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TORONTO CREDIT COUNSELING: OUR GUIDE TO GOING INTO RETIREMENT DEBT FREE

toronto credit counselingToronto Credit Counseling: Introduction

It appears that a high percentage of families in the GTA are in need of Toronto credit counseling. This week’s blog highlights why people are now carrying debt into retirement. By having this information, we hope that you will be able to easily prepare your own comprehensive guide to going into retirement debt free.

Toronto Credit Counseling: Household debt at an all-time high

With household debt at an all-time high and continuing to break records, it’s hard to find families not dealing with debt. But, have you considered how your debt load may impact your children’s futures? As parents I’m sure you want to give your children every advantage in life. This includes a college or university education.

Unfortunately it’s impossible to give your kids a post secondary education if you have a debt load to contend with. The reality is that student debt is directly tied to parents dealing with debt. So, ultimately your children may pay the price for your debt load. Believe it or not, they may even have debt carry into retirement.

Toronto Credit Counseling: Carrying debt into retirement

New research from Strategic Insights brought this very important issue to light:

  • Total student debt rose 6.2% annually over the past 10 years to $42.9-billion
  • this compares with an average inflation rate over the same period of 1.6%
  • Average debt for a graduating student as of July, 2015 was $26,819
  • Students graduating with significant debt could buy houses and start families later in life
  • Add on as many as 35 years to pay off mortgages, lines of credit and other borrowings
  • This stretches debt into retirement
  • Student debt has soared despite a substantial increase in the amount of money parents are contributing to RESPs

Toronto Credit Counseling: Going into retirement with debt

It’s hard to imagine that student debt can still haunt retirees, but it’s happening. And more and more students are graduating with heavy debt loads. Statistics Canada reports that 50% of students graduating with a BA relied on debts to pay for their education which in turn may well affect the future debt load of retirees. Parents, you may not realize it but your children may pay the price for your debt load.

Toronto Credit Counseling: Going into retirement debt free?

If you’re struggling with debt, now is the time to deal with it, before it becomes a multi generational issue. Perhaps all you need is credit counseling to get you pointed in the right direction to become debt free.

Contact the Ira Smith Team. We can help you put debt behind you Starting Over, Starting Now. End the cycle of debt, avoid bankruptcy and help your children have a bright future, free of student debt.3bestaward

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BUYING REAL ESTATE FROM A RECEIVER: READ, REMEMBER AND FOLLOW THE CONTRACT LAW FINE PRINT

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Buying real estate from a receiver: Introduction

Buying real estate from a receiver is a little different from a normal real estate transaction. In this Brandon’s Blog I describe a recent Court of Appeal Decision that shows it can even be tricky for the receiver.

Buying real estate from a receiver: Court appointed receiver+real estate

K was the court-appointed receiver (the “Receiver”) of the assets, properties and undertaking of a lakeside hotel in British Columbia, Carmel Cove Resort & Spa Inc. On October 25, 2013, the Receiver went into a contract in writing to sell the real property owned by the company in receivership to the participant, B.C. Ltd. (the “Purchaser”). The Contract of Purchase and Sale (the “Contract”) was in the form of the standard agreement of the British Columbia Real Estate Association and the Canadian Bar Association (B.C. Branch).

Buying real estate from a receiver: Contract fine print example

One of the conditions in the Contract was that the deal was subject to approval by the Supreme Court of British Columbia (the “Court”). It had to be obtained within twenty-one (21) days of acceptance of the Contract by both parties. Clause 3 in the Contract (“Clause 3”) stated that unless each condition was either waived or satisfied by written notice provided by the benefiting party to the other party on or before the date specified for every condition, the Contract would end.

On November 14, 2013, the twenty-first day after the Receiver’s approval of the deal, an application for court authorization was heard and approved. Five days later, on November 19, 2013, the Receiver gave the Purchaser written notice of the Receiver’s fulfillment of the condition for court approval.

