Tag: credit score

CANADIAN DEBT RELIEF PROGRAM SCAM REVIEW: MASSIVE HARM CAUSED TO DEBTOR

Post author By Brandon Smith
Post date January 24, 2022

As the COVID-19 pandemic continues, we hope that you, your family, and your friends are safe, healthy, and secure. Ira Smith Trustee & Receiver Inc. is fully operational, and both Ira and Brandon Smith are readily available for phone or video consultations.

A Canadian debt relief program: it may seem like a good idea. Missed payments on your credit cards, loans or other unsecured debt, can lead to collection calls and worsen your situation. Choosing a debt relief program is often the last resort for Canadians to escape the grip of their creditors.

As a solution to consumer debt problems, debt relief companies offer debt settlement programs and debt relief programs. As a debt consultant, you do not need any special education or licensing to operate. Often, their actions are detrimental rather than beneficial.

This Brandon Blog is about a case I recently consulted about that is sad but true. This story is about a Toronto man who decided to use a Canadian debt relief program provided by a debt relief company to settle his debt issues. As a result of using that Canadian debt relief program, he is still unable to pay his bills, and is in a much worse financial situation now than he was before he visited the debt settlement company. To make matters worse, the debt relief consultant then got a licensed insolvency trustee to almost go along with his cockamamy scheme. Unfortunately, the Trustee woke up too late, after all the damage was done.

I will explain it all to you.

Canadian debt relief program: Research the company’s reputation

There should be a law that requires all debt relief services companies to be licensed to do debt relief work in Canada. So if they are not licensed they are not allowed to claim they are licensed. Since a debt relief company does not need to have a special license to provide a debt relief solution, it means there are few regulations set in place to control what they can do and what they can charge their customers. A debt relief program is a program set up to help people get out of debt. Debt relief programs always are not designed to help you pay off all your debt.

Debt relief programs run by debt relief services companies often aren’t designed to help you find a permanent solution to the behaviour that got you into your debt problems in the first place. The problem with a Canadian debt relief program put together by a debt settlement company is that it may very well cause the loss of your money or as is the case in the true story I am about to tell you, the loss of your home.

canadian debt relief program

Canadian debt relief program: Are debt relief programs really worth it?

A for-profit debt settlement company charges fees, just like any other for-profit business. Before any of your money is used to settle your personal debts, you must pay most of their fees upfront. No fees are charged by the non-profit credit counsellor. Reputable credit counselling companies do not require you to pay upfront for any tangible services they offer to help you reduce your various types of debt.

You set up an account with the company, where you make monthly payments from available funds to generate the money necessary to pay their fee and then to make settlement offers. There is no guarantee that working with a private debt settlement company will work. Debt settlement companies cannot guarantee that creditors will agree to settle on the outstanding debts when they contact them.

Your creditors may not be able to reach an agreement with them, so you may have to file a consumer proposal or end up filing bankruptcy. For services that the bankruptcy trustee provides for free, debt settlement companies charge debtors upfront fees. While you are in a Canadian debt relief program offered by one of these companies, you do not have any protection from creditors.

Should debt management programs be pursued? A not-for-profit credit counselling agency can provide this service. The answer is NO if it is a for-profit debt relief company. However, the answer is YES if it is a formal consumer proposal with a licensed insolvency trustee.

Canadian debt relief program: When using a debt settlement company goes terribly wrong – a true story

When things go wrong, they go really wrong and fast. We were contacted by a lawyer representing an undischarged bankrupt. The facts as I understood them to be were:

The debtor went to a debt settlement company to get financial advice and help in resolving his debt problems. The company claimed to specialize in helping Canadians deal with their debt problems through a successful Canadian debt relief program. They said they could get him out of his financial mess and save his house. They told him that they would take care of everything.
He was the only owner of the marital home. A real estate agent gave an opinion letter that stated the home was only worth the total of the registered mortgages.
The debtor lost his job and his wife was making the mortgage payments from her employment income. They advised the couple that the wife could get legal protection by taking the position that each of her mortgage and utility payments was a secured advance to the husband. There was no written agreement between them registered on title and she did not register a mortgage against the home. This advice was obviously very wrong.
The debt settlement company could not create any plans for debt forgiveness acceptable to the creditors. It was mainly credit cards and the debtor needed a successful credit card debt relief plan.
The debt settlement company marched the debtor to a licensed insolvency trustee. We could not determine from the documents provided to us if the Trustee did any verification work or merely filed the assignment in bankruptcy based on the work of the debt settlement company. The sworn statement of affairs had the same value for the home as in the real estate agent’s opinion letter. Net of mortgages, the sworn statement of affairs showed no equity in the matrimonial home.
The same day that the Trustee’s section 170 report was prepared, the Trustee wrote a letter to the debtor. According to the Trustee’s letter, after 1.5 years of bankruptcy there is $200,000 equity in the home, the wife has no existing secured claim to the property and therefore, the Trustee opposes the discharge since the asset has not yet been realized. There were no references in the Trustee’s letter to any previous communications or correspondence with the debtor regarding his equity in the home. Therefore, I do not know if the letter was the first time the Trustee discussed with the bankrupt the need to realize the equity in the home.
In the section 170 report, again, dated the same day as the letter, the Trustee opposed the bankrupt’s discharge due to the home equity issue.
A list of licensed credit counsellors can be found on the website of the Superintendent of Bankruptcy. Upon searching that licensed credit counsellor database, we were unable to locate the name of the debt settlement company employee who assisted the debtor.
The undischarged bankrupt’s wife, or any other family member of his, was not able to raise the necessary funds to purchase the Trustee’s interest in the equity of the home. The undischarged bankrupt has no means from which to attempt to do a consumer proposal or Part III Division I Proposal to do a successful proposal out of bankruptcy.
The debt settlement company’s work directly led to the undischarged bankrupt losing his home as it would have to be sold either by the debtor or the Trustee.
canadian debt relief program

Canadian debt relief program: My advice

I did a Teranet search of the matrimonial home. The estimated value of the home according to Teranet showed there was more like $350,000 of equity, not $200,000. There was not a lot that this undischarged bankrupt could do. My advice was:

The debt consultant apparently was doing work that a Trustee must do under the Bankruptcy and Insolvency Act (Canada) (BIA) but is not licensed to do that work. The debtor should consider demanding the fee paid to the debt consultant.
Find out who did the mandatory two credit counselling sessions with the debtor; a licensed credit counsellor under the Trustee’s employ or the debt consultant?
Find out if there is a financial arrangement between the debt consultant and the Trustee. Such arrangements are outlawed by the Superintendent of Bankruptcy.
The debt consultant was very “cute” in trying to fix the value of the home so that there was no equity in the home. What verification work did the Trustee do when accepting the value in the sworn Statement of Affairs and beginning the bankruptcy process?
Unfortunately, the undischarged bankrupt is stuck with this situation. The equity in the home belongs to the Trustee. There really was not anything that I could do to change that.

The lawyer thanked us very much and said that his discharge hearing will be quite the show after she examines the witnesses!

Canadian debt relief program: Options you can trust to help you with your debt

A licensed insolvency trustee would have been a better choice for this debtor rather than this debt relief company. Most people with consumer debt problems fall into one of three categories. Using these three categories, I will show what I would have advised this debtor. It is sufficient to say that the earlier you seek the services of a licensed insolvency trustee and avoid the debt consultants and their unrealistic promises, the more options you will have.

Your finances could be better, and you would like some help.

When you realize that you can do things better and wish to avoid trouble, you fall into this category. You can get proper financial advice from a licensed insolvency trustee at this stage. It is likely that if this debtor had approached me at the first sign of trouble, he could have avoided filing for bankruptcy. Things I might have discussed with him include:

How to establish and follow a budget for the family.
Does he have an adequate credit rating or credit score to be approved for and get a debt consolidation loan so that this loan would enable him to pay off all his unsecured debt in full and have one affordable monthly payment under a debt consolidation program.
Having a non-profit credit counselling service assist him with budgeting, assistance with debt management and if required, arranging a debt relief settlement plan with his unsecured creditors. Creditors understand that sometimes life happens and there are situations where people require support for plans for debt forgiveness when it comes to ‘debt-causing’ scenarios such as critical illness, job loss and the death of a loved one.
Making monthly payments to the non-profit credit counselling service so that they can make the necessary payments to creditors, as prescribed in the Canadian debt relief program they set up for him.
His job includes referring the debt collectors to the non-profit credit counselling service when he receives their calls.
His wife should seek independent legal advice about registering a mortgage against the family home as security for all advances she is about to make to her husband for the mortgage, property tax, utility bills, and any other funds related to the home’s maintenance.
Is it possible to use the equity in the home to downsize?
How filing a consumer proposal or an assignment in bankruptcy affects his finances and his life, including how it affects the equity in his home.

My advice would have cost him nothing, and he would be in a much better financial position than he is now. Most likely, he would have avoided the need for a consumer proposal or bankruptcy altogether.

Your finances are beginning to get out of control.

He and I would have discussed all of the above, along with independent legal advice for his wife, and the realistic option of having an affordable payment plan with debt reduction, by filing a consumer proposal as a real Canadian debt relief program for debt reduction and allowing him to make one affordable monthly payment on all his outstanding unsecured debts. Consumer proposals are the only Canadian debt relief program approved by and authorized by the Federal government.

You are in serious financial trouble.

If he hadn’t come to see me before he suffered severe financial difficulties, his only realistic option would be bankruptcy. From the very beginning, he would have realized that the equity in his home was at stake and would be lost to the Trustee. It wouldn’t have been a bad shock to the debtor after filing for bankruptcy. He may even have been able to locate a relative who could have purchased the equity in his home from the Trustee prior to filing so that his life would not have been negatively affected.

canadian debt relief program

Canadian debt relief program: Summary

I hope you found this Canadian debt relief program Brandon Blog informative. Although nothing is guaranteed, managing your debt in a way that will allow you to be able to afford it, will lead to your financial success. It will also give you the best shot at having a financially stress-free life.

Are you or your company in financial distress and a debt crisis? Are you embroiled in costly litigation or a crushing debt load and need a time out in order to restructure? Do you not have adequate funds to pay your financial obligations as they come due? Are you worried about what will happen to you? Do you need to search out what your debt relief options and realistic debt relief solutions for your family debt are? Is your company in financial hot water?

Call the Ira Smith Team today. We have decades and generations of experience assisting people looking for life-changing debt solutions through a debt settlement plan and AVOID the bankruptcy process.

As licensed insolvency professionals, we are the only people accredited, acknowledged and supervised by the federal government to provide insolvency advice and to implement approaches to help you remain out of personal bankruptcy while eliminating your debts. A consumer proposal is a Government of Canada-approved debt settlement plan to do that. It is an alternative to bankruptcy. We will help you decide on what is best for you between a consumer proposal vs bankruptcy.

Call the Ira Smith Team today so you can eliminate the stress, anxiety, and pain from your life that your financial problems have caused. With the one-of-a-kind roadmap, we develop just for you, we will immediately return you right into a healthy and balanced problem-free life.

You can have a no-cost analysis so we can help you fix your troubles.

Call the Ira Smith Team today. This will allow you to go back to a new healthy and balanced life, Starting Over Starting Now.

Brandon Blog Post

3 TOP WAYS TO SUCCEED IN CREDIT REPAIR USING A CREDIT CARD FOR REBUILDING CREDIT

Post author By Brandon Smith
Post date November 4, 2021

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic. Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Credit card for rebuilding credit: Introduction

Money mistakes in the past can negatively impact your credit score and your ability to qualify for a loan or obtain a good interest rate. Fortunately, there is hope. Bad credit scores can be improved in Canada by the use of perseverance and some time. You might even qualify for a credit card for rebuilding credit in Canada.

