certificate: Introduction

I have written before on the more practical aspects of Ontario bankruptcy discharge certificate issues and process within Canadian bankruptcy and insolvency law. The most recent blogs are:

  1. BANKRUPTCY DISCHARGE: THE TOP 8 THINGS THE BANKRUPTCY COURT WILL CONSIDER ON ANYONE’S BANKRUPTCY DISCHARGE APPLICATION – September 13, 2017
  2. GAMBLING DEBT BANKRUPTCY: CAN GAMBLING DEBT BE DISCHARGED IN BANKRUPTCY? – January 31, 2018

I recently reviewed the Ontario Court of Appeal decision in Cole v. RBC Dominion Securities Inc., 2017 ONCA 1009. This case is very interesting as it highlights an issue that we often don’t talk enough about when advising a person on what they might expect at their hearing under Canadian bankruptcy and insolvency law.

The facts

Henry Cole, age 52, had a Bankruptcy Order made against him in 2011 upon motion by Royal Bank of Canada (“RBC”), after he misappropriated $5 million from clients while working as their investment advisor. While in bankruptcy, he had a net monthly income of $14,600, resulting in surplus monthly income of $12,500. He nevertheless failed to make any surplus income payments.

To understand what surplus income in a bankruptcy is, see my June 1, 2016 vlog titled WHY SURPLUS INCOME IS SO POPULAR UNTIL YOU ARE FORCED INTO BANKRUPTCY.

The Ontario Court of Appeal (“ONCA”) upheld the two lower Court decisions

As is the case in bankruptcy matters, Mr. Cole’s bankruptcy discharge hearing came before the Master in Bankruptcy Court who also sits as the registrar in bankruptcy. Mr. Cole appealed the Master’s decision (discussed below) unsuccessfully to a Judge of the Bankruptcy Court. The Judge dismissed Mr. Cole’s appeal, thereby upholding the Master’s decision. As indicated above, the ONCA agreed with the Judge (and the Master) in dismissing Mr. Cole’s appeal.

Now for the interesting stuff!

Now for the interesting stuff. The Master determined that there was enough evidence to show that Mr. Cole, as a bankrupt, committed various bankruptcy offenses. The Master determined facts for which discharge may be refused, suspended or granted conditionally, under Section 173(1) of the Canadian bankruptcy and insolvency law called the Bankruptcy and Insolvency Act (Canada) (“BIA”).

The Master determined that Mr. Cole had failed to provide information to enable the Licensed Insolvency Trustee to calculate surplus income. Mr. Cole also conceded to the following facts:

  1. his assets upon bankruptcy were not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities. Mr. Cole gave no evidence why he should not be held responsible;
  2. he failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities; and
  3. he brought on, or contributed to, his bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of his business affairs

With these findings, the Master, under Section 172(2) of the BIA, had to not grant an absolute discharge and to:

  1. refuse the discharge of a bankrupt;
  2. suspend the discharge for such period as the court thinks proper; or
  3. make the bankrupt, as a condition of his discharge, to do such acts, pay such moneys, consent to such judgments or comply with such other terms as the court may direct.

I must point out that the options available to the Master are not mutually exclusive. So, just like in Mr. Cole’s case, you could have the Court come up with a mixture of a suspension and a condition to pay moneys.

What the Master decided

The Master made several decisions. First, the Master dealt with the surplus income issue. The Master ordered Mr. Cole to pay $284,346 to the Trustee as surplus income, payable at a rate of $5,000 per month.

The Master also considered Mr. Cole’s criminal behaviour and that he had real income while not working any longer as an investment advisor. Given the amount of Mr. Cole’s liabilities, and for the integrity of the Canadian bankruptcy system, the Master ordered as further conditions that:

  1. Mr. Cole pay an extra $5,000 per month to the Trustee for a further six years for a total more payment of $360,000; and that
  2. his discharge from bankruptcy be suspended for two years.

The dismissed appeals

Mr. Cole argued before first the Judge, and then the ONCA, primarily that the Master’s treatment of surplus and other income was in error. He also argued that the Judge’s finding in dismissing his appeal was an error. The ONCA disagreed and dismissed his appeal.

ontario bankruptcy

So what is the lesson to be learned?

It is important for the Trustee, when sitting down with the person contemplating an insolvency proceeding, to understand all the facts. By properly understanding all the facts, we can provide proper professional advice and guidance.

Someone who had a facts situation like Mr. Cole, we would have strongly advised him or her to avoid bankruptcy and to contemplate performing a Division I Proposal to compromise his debts. The reasons we would have advised this are:

  1. the debtor has real income to successfully do a Proposal;
  2. Mr. Cole never would have qualified for an absolute discharge from bankruptcy given his facts situation and any discharge conditions would be onerous;
  3. avoiding the ongoing calculation of surplus income up to the time of his bankruptcy discharge hearing; and
  4. with the support of his major creditors, it is possible that the Proposal amount could have been somewhat less than $644,000 (subject to knowing the value of his assets at the date of bankruptcy).

he person needs our advice in plain English before making any decisions

We also would have advised the debtor the type of the rough ride they were in for if they chose to go ahead with the bankruptcy option. We would have explained in detail how we believed the Canadian bankruptcy and insolvency law system would treat him, so at least there would be no surprises during the bankruptcy administration.

Many times people we speak with do not like to hear the truth, and begin “Trustee shopping” until they find a Trustee that does not tell them all the bad news up front. People like this believe that if they aren’t told it, it can’t happen. This is a mistake. We believe everyone deserves to know the truth about their situation, to help them make the best decision possible.

In Mr. Cole’s case, not only did he find out the hard truth from the Court, he then spent money on his lawyers appealing the Master’s and Judge’s decisions. That obviously was extra money spent with no benefit received.

FULL DISCLOSURE: Our firm has never met with Mr. Cole and was not considered to be his Trustee.

What to do if you have too much debt

Declaring personal bаnkruрtсу in Canada is a big deal. So is getting your Ontario bankruptcy discharge certificate. While it can be a way out for the honest but unfortunate debtor who is deep in debt and looking for a new start, there are rules, rеѕtrісtіоnѕ and fіnаnсіаl rаmіfісаtіоnѕ.

That is why the Ira Smith Team always looks first to see if one of the bankruptcy alternatives would be a better fit for you. The alternatives we look at with you include:

The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.

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