Buying real estate from a receiver: Fine print matters

The Purchaser chose not to finish the transaction. The Purchaser refused to do so. The Purchaser claimed it was partly because it thought the Contract was terminated due to the Receiver’s failing to offer written notification on time. The Receiver ultimately sold the asset to another purchaser. It sold the property for $925,000 less than it would have obtained if the Receiver completed the sale to the Purchaser.

The Receiver expended $312,150.96 to run the resort and administer the receivership in between the collapse of the sale to the Purchaser and the sale to the succeeding buyer closing. Therefore, the Receiver began an action, suing the Purchaser for $1,237,150.96. It applied to Court for a summary trial.

Buying real estate from a receiver: Fine print can’t lie

At the trial, both sides set out their disagreements and arguments on the condition precedent issue:

  • the Purchaser recognized that the Receiver met the need for court authorization by the twenty-first day adhering to the Receiver’s acceptance of the agreement.
  • The Purchaser pointed out, nonetheless, that the Receiver did not conform with Clause 3 by offering the Purchaser written notice of satisfaction of the condition on or before the day specified for the condition; i.e.: on the twenty-first day.
  • The Receiver’s position was that Purchaser knew the outcome of the court application on the day that it was heard.
  • The Receiver stated therefore written notice was superfluous, unnecessary, and duplicative.3bestaward

Buying real estate from a receiver: Here comes the judge

The Court kept in mind that the trouble with the Receiver’s position right here was that it was, truly, an invitation to the court to reword the terms of the contract. The notification stipulation in Clause 3 was quickly parsed by any type of literate individual. It was not unclear. The clause did not need interpretation. There was no need to refer to evidence to figure out what it suggested.

By its clear language, the notification arrangement in Clause 3 needed the party benefiting from the condition– in this situation the Receiver– to give written notification– e.g.:

  • a letter.
  • an e-mail.
  • a written note in crayon on the back of an envelope.

The notification that the condition– court authorization–was obtained on or before the day defined for the condition– i.e.: not greater than twenty-one days’ after the Receiver’s acceptance.

Did the Receiver do just what Clause 3 required? It did not. Rather, it offered the Purchaser written notification 4 days later which was also 4 days too late.

The trial judge held that the failure to give written notice of fulfillment of the condition as specifically stated in Clause 3 ended the Contract. For that reason, the Court rejected the Receiver’s claim.

Buying real estate from a receiver: The appeal

The Receiver appealed the decision. The appellate court dismissed the Receiver’s application. The Court of Appeal noted that it is necessary to give effect to notice arrangements included in commercial agreements to offer assurance between the participants who contract with each other.

Buying real estate from a receiver: What if you have too much debt?

Do you or your company have too much debt due to a contract gone wrong, losing in litigation or for any other reason? If you’re trying to find a way to restructure your debt, contact Ira Smith Trustee & Receiver Inc.

Our philosophy for every person is to develop an outcome where Starting Over, Starting Now happens, beginning the minute you come in the door. You’re just one call away from taking the essential action steps to get back to leading a healthy and balanced stress and anxiety free life.

You may read the entire Court of Appeal decision by clicking here KPMG Inc. v. 0747825 B.C. Ltd., 2017 BCCA 277 (CanLII)BUYING REAL ESTATE FROM A RECEIVER 4

 

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FINANCIAL ABUSE STATISTICS SHOW THAT OUR SENIORS DESPERATELY NEED ELDER FINANCIAL ABUSE HELP

financial abuse statisticsFinancial abuse statistics: Introduction

How common is elder abuse? As Canadians we should be ashamed that the financial abuse statistics show it is the most common form of elder abuse in Canada. There are countless stories about seniors being financially exploited by someone close to them – spouse, child, friend, neighbour or caregiver.

The victims are typically alone, lonely, in poor health or in diminishing capacity. They’re easy prey and in many cases lose their savings and their homes, with just their pensions left to exist on. According to Lynn MacDonald, director of the Institute for Human Development, Life Course and Aging at the University of Toronto, one of the elder abuse facts is that 2.6% of Canada’s growing population of residents 55 years of age and older are financially abused. It’s very sad that we now have to educate seniors on how to protect themselves from those closest to them.