This Brandon Blog shows you how to take control of your finances, including learning how to use a credit card for rebuilding credit to improve your credit rating.

credit card for rebuilding credit

A credit card for rebuilding credit for people with bad credit is not your first step

Getting a copy of your credit report is the best way to determine which areas need improvement when it comes to repairing your credit. How many late or missed payments have you had in the past? The credit bureaus can report past due utility payments, outstanding cell phone bills, and old parking tickets. Have you exceeded your debt utilization ratio? Did you experience bankruptcy in your past?

Could your credit report be inaccurate? This is something that needs to be brought to the creditor’s attention so that they can fix the problem and revise their reporting. As an alternative, you can provide proof to the two credit reporting agencies in Canada, so that each can correct the error.

credit card for rebuilding credit

A credit card for rebuilding credit Canada is not your next step either

Now that you know your debts need to be addressed, you need to figure out how to get your payments in order. You need to develop smart spending and saving habits to rebuild your credit score. One of the best ways to do this is to create a budget that reflects your income and expenditures. In my Brandon Blog, I have written extensively about the importance of household budgets. Budgets are essentially a plan for how you will spend your money. Following a budget will help you with having normal and current payment activity.

Getting comfortable with not overspending and living within your means should become a habit. You don’t have to give up every nice dinner or outing just because you have a budget, but you do have to be aware of how much income you have available to spend and save after taxes. This will allow you to be able to make all necessary payments on time.

Next, you must establish better credit history through consistent payments. Your payment history is the most important factor in determining your credit score, so if you’ve fallen behind on your payments – or haven’t been paying on time – your credit situation is unlikely to improve until you catch up on your accounts. Without improving on this, you cannot fix a poor credit score. Spoiler alert – making only the minimum payment each month against your regular credit card is not keeping current on that debt.

If you cannot pay your overdue accounts right now, call up your creditors. Maybe you can negotiate a special repayment plan that fits your budget. Cut your debt as much as possible. Credit utilization ratios are very important. If your various types of credit, such as credit card balance, line of credit, or overdraft are used more than three-quarters of your available credit, that will bring down your credit score.

With time, patience, and financial discipline, building a better credit history and credit score – even rebuilding credit after bankruptcy – can be done. In the beginning, you may need to only use cash, and preferably not your debit card, for all of your necessary everyday purchases. Put your credit cards away to avoid temptation. Knowing that if you do not follow your budget you will run out of money is a strong motivation to stay on track when you only take out the amount of cash your budget says you can afford to spend.

One of the first steps to rebuilding credit with a credit card might be to lock each traditional credit card away and not use them!

credit card for rebuilding credit

Prepaid Credit Cards vs. Secured Credit Cards: What’s the Difference?

Prepaid cards are sold at many retail locations, such as grocery stores and pharmacies. A service fee is charged when you load money onto the card and when you use it. So not all the money you load onto the card is applied to your purchases. Whenever you do buy something with this kind of credit card, the dollar amount of your purchase is deducted from your cash balance.

You can still get a prepaid credit card without having a good credit score. That is because by getting this type of card, you are not applying for or getting credit from anyone. To load it, you use your own money. To put money onto a prepaid card you can: (i) transfer money from your bank account onto the card; or (ii) give cash to the clerk who will add it to the card at the store that sold it to you.

Prepaid cards are not credit cards in the traditional sense, so they won’t help you build credit or repair credit. In the same vein, it is not a credit card for rebuilding credit.

One of the requirements of a secured credit card is that you need to pay a cash deposit. Once the deposit is made, the credit limit is equal to the amount of the deposit. The security deposit that you pay is collateral held onto by the credit card issuer in return for the credit they are extending to you. If you don’t repay your balance on time, the credit card company can use this security deposit to pay off your debt. Once you have paid the security deposit, you can use the secured credit card.

The normal size of payment of security deposit typically varies from $500 to $10,000. You can get a secured charge card if you do not get approved for a standard unsecured credit card. Those with a poor credit history looking for a credit card for rebuilding credit will certainly find a charge card of this kind beneficial. Secured cards do not require a credit check because the financial institution is protected by the down payment. Consequently, you are practically certain to be authorized.

You will boost your credit rating as you make purchases and repay your full balance outstanding every month with this type of card. It is because the issuer of the secured credit card is really giving you credit. Your balances as well as payment history are reported frequently to the two credit bureaus in Canada. You can enhance your credit score over time by making your full regular monthly payments when due. Any individual aiming to use a credit card for rebuilding credit should seriously look into getting a secured credit card.

credit card for rebuilding credit

Credit card for rebuilding credit: Secured credit cards vs. unsecured credit cards

There are differences between secured cards and unsecured credit cards. An unsecured credit card is a routine charge card that can be made use of day-to-day as much as the credit limit allows. The issuer of these types of traditional charge cards makes a hard credit check inquiry right into your credit report when you apply for one. An unsecured card does not need a down payment. An unsecured charge card normally has a higher credit limit, and some credit card companies offer with their unsecured cards benefits like cashback, price protection, a better interest rate on purchases or travel points.

You can ask if your secured card can be turned into an unsecured one after an amount of time (and your security deposit returned). I would say that a reasonable time period would be six months to a year of making consistent payments on time as well as staying within your credit line. You have to demonstrate that you can handle credit properly.

Credit cards, both secured and unsecured, report your activity to the credit bureaus. If you use the card responsibly, you can build or rebuild your credit. Look around carefully to find the right credit card for your financial and credit score situation that will help you rebuild your credit. Secured, unsecured, low-interest rate, travel benefits and even guaranteed approval credit cards are available from many financial institutions in Canada.

Picking the ideal credit card for rebuilding credit is really crucial. While some bank cards have an annual cost, others do not. You must constantly check out the fine print in the contract when picking a credit card. I wish you great success in your financial journey.

credit card for rebuilding credit

Credit card for rebuilding credit: Summary

I hope you found this credit card for rebuilding credit Brandon Blog post informative. Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Your situation may be so dire that a redone budget and a secured credit card may not be enough of an answer. If it is too much debt for any reason, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Even though we are licensed insolvency trustees, we have found that not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation. We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

Brandon Blog Post

DIFFERENCE BETWEEN CONSUMER PROPOSAL AND BANKRUPTCY: THE PROVEN CANADIAN WAY TO GET DEBT FREE

Post author By Brandon Smith
Post date July 26, 2021

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom of the page and click play on the podcast.

Difference between consumer proposal and bankruptcy: Know your options

Regular readers of my Brandon Blog know that there are a lot of steps you need to go through to financially reorganize your life. I have written before different blogs on various aspects of both consumer proposals and bankruptcy. The purpose of this Brandon blog is to discuss in one place, the difference between consumer proposal and bankruptcy.

Many people opt for one of these options because life has thrown them a curveball, they no longer have the cash flow to pay off their debts and want to start fresh. There are some great benefits to filing bankruptcy. They include eliminating creditors and debts, getting control over your personal finances, and having a stress-free life, Starting Over, Starting Now. But if you’re considering a first-time bankruptcy, or the bankruptcy option even if you are familiar with the Canadian bankruptcy process from a prior time, you should consider the pros and cons of a consumer proposal, the only government-approved debt settlement plan in Canada. It will be good for you to know the options that I explain below.

Consolidation loans vs consumer proposals

What’s the distinction between a consumer proposal and a debt consolidation loan? The consumer proposal process is an insolvency procedure that allows you to resolve all the amounts you owe to your unsecured creditors via an arrangement with your creditors. It does this without needing you to file bankruptcy. A consumer proposal can only be carried out by a licensed insolvency trustee. A consumer proposal allows you to get rid of all the amount owed by repaying only a part of your financial obligations over time.

A consolidation loan means that you still have sufficient assets and income and a good enough credit score, in order to borrow the total amount you owe. The loan must carry an interest rate lower, and hopefully much lower, than the average interest rate of your combined total debt. You use the loan proceeds to repay 100% of your debts. You now have only one loan with a monthly payment you can afford. Taking out a consolidation loan is not an insolvency process.

The main difference between consumer proposal and bankruptcy

The consumer proposal is a fundamental part of our personal insolvency system. It is an insolvency procedure controlled by the Bankruptcy and Insolvency Act (Canada) (BIA) that allows individuals who owe $250,000 or less (not including any financial debts secured against their principal home). It permits you to pay a portion of your financial debts with time, yet eliminate all of them if fully executed. It is an alternative to declaring bankruptcy. It is an alternative to bankruptcy.

Bankruptcy is also a fundamental part of our insolvency system under the BIA. However, rather than restructuring, in personal bankruptcy, the person surrenders all of their non-exempt assets to the licensed insolvency trustee for the benefit of the person’s creditors. Once the bankrupt person has fulfilled all of their duties, they are entitled to receive a discharge from bankruptcy, subject to the Trustee or a creditor opposing it.

Personal bankruptcy involves the liquidation of the bankrupt’s assets in return for the eventual elimination of their unsecured debts. It is not considered a restructuring like a consumer proposal is.

Difference between consumer proposal and bankruptcy: The process of filing a consumer proposal vs bankruptcy

You start by talking to a Trustee who will provide you basic guidance on both a consumer proposal and also bankruptcy. The Trustee will likewise inform you specifically just how each process functions. If at the end of that discussion you inform the licensed bankruptcy trustee that you really feel good in wanting to take the next steps with them, the Trustee will provide you with their intake form. When the form is completed, you send it to the Trustee, including supplying any kind of backup documents asked for, the Trustee can then provide you advice for your unique financial difficulties.

If you choose a consumer proposal, the licensed insolvency trustee will prepare the necessary filing documents for you to sign. This includes assisting you with preparing the best possible proposal that works for both you and your creditors. You then meet with the Trustee to sign the documents. The Trustee then files the documents electronically with the Office of the Superintendent of Bankruptcy (OSB). The OSB then issues the Certificate evidencing the filing and the formal process begins.

After seeing your completed intake sheet, the Trustee will advise on whether or not a consumer proposal would work for you, or if your best or only option is filing for bankruptcy. Similarly, in bankruptcy filings, the Trustee prepares all the required filing documents for your signature. The Trustee explains all of them to you, you sign them and the Trustee then electronically files the filing documents with the OSB. The OSB then issues its Certificate evidencing the bankruptcy and that formal process begins.

You initially meet with the licensed bankruptcy trustee, in-person, by video or phone, to share details of your personal situation, and working together, you determine whether a consumer proposal, an alternative to filing bankruptcy, or personal bankruptcy is the best option for you. With COVID-19, we have been holding all of our no-cost consultations and meetings by phone and video. We can do the sign-up process by video and email. We have found this is very convenient for our clients as they are not required to take the time to attend our office in person.

As you can see, the process of filing a consumer proposal vs bankruptcy is not that different. For filing, there is not really a difference between consumer proposal and bankruptcy.

Major difference between consumer proposal and bankruptcy

Is there a major difference between consumer proposals and bankruptcy? Yes. So far in this discussion, there have not really been major differences. But there really are as the consumer proposal is akin to filing for bankruptcy protection while the other is bankruptcy. Both provide legal protection from creditors. But a consumer proposal gives a person what the media calls filing for bankruptcy protection. When you file for bankruptcy, that calls for the liquidation of non-exempt assets.