Financial abuse statistics: What is financial abuse?

Financial abuse can take many forms. The most obvious forms of financial abuse are actually theft or fraud. E.g. someone takes money out of your bank accounts for their own use without your permission.

Even if that person has power of attorney it’s still illegal because they are legally obligated to act in your interests, not theirs. Having power of attorney doesn’t mean anyone can help themselves to your money or property. Or, someone cashes your pension cheque and keeps some of the money for themselves without your permission.

Financial abuse statistics: Other forms of elderly financial abuse

Other forms of financial abuse are less obvious, but just as dangerous. According to the Government of Canada financial crimes against the elderly can include pressuring, forcing or tricking you into:

  • Lending or giving away money, property or possessions
  • Selling or moving from your home
  • Making or changing your will or power of attorney
  • Signing legal or financial documents that you don’t understand
  • Working for little or no money, including caring for children or grandchildren
  • Making a purchase you don’t want or need, or
  • Providing food and shelter to others without being paid

Financial abuse statistics: How can you protect yourself from financial abuse?

You really need to be cautious. Remember that the money and property is yours.

  • Safeguard your personal information
  • Don’t give out your online banking information or PIN numbers
  • Be cautious about opening a joint bank account because the other person can take all the money without asking or needing permission
  • Don’t co-sign credit cards or have joint credit cards. The other person can accumulate huge debts that you will be responsible for
  • Have your lawyer prepare a power of attorney appointing someone you can trust to look after you so that even if you’re ill and can’t take care of yourself, to protect your finances from others who might try to take advantage of you (pick someone who isn’t in a constant need of money)
  • Never sign any documents without legal advice from your lawyer
  • Keep detailed records of any money you give away and whether it’s a gift or loan
  • Don’t allow yourself to become isolated with only the abuser to depend on. It will give them all the power they need to take full advantage of you

Financial abuse statistics: What are the signs of financial abuse?

According to Leanne Kaufman, head of RBC estate and trust services, be vigilant for red flags such as new bills suddenly being paid or an inordinate or unusual number of financial transactions. And watch for changes in financial spending patterns or the types of places where money is spent.

Financial abuse statistics: Are facing debts you can’t cope with?

The sad reality is that everyone is vulnerable, not just the rich. If you’ve been a victim of financial abuse and/or are facing debts you can’t cope with for any reason, contact the Ira Smith Team. We give the depth of expertise found in a large company, delivered in a boutique setting that ensures high quality and cost-effective service. With a cumulative 50+ years of experience dealing with diverse issues and complex files, we deliver the highest quality of professional service. Contact us today and let us help you overcome your financial difficulties Starting Over, Starting Now.3bestaward

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SENIORS IN DEBT CANADA: SENIORS REQUIRING DEBT RELIEF IS A GREY AND BROKE MAJOR ISSUE

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Seniors in debt Canada: Introduction

A boosting variety of seniors in debt Canada are lugging financial obligations to the tomb. No pension, unanticipated expenses, or even grown-up children living in your home are all part of an economic problem bearing down our seniors.

Seniors in debt Canada: Grey and broke

For several senior citizens, there’s absolutely nothing gold about their retired life. In early August, professionals from around the globe collected at Carleton University in Ottawa for a senior citizens‘ financial debt meeting to take a difficult view at a delicate problem. The title of the seminar was, “Carrying Debt to the Grave?”

“I’m one of those seniors in debt,” she openly admits, “It was because of my wish to help my children, get them launched.” 77-year-old Nyla Staulus says attending the seminar. The debt of the senior in the hopes of knowing how she can manage her expanding financial obligations. “I try not to let it worry me because it’s useless to worry. If I’m not doing anything about it, it’s useless to worry,” she says.

Seniors in debt Canada: Seniors requiring debt relief

It is uneasy. Data from Jane Rooney with the Financial Consumer Agency of Canada states:

  • 19% of senior citizens still have home mortgages to repay;
  • 15% have significant credit card financial obligations; and
  • 18% of all individual insolvencies were people in between the ages of 60 as well as 64.

Laura Watts was just one of the speakers at the meeting. She is with the University of British Columbia’s Canadian Centre for Elder Law, “We are seeing boomers retiring with debt and not little bits of debt, significant debt” she states, “People owe $1.6 dollars for every single dollar they have in Canada. The issue is when you’re an older individual, you cannot make that back.”

Seniors in debt Canada: Seniors retiring in debt

In the United States, the situation is surprising. Deborah Thorne researches personal bankruptcy at the University of Idaho. She, as well, talked at the meeting, “In the United States, there has been a fivefold increase in seniors over 65 filing for bankruptcy” she states. She also states there are several factors, consisting of the collapse of the defined benefit pension as well as social safeguards leading to seniors going bankrupt.

“It’s expensive to age,” she says, “We were talking about the increase in dementia, housing and limited fixed incomes. In the States there is also especially health care costs. It’s dysfunctional and unmanageable.”

It’s a global dilemma which is just what has actually brought the cumulative minds with each other at Carleton University for this seniors’ financial debt meeting. Saul Schwartz with Carleton’s School of Public Policy and Administration was the mediator. “Older people not to need to be ashamed,” he states. “Most people are reluctant to discuss financial problems and they need to know this can happen to anyone and that they should seek out whatever help they can find in Canada.”

Seniors in debt Canada: Seniors requiring debt relief

“What we need people to do is adjust spending habits, put aside a small amount of money so you have 4 to 6 months to pay mortgages or expenses during a crisis” states Jane Rooney.

The point is most Ontarians do not have any type of kind of emergency financial savings. They have no method to deal with an unforeseen expenditure other than by taking on even more financial obligations.3bestaward

Seniors in debt Canada: Seniors swimming in debt

A brand-new Ipsos Survey reveals that just:

  • 34% of people might economically manage a divorce;
  • 35% might tackle unanticipated auto repair costs or a purchase; and
  • just 31% can manage to take 3 months off job as a result of a health problem.

“Probably not,” says one young man in Ottawa’s Byward Market today, “most of my money goes towards rent, tuition, stuff like that.” “Probably I would do the same,” another man adds, “because life is so hard.”

We understand that practices we find out as young people, we lug right into our old age. That’s why the professionals at the seminar claim beginning when your youngsters are young, instruct them on saving for their future while they can.

Seniors in debt Canada: Are you one of the Canadian seniors in debt?

Take action before you find yourself in the throes of a financial crisis. Ira Smith Trustee & Receiver Inc. has helped many Canadian companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. Don’t delay. Give us a call today. Financial problems can be solved with immediate action and the right plan.seniors in debt 6

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COMFORTABLE RETIREMENT LIVING: YOU NEED A PLAN TO SAVE TODAY TO HAVE A COMFORTABLE RETIREMENT INCOME

comfortable retirement livingComfortable retirement living: Introduction

We all want a comfortable retirement living but many Canadians haven’t got a clue how to make that happen. Your financial health is never a matter of chance, unless you’re a big lottery winner; it takes careful planning and you need to make saving a habit. All the retirement blogs say so.

I can see many of you rolling your eyes now and wondering how you’re supposed to think about saving when you’re trying to make ends meet. But, without a plan your financial situation will never change.

Comfortable retirement living: You need a comfortable retirement budget

Are you thinking about your retirement? If not, now is the time. Research has shown that people who have a plan often save more money and are financially healthier than those who don’t.

  • Those who thought about retirement — “a lot,” “some” or even “a little” — approached retirement age with twice the wealth of non-planners (2007 Pension Research Council study)
  • Simply using a retirement calculator increased someone’s likelihood of saving (Journal of Consumer Affairs in 2011)
  • Parents who created a plan to pay for their children’s college educations saved 76% more than parents who saved but didn’t have a plan (Sallie Mae’s How America Saves for College 2016 report)
  • Households that plan for large, irregular expenses are 10 times as likely to be financially healthy as those that don’t (Center for Financial Services Innovation study in 2015)

Comfortable retirement living: What is financial health?