Both bankruptcy and a consumer proposal can be excellent options for somebody who is experiencing a challenging financial position. A consumer proposal is an excellent choice for individuals who have the ability to make monthly payments to their creditors totalling less than the amount they owe, yet eliminating all their debts, while keeping the equity they have in assets they wish to keep. Bankruptcy is an excellent choice for those who are bewildered by their financial obligations, and who don’t have a consistent income, making it actually hard or impossible to manage making payments at any level to their creditors.

While both bankruptcy, as well as a consumer proposal, can supply a financial clean slate, there are a few vital distinctions.

In a consumer proposal, you normally get to keep all of your assets. In a bankruptcy, if you have equity in assets that you want to keep, you or someone friendly to you has to pay that equity to your Trustee for the benefit of your creditors. Otherwise, you need to surrender all non-exempt assets to the Trustee for the Trustee to sell them and then put the cash towards the claims of your creditors. The assets covered by your bankruptcy exemptions do not need to be surrendered.

In bankruptcy, you also have the issue of needing to obtain your bankruptcy discharge. If either the Trustee or one or more creditors object to your discharge, then you will not get your automatic bankruptcy discharge and you will have a discharge hearing in Court. You may also be subject to surplus income payments in a bankruptcy, which you will need to make to your Trustee (21 months for a first time bankrupt, 36 months for a second time or more bankruptcy).

The amount to offer your creditors in a consumer proposal has to be a better amount than they would receive from your bankruptcy. After doing the calculations I spoke about above, including any surplus income obligation, you will better understand what amount needs to be offered to your creditors.

Another difference between consumer proposal and bankruptcy is that there is a benefit of a consumer proposal in that you can spread the monthly payments for the amount determined over a term of up to 60 months, interest-free. In a bankruptcy, you are typically required to make any required payments over the term of your bankruptcy, which is much shorter than in a proposal. Therefore the consumer proposal allows you to term out a slightly higher settlement over a longer period of time. This makes the monthly repayment less complicated on your cash flow as well as your budget plan.

Once your consumer proposal is (deemed) accepted by the creditors and (deemed) approved by the Court, you just need to make your promised monthly payments to the Trustee. The Trustee handles making payments at regular intervals to your creditors. Once you have completed the payment promised under the consumer proposal, you receive your Certificate from the Trustee showing that you completed the consumer proposal. That is it. No discharge hearing can be opposed and no extra surplus income payments. It is already accounted for in the amount offered to your creditors in your consumer proposal.

The cost difference between consumer proposal and bankruptcy

When doing a consumer proposal, the fee of the licensed insolvency trustee is included in the payment you negotiate with your creditors. As I mentioned above, the calculation of what to offer in a consumer proposal does not include what the fee and costs are. Rather, it is compared to what the unsecured creditors can expect in bankruptcy.

However, if you were to file bankruptcy, the fee is based on the surplus income you may have to pay (based upon a criterion that includes income and family size) and also any assets that you are required to assign over to the Trustee. You might also have to make month-to-month contributions to cover the fee and costs if your income and non-exempt assets are insufficient to pay for the bankruptcy proceedings.

If there is no surplus income or assets, you, or someone on your behalf, will need to pay the bankruptcy fee which will be approximately $1,800 plus HST.

Difference between consumer proposal and bankruptcy: What’s worse? Credit rating impact of a bankruptcy vs consumer proposal

Both a consumer proposal and bankruptcy are insolvency proceedings under the BIA. Therefore both will negatively affect your credit rating. In a consumer proposal, your credit rating will show as an R9 on your credit report while you are making payments. Once you have completed your consumer proposal, your credit rating will be an R7 for 3 years after completion.

For a first-time bankrupt, if you were to file for bankruptcy, your credit report will show an R9 rating for 6-7 years after being discharged.

The difference between consumer proposal and bankruptcy summary

I hope that you found this difference between consumer proposal and bankruptcy Brandon Blog interesting. Problems will arise when you are cash-starved and in debt. There are several insolvency processes available to a person or company with too much debt.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties with debt relief options as alternatives to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people with credit cards maxed out and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

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Brandon Blog Post

CREDIT CARDS MAXED OUT: THAT SCARY CRUSHING FEELING WHEN CANADIAN INSOLVENCY AT HIGHEST LEVEL

Post author By Brandon Smith
Post date July 21, 2021

credit cards maxed out

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

How do credit cards maxed out affect your credit score?

Your credit score is one of the most important things you have to offer anyone who is seeking to lend you money, whether it’s from a bank, a different credit card issuer, or even a landlord. Your credit score is a sort of credit health report that measures how much you owe, how much you owe on different kinds of credit, and how likely you are to default on payments.

Credit cards can be a convenient and effective way to manage your finances. However, the best use of a credit card may not be the best use when it comes to your credit score. Lenders consider one or more credit cards maxed out as a reason for your credit score to decline.

Right now we have a very unique situation when it comes to consumer debt. The average Canadian’s monthly credit card balance is lower today than it was 2 years ago. People’s credit card balance for months has declined. So it is not the case right now that credit cards maxed out. Yet, a recent poll shows that Canadians’ stress levels about their potential insolvency are the highest ever.

In this Brandon Blog, I look at the issues and provide some tips as to what positive things you can do if you are concerned about insolvency. Let’s look at the issues.

Changing habits as pandemic adds to debt load

There has actually been a surge in total Canadian consumer debt. It came mainly from financial debt growth in home mortgage debt and also automobile loans. Home mortgage balance increases originated from both refinancings of existing home loan debt and brand-new mortgage applications.

The thinking with vehicle financings is that it arose from Canadians acquiring vehicles that they had actually intended to purchase earlier. Concerning home loans, the refinancings were to consolidate higher interest rate non-mortgage debt, for credit products such as credit cards, into a brand-new higher home mortgage amount, at greatly reduced rates of interest.

Throughout the last 18 months approximately of the COVID-19 pandemic, Canadians have actually partially paid for or totally repaid their high-interest-rate consumer debt by turning it into low-rate debt from bigger home mortgages along with residence equity credit lines. They have used their real estate to obtain a debt consolidation loan.

Now that the Canadians have in fact done that, the Ipsos survey discovered that 50% of Canadians are now more worried about not having the capability to repay their financial obligations than they used to. Yet one-third of respondents say they will spend more as the economy resumes.

As the economy slowly resumes, many Canadians are looking at a great amount of debt incurred during the pandemic and are stressed over making ends meet without taking on even more financial obligations. They have maxed out the possibility of getting even more cash from their homes.

The reasons are that either there is no more asset value to borrow from and/or their income cannot sustain any more financial obligations. So where is one of the most likely areas this brand-new financial debt is most likely to come from? Paid down credit cards are going to increase once more and many will sooner rather than later have credit cards maxed out from additional credit card debt.

Canada on verge of widespread insolvency and restructuring surge in COVID-19 new normal

Statistics Canada recently reported that overall household debt increased by 0.8% for the 2nd straight month to over $2.5 trillion. Mortgage debt and also home equity credit lines made up $1.98 trillion of that total amount. Over the initial 5 months of 2021, households had $57.5 billion in home mortgage financial obligations, compared to $34.3 billion over the exact same time period in 2020.

At the same time, non-mortgage debt climbed by 0.4% in May to $786.2 billion. Growth in credit card debt as well as other personal loans was the main driver. While charge card debt rose for the third month straight, it was still down by 3.3% from May 2020.

These statistics seem to bear out my thoughts that Canadian consumers now have no more room to borrow against their homes, so now, they will need to turn back to their credit cards and increase their credit card debt in order to fund their expenses. This will not turn out well in the long run. I foresee people having maxed out the amount they can borrow against their homes and then once again having their credit cards maxed out.

Lots of people do not understand how financial problems are created pushing individuals to seek out a remedy such as bankruptcy or a consumer proposal to restructure. The majority think that people get into financial trouble because they can’t properly handle their money. However, in most cases, it is because of an unforeseen trigger. Divorce, job loss, illness and the present pandemic are examples of triggers.

People in financial trouble feel shame and unfortunately, stop them from connecting with us early. Reaching out to a licensed insolvency trustee early is so important.

Credit cards maxed out Is a bad idea

By maxing out your credit cards you’re boosting your credit utilization ratio. This accounts for 30% of your credit score. As such, a maxed-out credit card can adversely impact your credit rating.

Theoretically, yes, you can pay off your credit card by just making the minimum payment. However, it can take you years to pay it off if you are only making the minimum payment. Your interest charges will be higher than your minimum monthly payments.

Your credit utilization ratio and therefore your credit score will suffer. Many people try to solve this problem by just applying to the credit card issuer for an increased credit limit. This may work once, but it does not make any sense. You cannot eliminate debt by increasing it!

Furthermore, you’ll be carrying that debt and paying for it at a very high rate of interest. On the other hand, if you make your repayment by the due date, or make big routine payments to pay it off, you will certainly pay no or extremely little in interest.

credit cards maxed out

Are your credit cards maxed out? Here’s some personalized tips for paying off credit card debt

What can you do trying to be credit card debt-free? My 4 step strategy can help you get there.

1. Credit cards maxed out: Take control

It isn’t simple or comfortable to take a hard look at your finances, but it is essential. Analyze your household expenses, as well as the interest rates linked to every resulting financial obligation. Track your monthly expenses to really understand what your credit card purchases get you on a monthly basis.

This is the first step in understanding your expenditures and cutting down on the ones that are not needed. To recognize where you are going, you need to recognize where you have in fact been.

2. Credit cards maxed out: Minimize interest rates

The normal rate of interest on a bank card is about 19 percent. That’s rather high, so you may wish to think of doing a balance transfer by moving your credit card debt to a card with a minimized or zero-interest offer to assist in paying it off a lot faster.

A word of care: you’ll probably require to pay a transfer fee in doing so. Likewise, you will need to repay the debt in full before that promotion price finishes. Otherwise, the remaining balance on your new balance transfer card will again attract a greater rate of interest, possibly the very same or higher than the card you moved the debt from.

Although I do not hold out a lot of hope, you can ask your credit card firms if they will lower your rate of interest.

3. Credit cards maxed out: Credit counselling as well as debt paydown approaches

If you merely cannot make sufficient earnings to fund your debt repayments, consider a non-profit credit counselling service. At no charge to you, they can get you into a Debt Settlement Plan. Bear in mind that as soon as you are in such a strategy, your charge cards will certainly be cut off.

Do not go to any one of the financial debt settlement services that market often on television or social media. All they do is charge you a fee to take down basic information that a certified non-profit credit counselling agency or a licensed insolvency trustee would certainly do for no cost. After that, they run you through their “program” charging you a lot more fees until you can pay no more. After that, they send you to a qualified bankruptcy trustee.

There are 2 regular financial debt settlement strategies– avalanche method and also snowball method. The avalanche technique of getting out of the credit card financial debt is you initially put all your available cash to pay down your highest interest rate debt. As soon as that’s cleaned up, you start settling the following most costly debt. You keep repeating this up until all your consumer debts are gone.

Sometimes, the snowball technique offers a great deal of extra motivation. With this method, you settle the tiniest financial debt initially, to improve your mood. You use that power to resolve what is the next tiniest debt and so on. You are grabbing steam like a snowball rolling downhill.

It does not matter which strategy you utilize. The vital thing is that you start now and stick with it.

4. Credit cards maxed out: Adhere to it.

Remember your single focus should be reducing debt, not new non-essential spending. So do not prepare any kind of sort of travel getaways or big purchases in the meantime. You could backslide or strike some road bumps yet do not let that distract you or depress you.

Now for the challenging part. When possible, save some money to assist with unpredicted expenses that you would typically place on your credit card. This will certainly minimize the amount you would have to borrow by paying with real cash.