What exactly does financial health mean? The Centre for Financial Services Innovation has described financial health as having emergency and retirement savings, sustainable debt loads, good credit scores and property, life and health insurance. Are you financially healthy?

Comfortable retirement living: What is a comfortable retirement definition?

How do you define comfortable retirement? CANSTAR Pty Limited, a privately owned Australian research agency that provides finance comparison services, has what I think is a very good definition:

“…one which enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities. It allows funding for private health insurance, a reasonable car and regular holidays (domestic and occasionally international)…”

Comfortable retirement living: How can you become financially healthy?

Everyone needs a plan – not just for retirement, but for more immediate goals like having enough for the monthly expenses. A financial plan always involves a budget and I can’t stress enough how important a budget is.

Once you have a plan in place you can start saving. It doesn’t have to be huge amounts of money, but just enough to start making saving a habit. Start building a little emergency fund. Once you follow the plan and make saving a habit, you’ll be well on your way to financial health.

If you’re struggling with debt and can’t see a way out, contact Ira Smith Trustee & Receiver Inc. We’re licensed trustees who are experts in helping people just like you get back on your feet Starting Over, Starting Now. Give us a call today and with the right plan you too can be financially healthy again.3bestaward

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EARLY WARNING SIGNALS OF FINANCIAL PROBLEMS: SPOTTING TROUBLE FAST USING OUR EARLY WARNING SIGNALS TOOLBOX

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Early Warning Signals Of Financial Problems: Introduction

I wanted to write about the early warning signals of financial problems in companies. The reason is the one point I hate the most is seeing businesses marketing their products and services to others just not to be paid. The initiative you put into the sales funnel as well as the sales process is totally squandered if inevitably your customer cannot pay.

Currently the choice is usually to decide to take legal action against them or not. You want to see the value of recovering your unsettled billings. At the very least obtaining much more back than invested in battling the case.

To do this, it’s vital that you act earlier as opposed to later. So you must get on the continuous watch out for very early warning signs that your client or customer may be in financial trouble.

Right here are 5 very early indications to look out for as well as just what to do if you find any one of them.

Early Warning Signals Of Financial Problems: Irregular repayments

Among the first signs that your client is having economic difficulty is that their payments become unpredictable. This does not simply mean they pay later. You might find that you begin getting just a part repayment of your billings.

This is generally a clear indicator of cash flow troubles. Your client is possibly managing their distributors, paying only what they need to, when they can. Probably, they are just paying the vendor who is shouting the loudest for payment!

If you aren’t sure when payments are showing up, or if you get less than anticipated, you cannot budget to pay your own obligations on schedule. If you’re not mindful, your customer’s cash flow problems can cause troubles for your very own cash flow as well.

In this situation, the much more certainty you have the better. Try talking to your client and create a payment plan that they could adhere to.

Early Warning Signals Of Financial Problems: Weakening team morale

If you know exactly how your customer’s personnel feels about their work, you can commonly get a great sign of the general wellness of the business. If they’re miserable, it’s a sure sign of problem.

This is where the working partnership with your customers pays dividends. It’s amazing just what you could glean through small talk as you’re on the phone to them.

Undoubtedly, if you figure out that there are dangers of redundancies or that a reduction in your customer’s staff’s benefits is occurring for cost savings, you will recognize there are money problems. However, some issues are less clear. If the staff are whining that they are worked off their feet, it might additionally be indicating trouble.

While it could be, there is lots of work coming in, maybe your customer’s employees are overworked and stressed out because staff are leaving and are not being replaced. This will certainly make those that stay busy. Do not be afraid to delve a little deeper to learn what causes these troubles.

Early Warning Signals Of Financial Problems: Dropping revenues

No firm could endure long-term unless it’s profitable. So you need to be alert to a client’s dropping profits as early as possible. This can be a difficult measure to find, particularly for private companies. For public corporations, by the time you read their financial statements, it is already far too late.

You need to look for other hints about exactly what might be taking place behind the scenes. Try to work out just what the profit margin of your client’s organization is likely to be. Then look for various other pieces of evidence of what could be happening to revenues.

As an example, if market problems are tough, sales are most likely to be declining. If the price of basic materials is increasing, input prices are going to rise. Fluctuations in currency exchange rates due to political or financial uncertainty could additionally have a big effect on revenues if there’s a worldwide aspect to your client’s business.

Any of these scenarios could eat into a business’s revenues and tip the equilibrium to negative cash flow, leading to problems.

Early Warning Signals Of Financial Problems: Decreasing online reputation and market share

How many big names and long well established organizations have we seen vanish because they fail to adapt to a changing marketplace? It appears to be taking place all the time and it’s a real risk if you’re a supplier to these companies.

The larger the firm, the easier this is to find. In smaller sized business there are always indications too. Watch in mainstream and social media sites to see what people are stating about a company.

People can be very vocal on social networks if they’re miserable with a product or service, or if it’s no longer in style. Keep an eye out for these remarks. If you see comparisons such as “Company X doesn’t have the same product range as Company Y” it could be an indication business is losing touch with just what its consumers want.

Because of this, their track records as well as market share can decrease. This brings about economic problems and the enhanced danger that they will not pay you on schedule.3bestaward

Early Warning Signals Of Financial Problems: Business becomes much more controversial

If a firm is struggling for its survival, it will certainly try to find any type of justification for not paying you. You might find your customer increasing spurious issues about your products or services or objecting to your invoices for no good reason at all. All they’re trying to do is postpone payment, get a discount rate and even avoid payment completely to ease their cashflow troubles.

If you take a hard position with these clients, they will typically pay up since they will certainly have ample on their plate to handle. They won’t want to get entailed with disputes they could not win and which will certainly cost them even more over time.

There are 3 key points I would like you to remember in all times:

  1. The earlier you find an issue, the easier it is to manage

If you find any one of these five warning signs, work as quickly as possible.

  1. Do not allow troubles to intensify

If you have outstanding billings, don’t allow your customers to get more into debt with you. If your client is paying late they will certainly stay in breach of contract so this could give you the right to suspend your services or stop the contract entirely.

  1. Maintain your feelings aside

Bear in mind, your top priority is to get paid as in full as promptly as you can. When a business is in financial difficulty, problems could intensify swiftly, so be realistic. Sometimes it may be more prudent for you to accept a reduced dollar figure now as a far better alternative than holding on for complete repayment later, which never ever shows up.

We have helped many businesses and people experiencing financial troubles restructure. Like the warning signs, the earlier a business or individual does something about it to fix their troubles, the more choices that are readily available to them to effectively reorganize and stay clear of bankruptcy.

Early Warning Signals Of Financial Problems: What to do if your customers are negatively affecting your company’s cash flow

If you’re trying to find means to reorganize your company’s financial debt, call Ira Smith Trustee & Receiver Inc. Our technique for every person is to develop an outcome where Starting Over, Starting Now happens, beginning the minute you stroll in the door. You’re just one call away from taking the essential action steps to get back to leading a healthy and balanced stress and anxiety free life.

UPDATE: CHECK OUT OUR NEW VLOG BY CLICKING ON:

SEARS CANADA IS CLOSING: THE #1 REASON YOU HAVE TO RUN AND NOT JUST WALK TO REDEEM YOUR GIFT CARDS AND CREDITS

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ARTICLES ABOUT DEBT HELP: ARE CANADIANS IMMUNE TO THE DANGERS OF DEBT?

articles about debt helpArticles about debt help: Introduction

I regularly write articles about debt help. Trends over the past few years about the increase in Canadian average household debt has gotten me thinking. We can get vaccinated for measles, mumps, rubella, influenza and a host of other diseases. Now it seems that without even getting a shot, Canadians have developed immunity to the dangers of debt.

How could this happen to what was traditionally a nation of savers? Did we just throw caution to the wind? Why did we stop heeding the warnings from the Bank of Canada, financial institutions, the Parliamentary Budget Office (PBO) and the credit reporting agencies?