It’s an incredibly lengthy as well as agonizing trip to fully pay off your credit cards maxed out. It also can be an extremely lonely one. People don’t get into the bank card debt trap overnight, so you can’t leave it without some effort.

Credit cards maxed out summary

I hope that you found this credit cards maxed out Brandon Blog interesting. I wrote this now because I fear the trend I see from both the Ipsos survey and the Statscan report shows that now that Canadians have done their debt consolidation and credit card balances are low, the credit cards are now being run up again. The end result will be higher debt than the average Canadian started with.

Problems will arise when you are cash-starved and in debt, especially with a maxed-out credit card. There are several insolvency processes available to a person or company with too much debt.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost bankruptcy consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Brandon Blog Post

CREDIT REPORT FROM EQUIFAX: HOW THIS ONTARIO TEACHER’S CREDIT SCORE TOOK AN AWFUL MASSIVE HIT TO ZERO

Post author By Brandon Smith
Post date June 2, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Credit report from Equifax: What is the Equifax Credit Score?

A credit report from Equifax Canada Co. shows your recent credit history as well as the Equifax credit score. This credit score is the most widely recognized one in Canada. It is used to determine an individual’s creditworthiness and is used for a host of purposes, including the ability to get a mortgage or credit card. This score is commonly used as a predictive model for lending decisions.

Equifax Canada is one of two credit bureaus in Canada. The other one is TransUnion Canada. Each one uses their own proprietary credit model to produce a credit score on you using their credit scoring algorithms. Consumer credit reports are not always accurate. It is up to you to make sure that it is. But even when you notice something strange it is not always so easy to quickly clear up an obvious error.

In this Brandon Blog, I will tell you the story of Angela Monaghan, an Ontario high school teacher. I will tell you how a very rare error caused her two years of grief when her credit score took a massive credit score drop down to zero!

Credit report from Equifax: What is a Consumer Credit Reporting Agency?

Consumer credit reporting agencies are businesses that collect and analyze information from customers of other businesses, primarily companies that have extended credit to you, but also from public records. The CRA’s primary goal is to provide you with an accurate and complete report of your credit information and its protection.

What is your credit report from Equifax?

You should know what goes into your credit report from Equifax Canada Co. or TransUnion Canada and how your financial behaviour may impact you and your credit. When you think of credit, you should think of Equifax Canada Inc. and TransUnion Canada. They are the two Canadian credit bureaus that hold your Equifax credit report, which is a snapshot of your credit history.

They provide information about what you owe, who you owe it to and what your balances and payment history look like. In addition, their databases reflect your consumer behaviour and determine the risk level associated with any individual that a credit report is requested for because you are applying for any type of credit and permitted that bank or company to do a credit check on you.

A credit report normally includes:

your name
age and current address
your job and where you work
what debts you have
your paying habits (do you usually pay on time or are your payments late, do you only make minimum payments)

A credit report does not include: a bankruptcy discharged more than 7 years ago unless you have declared bankruptcy more than once. Your credit report, summarizing all this information into a consumer credit score, affects your ability to get credit, which can affect your ability to buy a car or home.

The Ontario Consumer Reporting Act (OCRA) is the legislation that regulates consumer credit reporting in Ontario.

What is the Ontario Consumer Reporting Act?

The Ontario Consumer Reporting Act (OCRA) is the provincial legislation that regulates consumer credit reporting in Ontario. The OCRA creates the rules under which a consumer reporting agency operates. Examples are:

how a consumer’s credit report can be used
when someone can request a credit report
what consumers can do if their files contain any wrong or incomplete information and many more issues are covered by this provincial law.

OCRA recognizes that businesses, landlords and employers need to have the correct information.

At the same time, it makes sure that:

agencies collect, maintain and also report your debt and personal information sensibly and as accurately as possible
your right to recognize what is being reported concerning you and also to whom
your right to remedy details regarding yourself that are inaccurate.

A party who is convicted of purposefully supplying a consumer reporting business with false or incorrect or deceptive information could be fined up to $25,000 or sent to prison for up to 1 year, or both.

Credit report from Equifax: The Angela Monaghan TransUnion Canada story

A Tiny, Ont. high school teacher, Angela Monaghan still keeps in mind the moment she went to her neighbourhood Canadian Tire in the summer season of 2019. She went there to make an application for a new store credit card to use for expenses related to the school orchestra.

The request was promptly rejected. The application had been flagged because according to her credit file, she recalls the Canadian Tire employee, matter-of-factly stating that she was dead.

The one that had actually passed away was her late husband who had passed away from cancer. Yet as she tells her story, she later uncovered a reporting mistake that indicated she, rather than her late husband, had been declared as dearly departed on her TransUnion credit record by a reporting error.

As soon as the consumer reporting agencies are alerted of someone’s death, they position a death notice on their credit report. This step is meant to stop identity theft. However incorrect death reports do take place periodically. Identity thieves and other criminals always try to use a deceased person’s identity for their own illegal gain.

It took her virtually 2 years from when she became aware of and reported the error to TransUnion to have it officially and fully corrected. During that time, she claims she needed to cope with a TransUnion credit report of zero!

Credit report from Equifax or TransUnion: Be proactive

What happened to Angela Monaghan is very frustrating. After the loss of her husband, this is the last kind of trouble she needed. But you can be proactive. You don’t have to wait until you apply for credit to find out if there is an error on your credit report.

The consumer reporting agencies allow you to apply for your own credit report once a year for free.

How Do I Get My Free Credit Report?

You can request your free credit history report by one of several techniques: credit report by phone, by mail or in person. If you’re asking for your credit report by phone, you will need to enter your Social Insurance Number. You’ll need to send acceptable identification validating that you say who you are and your mailing address if you are asking the credit bureau by mail. Photo identification such as your driver’s licence can identify both you and your current home address at the same time. This is one type of acceptable documents.

Everyone qualifies to receive a free credit report annually from each of the two Canadian credit report reporting companies.

How do I confirm my identity?

In addition to the above, identity confirmation is done by responding to a series of individual and financial questions, where one of the possible answers to each question is a fact about yourself. They will only send you your free credit report by mail.

How much does it cost to order my credit report?

As I already stated, Equifax Canada and TransUnion Canada each allow you to order your credit report once annually for free. So if you really wanted to stay on top of reviewing the information the credit bureaus have on you, you could order from each of them once a year, 6 months apart.

Correct an inaccuracy on your Equifax credit report: How do I dispute my credit report from Equifax?

Credit reports matter. Let us assume that you have been checking your credit report from Equifax regularly and you find something you believe is a credit report error or potential inaccuracy and should be removed from your file. The error can be as drastic as the one Angela Monaghan had or something a little less distressing, yet still troubling. If you find such an error, you need to initiate an investigation.

What are the steps to dispute information on your credit report from Equifax? There are two ways to submit your dispute info to Equifax for free – online submission or by mail. You of course have to file supporting documentation to prove your dispute is valid.

Once you’ve successfully filed your dispute by mailing the Credit Report Update Form or completing the Equifax Online Dispute, there will be an investigation of your dispute. When reviewing your dispute, if they can make changes to your credit report based on the information you provided, they will do so.

People ask me how long will my investigation take? Equifax states that their dispute process is completed in 5-20 business days. However, they also say that due to COVID-19, investigations and dispute resolutions are experiencing longer than normal processing times for dispute investigations. After their investigation is complete, a confirmation letter or email will be sent to you with the results and outcome of the investigation.

We see their time estimate is not always accurate. It took Angela Monaghan two years to correct the fact that she was not deceased! If you dispute an item and the investigation did not resolve the dispute, you have the right to add a statement to your credit file that is 400 words or less, free of charge, explaining the nature of your dispute.

Spot identity theft early. Review your credit reports.

Inaccuracies on credit reports can be simple errors, or much worse, you could be a victim of identity theft. So much of our financial lives and financial history is stored in computer databases. Computer hackers steal and sell such personal information which is why identity theft continues to be on the rise. As a matter of fact, an Equifax data breach by hackers took place from mid-May through July 2017. Amongst the stolen information were Social Insurance numbers.

With such theft, thieves use your personal information to open up credit card or loan accounts, run up each credit card balance to their respective credit card limit to purchase goods and never pay a cent. When the debts go into arrears, you start getting calls from collection agencies and your credit rating takes a drastic reduction. One of the more common signs of identity theft is a credit card opened up in your name without your knowledge. Having this happen to you could be devastating to you, especially if you have a consistent payment history of paying your credit card in time every month and all of your other debts on time.

It is up to you to confirm that you are not the one who opened these accounts. It is a painstaking and sluggish procedure. You will most likely have to ask for a copy of the real application from the financial institution and match up your genuine signature against the one given on the application to confirm it was not you. It will certainly take some time, however ultimately, you will get it corrected.

There is also one more means to keep up to date with what is happening with your credit report from Equifax, however, it will cost you some cash.

What is credit monitoring?

If you use credit cards, you may one day either be or know someone who is, a victim of identity theft. Bank cards and other types of credit scams are a serious problem, as well as one that is promptly growing as more individuals utilize plastic, including debit cards, e-Transfers or online bill payments to settle their debts. A credit tracking solution can help you stay one step ahead of credit card fraud.

Both Equifax and TransUnion, along with many credit card issuers and financial institutions, provide credit report monitoring solutions. Equifax calls their product Equifax credit watch™. Transunion Canada also has a subscription-based credit monitoring service.

These solutions monitor your credit activity and give you a regular report with alerts after certain updates to your credit file, such as a credit inquiry. If fraud is suspected, you will get an initial fraud alert.

You can think about using this service if you:

believe you’ve been the victim of fraud;
if you have actually been affected by an information breach; or
you just wish to guard in real-time against identity theft.

This service will help you see if somebody is trying to apply for credit in your name. You will be able to spot identity theft in more or less real-time. However, you usually are required to spend money to get this type of protection. Monitoring things twice a year using your free credit reports in most cases should be enough for the average person.

Credit report from Equifax summary

I hope that you found this credit report from Equifax Brandon Blog informative. Many people feel that they are trapped in a cycle of credit card debts, unsecured lines of credit, tax debt and generally an unmanageable level of debt. Some of this may have come about because you are a victim of identity theft. You may want to do something about those debts but you aren’t sure what to do.

If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Brandon Blog Post

SOFT CREDIT CHECK: TWEAKS YOU CAN DO TO MAKE IT HARD AND HAPPY

Post author By Brandon Smith
Post date May 3, 2021

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the very bottom and click play on the podcast.

Soft credit check introduction: What is a credit score?

When you apply for a loan, or to rent someone’s house, condo or apartment, the bank or landlord will very likely do a credit check on you. What will be of importance to them, amongst other things, is your credit score.

A Canadian credit score is a three-digit number used to indicate the creditworthiness of a debtor, based upon the info in their credit report. It is determined by looking at several factors, including if you usually pay your bills on time, just how much of your readily available credit you use, the number of charge cards you have, as well as your basic level of financial debt. The score ranges from 300 to 900 and also represents the chance that you will pay every one of your expenses on time.

There are two methods that either you or a potential lender can do a credit check on you: soft or hard. Keep in mind that even a potential landlord can fall into the category of prospective lenders. They will be advancing your credit in the form of their property. They are entrusting the tenant to take possession of their property, in return for paying for that privilege every month. In that way, a landlord is also extending credit to a tenant.

Have you ever wondered what the difference is between a soft credit check and a hard credit check? Well, in this Brandon Blog I am going to explain the difference between them for you.

Overview: Hard vs. Soft inquiries on your credit report (And Why They Matter)

The hard inquiry is a credit check that will show up on your credit report. These types of inquiries are typically the result of applying for a new loan, credit card or insurance quotes. A hard inquiry will typically stay on your credit report for up to 3 years.