Articles about debt help: Immunity to debt

Everyday there are headlines about the alarming levels of personal debt and how many Canadians are teetering on the brink of financial disaster. Have we stopped hearing the message or heeding the warnings? It seems that as we borrow more and take on more debt that our attitude to debt changes.

“People who don’t have any debts tend to be strongly opposed to debt… but if you put them into a situation where they are forced to acquire it, their attitudes change in the direction of toleration,” said Stephen Lea, an emeritus professor of psychology at the University of Exeter in the U.K. who has decades of experience studying the psychology of debt. As people acquire debt, Lea has found they also change their attitudes towards indebtedness. That’s an example of what psychologists call dissonance reduction. According to Mr. Lea, we really have developed immunity to debt.

Articles about debt help: Home prices and feeling immune to debt

There are more reasons why Canadians seem to feel immune to the dangers of debt. With house prices skyrocketing, home owners feel rich. And it seems that if Canadians are working and making their payments promptly, they feel in control of their finances. If interest rates continue to stay low, Canadians will continue to borrow more and more without realizing the dangers of accumulating debt.

Articles about debt help: Is there a solution to our immunity to the dangers of debt?

Saul Schwartz, who has studied personal debt as a professor of public policy at Carleton University believes that government should focus on policy actions that would rein in the lenders who are enabling all our borrowing because all the warnings are being ignored. I don’t know if that’s the answer but as a professional licensed insolvency trustee I can tell you that many Canadians felt immune to the dangers of debt until they faced a financial crisis.

Articles about debt help: What should you do if you are not immune to your debt load?

Take action before you find yourself in the throes of a financial crisis. Ira Smith Trustee & Receiver Inc. has helped many Canadian companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. Don’t delay. Give us a call today. Financial problems can be solved with immediate action and the right plan.3bestaward

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SEARS CANADA NEWS TODAY: ARE THEY SABOTAGING THEIR OWN RESTRUCTURING?

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Sears Canada news today: Introduction

“I will certainly not invest one red cent in your shop … no severance, no sale,”

A (typical comment) posted on the Sears Canada Facebook page before the company blocked new comments and made old ones vanish.

Well there has been a lot of Sears Canada News today and in the last month. The company sought bankruptcy protection only last June 22, 2017. It has been only a little over 1 month, but there has been so much media attention it seems a lot longer.

Sears Canada news today: Social media backlash

We’ve seen on social media that Sears Canada is facing a backlash when it comes to how they’re handling this liquidation. Notice that I am using the word liquidation, as opposed to restructuring. This is in spite of they are currently operating under the Companies’ Creditors Arrangement Act (Canada) (CCAA). This statute is designed as a restructuring statute.

Sears Canada news today: Why KVETCH about a KERP?

It comes just as the company began its liquidation sales at those fifty-nine stores they’re looking to close. There is a boycott in Canada that is gaining some traction on social media. People are upset with Sears Canada’s senior management. They obtained on the first Court application, approval from the Court on their plan to pay themselves retention bonuses. These bonuses would be paid under the terms of what is commonly called in complex corporate restructurings a “Key Employee Retention Plan” (KERP).

The retailer introduced that, as part of a Court-supervised restructuring procedure. It is shutting 59 of its 255 shops and letting go 2,900 workers. None of them will get severance pay. Sears also will stop payments to the employees’ defined benefit pension plan. The retailer recently accepted to delay that pension plan payment issue till September 30th.

Sears also accepted the compromise with the former employees to maintain paying health benefits for an extra 3 months until the end of September. This is so the people could have that time to get alternate coverage. It is still not great though. The employee pension plan will remain underfunded. The employees will have to look for a new health plan. To date, there is no provision for former staff to receive any sort of package.

Sears Canada news today: What exactly is a KERP?