A soft inquiry, on the other hand, is a credit check that does not show up on your credit report but is visible to creditors. A soft inquiry could be the result of checking your own credit score or shopping around for a new cell phone or cable plan.

More details: What is the difference between hard and soft credit inquiries?

What is a soft credit check you ask? A soft credit check request is something you can do at the beginning of your search for a loan. It will help you to know what your credit score is to help you get better loan rates, special promotions or offers a bank may be running or even help you secure that loan for which you might not qualify if your credit score was outside of an acceptable range. Knowing that information upfront can help you negotiate better for that loan deal you want.

A soft credit check is a surface-level credit inquiry that is used to get a preliminary assessment of your creditworthiness. These take place when you check your credit report or when a lending institution checks your score to pre-approve you for special deals. Soft checks do not influence your credit rating.

A hard credit check is basically a check performed by a company to find out your credit history and score. A hard credit check is different than a soft credit check. Hard checks are performed by companies that decide whether or not to lend you money. Sometimes, a hard check is also referred to as a hard credit inquiry. While a hard check is more informative than soft pulls, it can also adversely affect your score if too many checks are performed.

Sometimes you will enter into a contract for a product or service that requires you to provide authorization on the credit applications to access your credit report and credit score. Whether you are applying for a cell phone contract, to a credit card company, or applying to mortgage lenders or for auto loans, the company is going to check your credit report and score. Knowing what is a “hard credit check” can help you decide if it is worth it to use the service or not.

How could a hard credit check affect your credit score when a soft credit check will not?

Many consumers have a good credit score, but when you are one of the millions of consumers who do not, it can be difficult to get that coveted loan or credit card. To make sure that you do not have to deal with a hard credit check, you should make sure that you have no missed payments on your credit reports and that you have a diverse mix of credit (credit cards, store cards and installment loans, for example).

A hard inquiry can harm your credit score, but usually by just a few points. But how much your score is affected can depend on your specific financial situation.

Having too many inquiries on your credit report especially within a short period of time may also have an impact. And if your credit report shows multiple credit applications within a short period of time, it might appear to lenders that your finances have changed negatively.

When you apply for credit, as I mentioned, a hard credit score check is the way a potential lender can take a deep dive into your credit history. A putative lender would do so to determine if they should approve you for the credit you are applying for. This is different from a cursory soft credit check so a lender can tell you if you might qualify for a special deal or are doing your own self-assessment.

If you’ve ever before been denied for financing, denied an apartment, or had your car loan application rejected, you probably went through a hard credit check and the financial institution or landlord you approached was not happy with your results.

Soft credit check: How your initial credit limit is determined

The normal question individuals typically ask is why their credit line is not higher. In fact, the question is so usual, some credit card companies have their own applications that you can use to forecast your credit line. Nonetheless, as you may anticipate, the response is not quite as straightforward as the credit card issuers would like you to believe.

Your credit rating is an important metric in establishing what your credit line will be set at. If you have an inadequate credit rating, expect a lower credit limit and various other unfavourable terms. On the other hand, a high credit score offers you the opportunity to shop around to find the best credit card agreement and credit card issuer for you.

Soft credit check: Who creates your credit report and credit score?

Each time you make an application for a credit card, a car loan or home mortgage, your credit report is evaluated by the loan provider you are applying to. Your credit report is a document of the financial commitments you have actually currently incurred (credit cards, personal loans, lines of credit and mortgages) and your payment history. It is obtained from one of the two credit bureaus in Canada.

By now you should understand that the higher your credit score, the better your chances are to be approved for the loan or credit card you are applying for. This is because your credit rating will be seen as a lower threat to default, and therefore the bank will feel more positive that you will pay off any credit extended to you.

TransUnion and Equifax Canada are the two credit bureaus in Canada that contain your credit information. Lenders will use one of these two businesses to do the soft credit check or the hard credit check on a potential borrower or existing customer requesting additional or new credit.

These are private businesses that collect, store and share details concerning just how you use debt. Equifax Canada and TransUnion just collect information from creditors concerning your financial experiences in Canada.

Can a lender do a soft credit check or any type of inquiry without my permission?

If you are applying for credit from a financial institution or another type of lender, you will be asked to provide the authorization for them to do search one of the two major credit bureaus in Canada on you as part of their normal credit process. A lender cannot perform a hard credit pull without your OK.

No pre-authorization is required to do soft pulls. Perhaps you wish to just discover if you meet the requirements for a unique promo they may are promoting on one or more of their credit products. Or, possibly the loan provider wants to get a quick picture of your credit file to see if it is worth investing the time running you through their credit application process. The lender can get a response to both issues by carrying out a soft inquiry on you. That they can do soft credit pulls on their own.

Soft credit check: How long inquiries stay on your credit report

Your credit rating is a snapshot of your financial life, and it is important for obtaining credit, renting an apartment, even getting a job. But what happens if you want to buy a house, apply for a job, or apply for a loan and you have a negative or positive inquiry on your credit report? It is important to know how long an inquiry will remain on your report.

The rules surrounding credit inquiries and how long they stay on your Canadian credit report are a little different than in the US. In the US, hard inquiries generally stay on your record for 2 years. In Canada, there is no specific set amount of time that they stay on your report. The length of time a new inquiry is reported is determined by the business that requested the inquiry. According to Equifax Canada, a hard inquiry may not drop off your report for up to 36 months.

Home & Car Insurance Savings From Good Credit Scores

If you’ve ever shopped for auto insurance or homeowners insurance, you’ve no doubt been pressured to buy coverage you don’t need or a policy that seems like the insurance costs are just too high? If that sounds like you, don’t be ashamed! To avoid this, you should first know your credit score, since that will be the key to getting the best insurance rates.

A good credit score does more than simply affect the interest rates you pay on loans – it also affects the rates you pay on your insurance. This is because insurance companies consider your credit score when setting the rates you pay because it correlates to your likelihood of filing a claim and the likelihood of that claim being paid.

In addition, your mortgage company, your landlord and your car dealership will check your credit score when renting property, leasing a car or deciding how much of a down payment you can afford.

Can prospective employers perform a credit check on me?

If the job application you signed gives a potential employer permission to do a hard inquiry on you, then they can. Bad credit history can have many consequences that far exceed a simple refusal to get a loan. It can prevent you from getting a job, and destroy your self-esteem. How do you know if your bad credit is affecting your life? The first step is to find out what’s on your credit report.

The next step is to realize that your negative financial situation didn’t happen overnight. Your financial problems are a result of both bad luck and poor judgment.

Most of us have been there: you’re ready to start your career, turn over a new leaf and begin a new chapter in your life, but you get rejected for a job because one of the background checks turns up a bad credit report. And you are confused. You didn’t know that your report included bad credit information. And you didn’t know that you could fix a bad credit report.

But you can. As I already mentioned, it starts with you doing a soft inquiry on yourself and finding out what the bad information is. Or, once a year, for free, you can do a hard inquiry on yourself and really drill down to find out what negative information is causing the roadblock to your moving forward in life. I highly recommend that you do so as the start to improving your financial situation.

Soft credit check a summary

I hope you enjoyed the soft credit check Brandon Blog post. You may be very upset and frustrated over the current pandemic situation and your personal financial problems. You may even be downright depressed. The entrepreneur may be very frustrated that the company can no longer pay all its debts as they come due.

There may be sufficient value to take care of the secured creditor, but nothing for anyone else, including the unsecured creditors. There may be some business units that should not survive, but if cut out, the business will be viable. A receivership might very well accomplish the goals for the entrepreneur also. I have many times structured a receivership process, in order to meet the goals of the entrepreneur, while satisfying the requirements of the secured creditor.

Are you worried because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option? Call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

Brandon Blog Post

PAYING DOWN DEBT: MY 7 ESSENTIAL YET EASY HACKS TO BE DEBT FREE

Post author By Brandon Smith
Post date January 6, 2021

The Ira Smith Trustee Team hopes that you and your family had a restful holiday season and that you are all safe, healthy and secure.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this paying down debt Brandon’s Blog, please scroll to the bottom of the page and click play on the podcast

Paying down debt No. 1 financial goal of Canadians for 2021: Poll

A new survey states paying down debt is the #1 economic objective of Canadians to focus on heading right into the brand-new year. Many claimed that they handled more financial and high-interest debt this year to cover day-to-day expenditures and also offset a loss of revenue.

The annual CIBC poll says having a debt repayment plan has actually continued to be the top financial priority for the past 11 years. Unfortunately, what this says is that even without a COVID-19 pandemic, Canadians have been largely unable to do so. Everyone can be excused for 2020. Canadians have been grappling this past year with the financial and health challenges because of the coronavirus.

The purpose of this paying down debt Brandon Blog is to discuss the survey results and provide some tips on how to tackle debt that needs to be paid down. I truly believe that it is not your fault that you have not been able to be successfully paying down debt. You have only been shown the old ways that do not work anymore. Below I describe my 7 easy hacks for paying down debt. It is a new way of getting into the habit. It is a process that you can set up, track and see how you progress.

The survey found the 2nd monetary top priority of Canadians for 2021 after paying down debt is merely keeping up with bills as well as getting by. The survey showed that on average, Canadians expect a positive economic outlook for 2021. The poll results indicate that 24% of Canadians believe their financial position will certainly get better in 2021. This is down from 32% in 2019.

The poll also found the top economic issues facing Canadians in 2021 consist of the rising cost of living, the increased prices of goods and a sluggish economy.

Carissa Lucreziano, vice-president of CIBC Financial and Investment Advice, claims it is reasonable that Canadians are worried given the economic climate of 2020. She states the best buffer is to be prepared with a plan to satisfy your financial objectives, which includes a realistic estimate for paying down debt, that can be readjusted when situations alter.

How Debt Affects Your Credit Scores

The first thing you should know is that debts have a ripple effect across your whole financial life, including your credit history.

Revolving financial obligations includes a line of credit or credit card debt where you can churn, or rotate, a balance from month to month. You can obtain as much credit as you like up to an established credit limit. Interest is charged on any outstanding balance that is not fully repaid by the due date. Your regular monthly payment can differ on revolving debt based on your outstanding fluctuating balance.

Fixed financial debt includes mortgages, auto loans, personal loans and student loans. Most of the time, the amount of money you borrow, rates of interest, the monthly due date and the size of your monthly payment are fixed and known at the start.

With both revolving and fixed financial debts, you must pay promptly. When you miss a payment, your loan provider will report it to one of the two Canadian credit bureaus: Equifax and TransUnion. The credit bureau reporting of late payments can remain on your credit records for 7 years. When you miss a scheduled payment, you not only still owe that amount, but you will also have to pay late or default fees. Now the debt costs you even more!

Besides your payment history, there are other ways each type of financial obligation influences your credit score. With fixed installment debt, having a high outstanding amount does not have a huge effect on your credit score.

Rotating debt is a different story. If you are using a high percentage of your available credit from month to month, it will likely have an adverse result on your credit report and credit score. This is particularly true if you are doing it with numerous credit cards.

Your credit score will be negatively influenced because by using a large percentage of your available revolving credit, your credit utilization score is high. Credit utilization has considerable influence in calculating your credit score. So to keep your revolving debt outstanding as low as possible compared to your authorized credit, ideally, you ought to be paying down debt fully every month.

Why Credit Card Debt Is So Dangerous: My paying down debt calculator

When it comes to financial obligations, credit card debt is usually the most wicked.

Credit card companies can tempt you in with a low initial annual percentage rate (APR) and flashy credit limit. However, that introductory APR deal will ultimately end. When it does, you can find yourself looking at a frustrating heap of financial debt if you really did not handle your new charge card account properly. The reason revolving financial debt can be so frustrating is due to the fact that credit card interest rates are usually very high.

So, if you’re just making the minimum payment each month, it will certainly take you a long time to paying down debt. It could potentially take decades due to the interest accumulation.

Let’s say you put $15,000 on a credit card with a 19.9% APR, and then cut it up. You never get a replacement card and never spend another penny on that account. It is normal for a Canadian credit card to have a minimum monthly payment of 3% of the outstanding balance.

If all you do is make the minimum monthly payment, assuming you maintain the original minimum monthly payment as your balance declines, it will take you 25 years to pay off the full amount. You will also be paying more than double the amount you charged on the card. Here is the math:

Credit card balance	$15,000.00
Credit card APR	19.9%
Minimum payment	3%
Monthly payment	$450.00
Balance payoff	300 months
Total payments	$33,156.26

As you can see, paying down credit card debt this way is very expensive and I have not yet met a person who is comfortable paying down debt over 25 years, other than for perhaps the mortgage on their home.

How Personal Loans Impact Credit Scores

Personal loans also influence your credit score. Whether the loan account one-day damages or improves your score depends on 2 primary aspects: (i) exactly how you take care of the account and what else your credit history shows.

Too many applications could injure your score. That is because when you make an application for credit, an inquiry is logged onto your credit report. Too many such inquiries can damage your rating. The reason is that with more than one application close together in time, the formula assumes that you need the money and at least the inquiries before the last one turned you down.

Your credit might increase as your personal loan ages and there are no negative notations about missed payments. Initially, a new account could lessen your credit score. As your personal loan gets older and remains current, it shows you are using that debt responsibly. That can help your numbers.

A fixed personal loan might reduce your credit usage. Individual loans are fixed installment financings, which do not affect your revolving application ratio in any way. You can have a high balance on a fixed personal loan. If you pay off credit cards with a fixed installment personal loan, then your revolving utilization ratio must reduce. Over time, as long as you don’t get the credit card balances back up there and have the new personal loan outstanding, this can improve your credit score.

Your credit blend could also be enhanced with a personal loan. The credit scoring formula rewards you for having a diverse combination of accounts on your credit report. If you do not have any installment borrowing on your report, getting a fixed installment personal loan may improve your credit score. You just have to make sure that you are making your monthly payments on time for paying down debt. If not, it will damage and not help your score.

7 hacks for paying down debt quickly

Hack 1 – This is my first step to ending up being totally debt-free. This is important prior to anything else. You need to get some quiet time and start to make you’re coming to be debt-free goals real. It is a process that anyone can learn. Making those goals real does not suggest merely thinking them out for 5 seconds. What will you do daily when you are debt-free? What will it feel like? How will your life be changed? How will you feel? Write out this story on a notepad or better still a vision board. After that follow the rest of the steps below to begin to focus on your paying down debt strategy.

Hack 2 – Just how much do you intend to pay off in three months? In six months? You will make use of the steps discussed below to produce these objectives. The recommendation is that you have some shorter-term goals of just how much to save and therefore just how much debt to pay back.

These shorter-term goals need to feed into your longer-term objective. They’re easier to get to than the full objective. They also will certainly inspire you to keep going when you reach them. With your short-term objectives clear, it is time to prepare your month-to-month spending plan. It is a strategy of writing down where your money comes from and where your money is going.

You need to take the time to jot down every source of revenue you have and just how much comes from each one. You likewise need to identify and also write down where the money is going – line by line. As soon as you have done that, you can figure out where you can really decide if you can do any other activities to bring in more and what spending you can cut out. This will get you onto a savings plan, which will then give you the extra money to let you begin paying down debt.

I know I may have just lost fifty percent of you. This isn’t a budgeting blog site in itself. You have to create your budget plan on your own. I have written other blogs on the subject of budgeting which you can read here.

Hack 3 – I like fast small flares for saving cash. It will also reveal a great deal concerning the way you spend money. Start cutting back on things from your budget plan you have control over. Things like clothing purchases, eating out at restaurants (pre-pandemic) and other entertainment. I would hazard a guess that since the lockdowns and self-quarantining began last March, you have spent less on these types of spending than the year before. Go track it from your credit card statements, I bet you will see that is the case.

You can test on your own how to lower that spending in half or eliminate it out completely over the next 2 months. I am not discussing going cold turkey and not spending anything. I am speaking about a short-term challenge of a couple of months and on 1 or 2 spending things at a time.

These spending challenges work on so many levels. I am sure you will love them just like me. By only taking one or two items off of your spending, you are not attempting to save every dime.

You can still spend. You are simply trying out cutting down on a couple of things each time. Besides saving a lot of cash, this is going to reveal to you what you do not really care about in the spending side of your budget. You will now easily have gotten into the habit of not spending money on those things. You will now have savings in the form of extra money that you can use for meeting your paying down debt goals.

What is also great is that 8 weeks is right around the time it takes to construct brand-new behaviour patterns and breaks old habits. Those brand-new practices are most likely to drive you and help you feel that saving is not as difficult as you originally thought it would be. Maintaining these brand-new spending and saving behaviours is just one of the tricks for paying down debt.

How to get out of debt on a low income

Hack 4 – Next is doing a complete decluttering. Don’t worry, I assure you it’s a lot easier than it seems. You just have to get started. Go room-to-room in your residence and itemize every little thing you do not need. Specifically, those things you have not used in a long time. Set a rule such as have I used this, worn it or looked at it in the last 5 years? If the answer is no, out it goes. Do not second guess yourself. Stick to the rule.

This could include the treadmill you might have used only in the first 3 months after you got it, the out-of-date clothes that you never wear or the furniture you never ever rest on. Anything that isn’t being made use of or making your life better, offer it for sale online.

Not only are you making a little cash to help with your paying down debt. You are ridding yourself of something you do not need and someone who will enjoy it as much as you used to.

You may find that with some of the items, you could have squandered your money getting some of these things. But that was in the past. We are now only looking forward. It will also be a good memory to have the next time you think you need to buy something. I am sure you will analyze all future buying decisions differently.

Hack 5 – This is going to be another hard decision. However, it is one that a lot of people just have to do if they are serious about paying down debt. That is taking a sober look at how you travel every day.

I like seeing or paying attention to people talking about how much financial debt they have. What always astonishes me is the number of people who have a reasonable brand-new vehicle with monthly payments they do not have the money or budget to support. Seriously, people simply do not seem to see exactly how a high regular monthly auto payment is trashing their spending plan!

Besides the payment itself, insurance, licensing and maintenance costs come with the vehicle. I am not saying you cannot have nice things or that you need to never ever get a brand-new car or truck. Perhaps a clean vehicle in good condition that just came off a 3-year lease would be extra affordable and save you cash.

Appreciate your money! We do not have a great deal of time on this earth and you have to enjoy it. However, you can’t appreciate life if you’re constantly stressed out from your debt. So have a close look at what is parked in the driveway and be honest with yourself. Can really afford it?

By following this logic you will have extra cash each month that you can allocate to paying down debt.

Hack 6 – This tip most likely will eliminate lifestyle creep. Lifestyle creep is how your spending appears to increase every time your revenue does. The result is you are always stuck in paycheque-to-paycheque mode and are never paying down debt.

Just how is it that we get tax refunds or a raise, we never have enough that amount saved? You work overtime but the cash just appears to vaporize into thin air. It is the problem of lifestyle creep. Our spending plan always seems to grow to eat up whatever income there is.

Fighting lifestyle creep suggests referring back and monitoring your budget on a regular basis. Plug in that refund or additional income on an after-tax basis. Remind yourself how much you are spending. This will let you take that initiative to not spend even more if you now have a little extra. The very best thing to do is to designate that additional money for paying down debt and then to do it right away.

By having a place for that money, it stops being a temptation to spend it. It may not seem like it will conserve much however you would be surprised just how quickly normal smaller amounts will build up over time.

Hack 7 – My last money-saving method is going to put a freeze on your credit cards. Make the essential payments you have budgeted for by using cash. You simply do not obtain that very same psychological and emotional sensation when you use a credit card that you obtain when you pay with cash. When you pay with cash, you feel the purchase. Not so much with a credit card.

I’m not saying to cut up your cards. I have a credit card I use for company spending purposes and another for personal use. It is also handy to have one for emergencies if you do not have an extra money reserve yet from your savings. Stopping the use of your bank card will still keep that alternative open yet it makes you reassess your spending on practically every product.

Simply put, these 7 money-saving hacks will give you thousands of dollars over time. You can use that money first for paying down debt. Once your debts are paid off, keep up those same habits to build up savings for investment and ultimately your retirement. Each hack is simple yet effective. You will love to see how quickly you can make progress in paying down debt. Each one is not a major step, but combined together, they will have a profound effect on your debt payment plan.

***Paying down debt*: Do you want an avalanche of snowballs?**

The 7 simple hacks I describe above gets you the cash to use to pay down your debt. Now you actually have to do it. I am sure that you have heard of the two highly touted methods of actually paying down debt being the: (i) debt avalanche method; and (ii) debt snowball method. Dave Ramsey, a US financial commentator, is a strong proponent of these methods.

Here is a summary of the two methods for paying down debt. In the debt avalanche method, you pay off your debt with the greatest rate of interest initially, 2nd greatest next and so forth. In the debt snowball method, you pay off the single debt in total with the smallest outstanding balance first, second smallest 2nd and so forth.

The debt avalanche approach of paying down debt approaches the matter from a financial perspective. The snowball method is more psychological. Both get you to reduce your debt. Both help you reach your financial goal.

If you would like more details on both the debt avalanche and snowball payment plan methods of paying down debt, read my March 2019 blog – Debt Help Near Me: Our Toronto Debt Repayment Calculator Strategy.

Can I book a meeting with someone who can help?

Of course, you can. Contact the Ira Smith Team for your no-cost consultation. We can start helping you immediately getting into a pattern of paying down debt.

I hope you enjoyed this paying down debt Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore. The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of this seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

The Ira Smith Trustee Team hopes that you and your family had a restful holiday season and that you are all safe, healthy and secure.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags annual CIBC poll, avalanche method, credit card, credit card balances, credit card debt, credit history, credit score, debt repayment plan, Equifax Canada, Ira Smith Trustee, Line of Credit, paying down debt, paying down debt calculator, personal loan, revolving debt, revolving utilization ratio, snowball method, transunion canada

Brandon Blog Post

MORTGAGE WITH BAD CREDIT: MY BEST TIPS ON HOW TO GET THE MORTGAGE YOU NEED

Post author By Brandon Smith
Post date December 28, 2020

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this mortgage with bad credit Brandon’s Blog, please scroll to the very bottom and click play on the podcast.

A mortgage with bad credit introduction

Looking back on the 2020 year, the coronavirus pandemic has caused so much health and financial devastation to Canadians. Canadians’ either losing their jobs or at least their income has been the main cause of personal financial problems this past year.

To their credit, the Federal Government quickly came to the aid of people and businesses by rolling out Canada’s COVID-19 Economic Response Plan. The many programs to lend financial support implemented by the Federal Government have been largely successful, notwithstanding not all the programs worked well. Luckily, the major ones did work well in getting much needed financial support to Canadians and Canadian businesses.

In fact, the government support has worked so well that insolvency statistics in Canada as of October 31, 2020, show that consumer and business insolvency proceedings are down in 2020 by almost 25% compared to 2019. So at a time when there is so much financial hurt in Canada, formal insolvency proceedings are way down. I attribute Canada’s COVID-19 Economic Response Plan as the main reason why.

But that does not mean that financial problems in Canada are over. I suspect that as certain government support programs have now ended, and the remaining ones are right now scheduled to end in 2021, it is the coming year where the insolvency statistics may take a turn for the worse with the number of insolvency proceedings increasing.

One of the support programs that have ended is the mortgage deferral program. The purpose of this Brandon’s Blog is to look at what are the options for people who need to either get or renew their mortgage with bad credit.

Mortgages and the coronavirus

As I previously wrote about, there were two phenomenons in 2020 with mortgages in Canada. First, there were roughly $170 billion in home mortgage deferrals among Canada’s 6 major banks. The bulk of them was set to expire by September 30.

The second was that there was a significant rise in Canadian consumer debt primarily from an increase in both mortgage loans and vehicle financings. The major banks reported that increases in mortgage debt came from both the refinancing of existing home mortgage debt as well as new home mortgage applications.

We also know from media reporting, that at least in the Greater Toronto Ontario Area, the residential real estate market remained hot. COVID-19 could not slow it down. We also know that Canadians have taken advantage of the extremely low home mortgage interest rates to increase their mortgage debt in order to pay down or off much higher-rate consumer debt.

For those with a good credit rating, getting new or refinanced mortgage loans has not been a problem. But what about those needing a mortgage with bad credit?

How your credit score impacts your mortgage rate

To comprehend just how poor credit scores impact home mortgage rates, it helps to look at it as a mortgage lending institution. Giving a loan to someone with a poor credit history is high-risk, as they are more likely to not make their monthly payments on time or they might default completely. To make up for the additional danger, lenders approve this kind of home mortgage with bad credit using higher interest rates than the posted rates.

In Canada, credit scores range from a low of 300 to a high of 900. You are rated by Canada’s 2 significant credit bureaus; Equifax and TransUnion. This number is used to tell lenders just how you have dealt with available credit in the past. The greater your credit score the far better, due to the fact that it assists you to get approved for the lowest possible interest rates.

A person with a minimum credit score of 630, should not have a problem getting a standard mortgage approval from one of the major bank mortgage lenders. Obviously, the higher your credit score above 630, the better.

If your credit score is below 630, a lot of the financial institutions in Canada will not authorize you for a mortgage loan. Rather, you may need to utilize a “B lender institution” or even a private lender to get that mortgage with bad credit. Lenders such as these have bad credit mortgages available for people with a poor credit history.

What kind of bad credit mortgages are available?

A person applying for a bad credit mortgage may have to save for a larger down payment (frequently 20% or more), or more equity in your house than a person with a good credit score if you are applying for a mortgage refinancing. If you are lucky enough to have a co-signer, that is also a good thing.

Sometimes, if the debt problems are small, the best or close to the best mortgage rate could still be readily available to you. You would be well advised to hire a knowledgeable mortgage broker. A mortgage broker’s fee is paid for by the lender, not the buyer or homeowner. They will certainly attempt to get you the best rate based on your current economic situation. Using an experienced broker is essential if you are looking for a mortgage with bad credit.

A mortgage professional has access to many different types of lenders. Most insurance companies have a portfolio of residential mortgages as part of their overall financial investments. Mortgage brokers also know of private lenders. Even if a lender at one of the major banks turns you down, a mortgage broker may very well be able to find you a lender who will say yes. The mortgage rate might be higher than those posted in the newspaper or shown online, but at least you will get the mortgage with bad credit loan that you need.

What are the advantages of bad credit mortgage loans?

Commonly bad credit borrowers with credit report problems, a bad credit score range and overall credit issues are rightfully reluctant to handle more debt. However, a mortgage with bad credit is very different than taking on more debt just for consumer overspending. When you need a mortgage, it is because you want to buy an asset that is worth more than the amount of money you will owe on it.

So, a mortgage with bad credit can be a powerful device to enhance credit score ratings. A few of the methods bad credit borrowers who can qualify for a home mortgage accomplish this are:

Consolidate multiple high rate consumer debts, such as credit card debt or unsecured line of credit debt, into a solitary lower interest mortgage loan. Eliminating high rate debt that is in default through debt consolidation with a lower rate mortgage AND making your monthly payments on time, will improve your credit score.
Amortize financial debt over a longer period to lower your monthly payments. This will certainly help your cash flow.

Even a mortgage with bad credit will certainly have lower rates than credit cards and unsecured lines of credit. This conserves money because the lower interest rate loan will have a lower monthly payment than the total of the monthly payments of the higher rate loans.

In short, a mortgage product for bad credit scores helps you improve your credit score over time, especially if you use the new or refinanced mortgage with bad credit loans to retire your credit card balances.

Here is another tip. Once you retire your old unsecured credit card balances, cancel them. Then, get a secured credit card. Just like the mortgage with bad credit product, every time you pay off your secured credit card on time, the card issuer reports that to the credit bureaus. This too will help repair your damaged credit and improve it over time.

What if I can’t get approved for a mortgage with bad credit loan at an A or B lender?

If you have worked to build your credit and are still incapable to obtain approval on a conventional mortgage, be sure to ask your broker what else you should do differently. More than likely, the broker will recommend canvassing their private mortgage lender contacts. Private lenders are willing to do mortgages for people.

Borrowing from a private lender for a mortgage with bad credit will carry additional fees and a very high-interest rate. Most private mortgages also carry a very heavy penalty for defaulting or even just late payments. However, if your budget tells you that you can afford the monthly mortgage payment, a private lender has much more flexibility.

A private lender is much more willing to look at your stable employment record and your proof of income, rather than just your credit report. Of course, an appraisal supporting the value of the home and the loan requested is crucial.

Keep in mind that a private lender may very well be more lenient if you had previously filed a consumer proposal or for bankruptcy. Whereas an A lender and many other lenders will be scared off by this, a private lender may very well not be. If you have successfully completed your consumer proposal or have received your bankruptcy discharge then you have shed the debt that weighed you down. So it is very possible that you have a relatively small debt load.

Alternatively, if you are refinancing for debt consolidation purposes, the private lender will want proof that the debts have been paid off with the portion required from their mortgage with bad credit advance. As long as the alternate lender is happy with your income and employment history along with the appraisal, the lender won’t be bothered by the debts that will no longer be outstanding.

So although the private mortgage route is expensive, at least the money you need is available. Let’s face it, if you had a good credit score, you would deal with one of the chartered banks, even for insured mortgages. You would not need someone who can provide you with a mortgage with bad credit product.

Mortgage with bad credit summary

I hope you have enjoyed this mortgage with bad credit Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges and you think the only thing you can do is file bankruptcy in Canada. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. We help many people and companies avoid bankruptcy.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags bad credit borrowers, bad credit mortgages, bad credit score range, B lender, Canada's COVID-19 Economic Response Plan, credit report problems, credit score, Equifax, how your credit score impacts your mortgage rate, insolvency statistics in Canada, mortgage debt, mortgage deferrals, mortgage with bad credit, poor credit history, private mortgage lender, TransUnion, what are the advantages of bad credit mortgage loans, what if I can't get approved for a mortgage with bad credit loan at an A or B lender, What kind of bad credit mortgages are available

Brandon Blog Post

CONSUMER PROPOSAL VERSUS BANKRUPTCY: MASTER THIS KNOWLEDGE AND BE SUCCESSFULLY DEBT FREE

Post author By Brandon Smith
Post date December 21, 2020

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this consumer proposal versus bankruptcy Brandon’s Blog, please scroll to the very bottom and click play on the podcast.

Consumer proposal versus bankruptcy introduction

The holidays are upon us and we can all ideally get a well-deserved break. This 2020 year truly threw us a curveball in March and it isn’t over yet. Many people have already identified that they need to understand their options in taking care of way too much debt. Hopefully, they will use the period of time during the holiday break downtime to seriously consider fixing their situation.

Maybe their New Year’s resolution will be to once and for all solve their financial situation. That is why I believe this is a good time to write this Brandon’s Blog to help those people who are wondering about the issues surrounding a consumer proposal versus bankruptcy.

***Consumer proposal versus bankruptcy*: Who qualifies for a consumer proposal?**

A consumer proposal is an alternative to bankruptcy. Consumer proposals are for people whose total financial debts do not surpass $250,000, not including financial debts secured by their primary house.

Division 1 proposals are available to both:

companies; and
individuals whose debts exceed $250,000 (leaving out mortgages on their principal home).

I will focus on the differences between a consumer proposal versus bankruptcy.

***Consumer proposal versus bankruptcy*: What are consumer proposals?**

Consumer proposals are formal ways governed by the Bankruptcy and Insolvency Act (Canada) (BIA) available only to people. Working with a licensed insolvency trustee (Trustee) acting as the consumer proposal administrator, you make a proposal to:

Pay your creditors a percentage of what you owe them over a specific period not exceeding 60 months
Extend the time you have to pay off the debt
Or a mix of both

Payments are made through the Trustee, and the trustee uses that money to pay each of your creditors. The consumer proposal must be completed within 5 years from the date of filing.

Below I will highlight more differences between a consumer proposal versus bankruptcy.

***Consumer proposal versus bankruptcy*: Is a consumer proposal worth it?**

The advantages of a consumer proposal versus bankruptcy are:

You keep all of your assets
Legal actions that are being contemplated or actually begun against you by unsecured creditors and results of a judgment such as freezing your bank account and wage garnishments are stopped.
Unlike informal debt negotiation or debt settlement programs, the consumer proposal forum catches all of your debts and your unsecured creditors must take part in your restructuring process.
Of all the debt relief options available to a person, it is the only government-approved program that combines debt consolidation (without having to apply for one or more loans) and debt settlement.
You do not need to use the “B” word.

You will definitely pay less than you owe with a consumer proposal. It could be as much as 75% less. All of your unsecured debts will be consolidated right into a simple regular monthly payment. What you pay is based on what your creditors could expect to receive in your bankruptcy and what you can actually afford.

So is a consumer proposal worth it to make one monthly payment that you can afford to pay a portion of the total you owe instead of going bankrupt? I think it is.

What is the impact on my credit rating if I file a consumer proposal versus bankruptcy?

We are always asked, “How will a consumer proposal affect my credit rating?”. The follow-up question is “What is the impact on my credit rating if I file for personal bankruptcy or do a consumer proposal?”.

The person who files for bankruptcy will absolutely obtain R9 status. This is the lowest credit score possible. It will remain on their credit report for 6 years after the person gets their bankruptcy discharge. So for a first-time bankruptcy with no surplus income and the person gets their discharge after 9 months, it is on the credit report for about 7 years. If the person is a first time bankrupt with surplus income, then their bankruptcy discharge cannot be gotten for at least 21 months. This equates to having the R9 for 8 to 9 years.

An individual that files a consumer proposal sees their credit score go to an R7 ranking which is less extreme. It will remain to be on their credit report for around 8 years in total, starting with the filing date.

Through the two mandatory credit counselling sessions that are provided with either a consumer proposal or bankruptcy, we teach you ways you can start rebuilding your credit score right away.

What are the costs and fees of a consumer proposal versus bankruptcy?

When doing a consumer proposal as a debt solution, the Trustee costs are included in the settlement you bargain with your creditors. The calculation of what is reasonable for you to pay is done without any reference to the Trustee costs.

For example, if your consumer proposal has you paying a regular monthly payment of $400 for 60 months, the Trustee’s fee and disbursements are taken from those funds. The consumer proposal fee is a tariff defined in the BIA.

If there is no surplus income or assets that you hand over to the Trustee, the cost for this type of personal bankruptcy is about $2,000. This cost would need to be paid to the Trustee either upfront or over an 8 month period in equal monthly payments.

However, if you file for bankruptcy and you have surplus income and/or assets that you must turn over to the Trustee, the personal bankruptcy cost could be higher. The Trustee’s fee and costs must be taxed by the Court. However, it will be calculated using the hours spent by the level of staff at each staff member’s normal hourly rate. If there are insufficient assets to pay the Trustee’s fee, the difference has to be paid for by the bankrupt person or someone else guaranteeing the Trustee’s costs.

This is another distinction between bankruptcy vs consumer proposal.

What happens to my assets in a consumer proposal versus bankruptcy?

If you do a consumer proposal, you keep your assets. In bankruptcy, other than for exempt assets, your assets are seized by the Trustee. Exemptions depend on the province you live in.

In Ontario the assets you get to keep in bankruptcy consist of:

The equity in your home of no more than $10,000.
A motor vehicle with an equity value of no more than $6,000.
Clothing and medical and dental aids.
Household furnishings up to a value of $13,100.
Tools of the trade with a value of no more than $11,300.
Pensions, RRIF, RRSP (except for any RRSP contributions made within 12 months of the date of bankruptcy).
Farmers – no more than $29,100 for animals and tools and equipment.

This difference to your assets between a consumer proposal versus bankruptcy is massive.

What happens if I miss payments and default on my consumer proposal versus bankruptcy payments?

If you do not maintain your payments on a consumer proposal, it defaults and it is over. You then cannot file a new one. Collection action by your creditors will begin again.

If you do not complete all your duties in bankruptcy, you will definitely not be discharged. If your Trustee gets discharged and you remain undischarged, then all your creditors can return to taking collection action against you to try to recover on their loans or other debt payments you owe them.

This is one more consumer proposal versus bankruptcy difference.

When is a meeting of creditors held in a consumer proposal?

A meeting of creditors in a consumer proposal is held if one is requested by one or more creditors who are owed at least 25% of the overall value of the proven claims.

A request for a meeting has to be made by the creditors within 45 days of the declaration of the consumer proposal. The Office of the Superintendent of Bankruptcy (OSB) can also ask for the Trustee to call a meeting of creditors whenever within that specific very same 45-day time frame.

The meeting of creditors is held within 21 days after being called. At the creditors’ meeting, they elect to either approve or turn down the proposal.

If no meeting of creditors is requested within 45 days of the filing of the proposal, the proposal will be regarded to have actually been approved by the creditors no matter any kind of objections received later.

A consumer proposal is fully performed as soon as:

the person has made the required payments within the time period called for in the consumer proposal; and
the two mandatory counselling sessions with the Trustee have been done.

In a bankruptcy, the discharge relies on various facets, including whether it was the first time the debtor filed for bankruptcy and if they need to make surplus income payments to the Trustee. The calculation for surplus income is based mainly on your household monthly income.

If the debtor has actually never ever declared bankruptcy before as well as they do not have to make surplus payments, the bankrupt is entitled to be released 9 months after declaring bankruptcy. Nevertheless, if the bankrupt has surplus income, they will require to make payments for 21 months before they can be discharged.

This is one more distinction between a consumer proposal versus bankruptcy.

***Consumer proposal versus bankruptcy*: How to file for bankruptcy?**

In order to file, you need to engage a Trustee. This is a person or company accredited by Industry Canada to administer the insolvency process in Canada.

The 11 steps below are a guide to the filing for bankruptcy process:

Contact a Trustee and attend a meeting with him or her to speak about your personal situation and your options. This will include all your options to avoid bankruptcy.
Deal with the Trustee to complete the necessary bankruptcy documents.
The Trustee will after that submit the bankruptcy paperwork to the OSB and get back a certificate evidencing your bankruptcy.
The Trustee notifies your creditors of the bankruptcy.
You attend a meeting of creditors if one is called.
You participate in 2 counselling sessions.
Based on your provincial exemptions, the Trustee sells your non-exempt assets; you may likewise need to make surplus income payments to the Trustee.
In certain conditions, you might have to participate in an evaluation by an officer at the OSB.
The Trustee prepares a report to the OSB describing your activities during the bankruptcy.
You go to the discharge hearing if required.
You get your discharge from your bankruptcy and afterwards, the Trustee completes the management of your bankruptcy file, including paying a dividend to your creditors, if available.

As you can see from the description of how a consumer proposal works and from these 11 steps, there is a difference in how a consumer proposal versus bankruptcy works.

***Consumer proposal versus bankruptcy*: Get back to a stress-free life**

I hope you have enjoyed this consumer proposal versus bankruptcy Brandon’s Blog. Both a successfully completed consumer proposal or obtaining your discharge from bankruptcy lets you get back on the road to financial health, relieve the stress you face and bring you:

Freedom by getting out from under garnishments;
The ability to live better than just hanging on one payday to the next;
Improved credit ratings; and
Improved health and well-being.

You are worried because you are facing significant financial challenges and you don’t fully understand the options available to you, including, filing a consumer proposal versus bankruptcy. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

Ira Smith Trustee & Receiver Inc. offers a full range of insolvency services to people facing a financial crisis. Whether you need help with a proposal to your creditors to avoid the worst case, financial counselling or advice about insolvency options, our goal is to make sure that you understand the process, your choices, and what steps will get your life back on track.

Call us for your free first consultation. We will inform you about all the choices readily available so you can make a proper decision about the very best plan to deal with your financial obligations.

Call Ira Smith Trustee & Receiver Inc. today. All you have to lose is your debt!

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

We hope that you and your family are safe and healthy.

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags alternative to bankruptcy, Bankruptcy, Bankruptcy and Insolvency Act, bankruptcy discharge, BIA, Consumer Proposal, consumer proposal versus bankruptcy, credit score, debt consolidation, how will a consumer proposal affect my credit rating, Ira Smith Trustee, licensed insolvency trustee, Office of the Superintendent of Bankruptcy, OSB, surplus income, trustee, What is the impact on my credit rating if I file for personal bankruptcy or do a consumer proposal, Who qualifies for a consumer proposal

Brandon Blog Post

FILING BANKRUPTCY VERSUS DEBT CONSOLIDATION IN TORONTO ONTARIO

Post author By Brandon Smith
Post date January 14, 2020

Introduction

Financial obligations of any kind of size can be stressful. Most of us have some existing debt. It is when debt is out of control that gives people problems. People with debt problems ask me for my opinion on filing bankruptcy versus debt consolidation. So, I thought I would share my thoughts with you.

What is debt consolidation?

The first step is understanding what debt consolidation is (and isn’t). Debt consolidation is a do-it-yourself strategy that you control. Debt consolidation is a form of debt restructuring that combines several loans into one, mainly for two reasons: (i) to lower the interest rate charged on your debt; and (ii) to lower your monthly payment amount.

When you have multiple debts to different creditors and loans to pay at varying interest rates, debt consolidation is an option that allows you to combine them into one loan at a lower interest rate. Debt consolidation can be a good plan, particularly if your credit is decent enough to land a new loan and if your new consolidated monthly debt repayment amount won’t overwhelm your monthly after-tax income.

Getting that new loan

Applications for debt consolidation are not always accepted. It will depend on the lender you chose to work with and what their lending guidelines for debt consolidation are. Overall, make sure you are open and honest about where you are financially and what your goals for debt consolidation are during your loan meeting. Because the purpose of debt consolidation is to lower the cost of debts, any additional fees the lender may add on top are not helpful.

The most common type of debt consolidation loan is an unsecured loan. It can also be accomplished through a home equity loan or even transferring credit card balances from high-rate cards to a lower-rate credit card.

One of the goals of debt consolidation is to get the lowest interest rate possible applied to your debts. It is a simple, safe, and effective way for people with excess debt to responsibly pay off their debts without filing for bankruptcy.

How does debt consolidation affect my credit score?

While it can save you money, it might negatively impact your credit score at first. However, it will make managing your bills easier, as you will only have one bill to pay each month. This method is a powerful way to take control of your bills, pay off your debts sooner and simplify your payments.

Eventually, your credit score will improve because you are paying off your debt with each monthly payment. Every month your lender is reporting to the credit bureaus that you are making your payments on time and living up to your obligations. This is a much better position to be in than your debts overwhelming you and not being able to afford your monthly payments.

The side benefits

Debt consolidation can help you pay off what you owe faster and more conveniently, with one payment instead of many. This process may offer the relief you are looking for. Remembering to make each payment at the right time on all your debts can be taxing for some people. This makes the concept of such a program that much more appealing.

Choosing the right solution for consolidation is highly dependent on your unique financial situation. In most cases, if consolidation is the right option in your financial situation, then there shouldn’t be too many downsides to using the process in general. If you are overwhelmed by keeping up with multiple bills and loans, it will be able to help. Reviewing your current debts and total income will also help you determine exactly what your financial goals should be. It will also start to get you thinking about saving for your future also.

It is not the same as debt settlement

Consolidating your debts is not the same as a debt settlement negotiation. Consolidation reduces the number of financial institutions for your financial debts. Settlement will use an authorized credit counsellor to bargain with lenders in your place.

I have previously written about the dangers of using a debt settlement company. For example, you can read about it in my blog HOW DOES DEBT RELIEF WORK: APPARENTLY NOT GREAT 4 EVERYONE.

There is only one debt settlement program in Canada that is sanctioned by the federal government. It is called a consumer proposal and can only be administered by a licensed insolvency trustee (formerly called a bankruptcy trustee) (Trustee). To read all about how a consumer proposal works to avoid bankruptcy, read my blog WHAT IS A CONSUMER PROPOSAL? OUR INSOLVENCY FAQ PRIMER.

Filing for bankruptcy

The bankruptcy process varies based upon whether or not you have previously been bankrupt and if you do or don’t have surplus income. An important attribute of personal bankruptcy is that a freeze or automatic stay is placed on all collection actions against you. The automatic stay initially includes repossession. Although you have to be able to pay your expenses going forward, the basic needs for a living cannot be denied to you because of your bankruptcy.

Debt consolidation cannot secure you from collection actions. But, either a consumer proposal or bankruptcy does invoke that automatic stay. While bankruptcy will initially harm your credit score, it ultimately will discharge you from your financial obligations. This positions you in the most effective way to start rebuilding a good credit rating.

Just like in a consumer proposal, only a Trustee can administer a bankruptcy. In a bankruptcy, the Trustee will need to take possession of your assets, other than those that are exempt under provincial law.

To find out more about the bankruptcy process, check out our TOP 20 PERSONAL BANKRUPTCY FAQS.

Filing bankruptcy versus debt consolidation: Is it better to file bankruptcy or do debt consolidation?

It is of course always better to avoid bankruptcy. Figuring out which alternative is much better for you will ultimately rely on your unique scenario. So, you should meet with a Trustee for a no-cost consultation to get advice on all of your options, tailored specifically to your financial situation. Filing bankruptcy versus debt consolidation is a serious decision. It should only be made with the assistance of professional Trustee help.

I hope you found this Brandon’s Blog, filing bankruptcy versus debt consolidation, useful.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags Bankruptcy, Consumer Proposal, credit score, debt consolidation, debt settlement, filing bankruptcy, filing bankruptcy versus debt consolidation, how does debt consolidationi affect my credit score, Ira Smith Trustee, is it better to file bankruptcy or do debt consolidation, what is debt consolidationj

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What are the costs and fees of a consumer proposal versus bankruptcy?

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***Consumer proposal versus bankruptcy*: Is a consumer proposal worth it?**

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***Consumer proposal versus bankruptcy*: Get back to a stress-free life**