It is normal in complex corporate restructurings to set up a KERP. The concept of a KERP began in US corporate restructurings in the 1990’s. The theory is that to have a successful restructuring, senior management have specific knowledge and ability. If they walked away from the company in bankruptcy protection, such as to accept a senior position elsewhere, the company would have a much more difficult and costly time in restructuring. Hence the idea was born that those essential managers should be promised a bonus to create the most value possible in the restructuring for the stakeholders. This is in addition to their normal compensation.

Often KERPs are now viewed as either:

  1. a standard item that senior management expects to receive; or,
  2. a greedy money grab negatively affecting other stakeholders.

I have not yet read any material to show why the Sears Canada bankruptcy protection case is so complex. I have not read how Sears Canada could not liquidate without existing senior management. It is earlier and current senior management who have not created a retail vision niche for Sears Canada for years.

Sears Canada news today: Time to “come back”

Thankfully, all CCAA protection orders have a standard “come back” clause. The reason for this is that not every stakeholder receives notice of the company applying for the bankruptcy protection order. Any stakeholder can come back to Court to oppose any part of the original order they did not receive notice of. They could not tell the Court of their position, and now want to come to Court with their complaints.

The Court appointed a law firm to represent the interests of the employees and former employees. As part of their motion material filed with the Court, they are asking the Court to amend the Sears Canada KERP. They state:

  1. the amounts are excessive under the circumstances; and
  2. the KERP does not incentivize senior management to enhance the value of Sears Canada.

It will be very interesting to follow this.

Sears Canada news today: It didn’t have to be this way

You may recall that Target Canada took a slightly different route towards its former employees when it decided to liquidate and leave Canada. It also liquidated under the CCAA. In our blog “TARGET CANADA CLOSING: $5.4 BILLION AND COUNTING”, we told you about the liquidation and that Target US established a trust fund for payment of the Target Canada obligations to its employees. For sure personal hardships occurred. At least they tried to soften the blow.

So now, while Sears Canada wants customers to come and buy at the liquidation sale, they have a PR nightmare on their hands.

Sears Canada news today: No comments please

It is so bad, that Sears Canada is not permitting public messages on its Facebook page. Most the messages from the public so far are negative against the company. CBC News recently noted that Sears Canada’s Facebook page was riddled with remarks from Canadians objecting exactly to what was happening to the company’s employees. Sears Canada has removed those comments from its Facebook page as well as blocking new comments.

sears canada facebook comments layoffs
Picture courtesy of CBC News

Sears Canada news today: Certainly a funny way to stay in business

You must wonder if Sears Canada really wants to restructure, or if they are just liquidating their inventory. They are also trying to sell whatever other assets they can. If it was a true restructuring, you would think that senior management would want to see more customers who would be loyal to (the new) Sears Canada when it would exit bankruptcy protection.

So instead of growing a loyal customer base, Sears Canada’s actions have spawned a strong and growing “Boycott Sears” momentum. They’re going to have to deal with that. It’s going to be interesting to see exactly how this plays out while Sears Canada currently is shopping for a buyer.

According to Sears Canada, the unhappy remarks did not motivate it to close the public articles or to remove many of the bitter statements. Regardless, the former employees are still faced with now with the question “how do you collect salary owed to you from an employer that goes out of business”.

Sears Canada news today: What to do if you or your company have too much debt

If your company or you are experiencing financial problems, contact Ira Smith Trustee & Receiver Inc. We’re here to tell you on your restructuring and other options to avoid bankruptcy. If necessary, we can also talk to you about your bankruptcy options.

We can help you put your financial house back in order and set you on a path to debt free-living. You’ll be amazed at the difference one phone call to Ira Smith Trustee & Receiver Inc. can make.

Contact us today. We are a licensed insolvency trustee and will listen to your issues and offer compassionate, professional assistance to aid you to avoid bankruptcy.

With our help, you can regain control of your life, Starting Over, Starting Now.

UPDATE: CHECK OUT OUR NEW VLOG BY CLICKING ON:

SEARS CANADA IS CLOSING: THE #1 REASON YOU HAVE TO RUN AND NOT JUST WALK TO REDEEM YOUR GIFT CARDS AND CREDITS

SEARS CANADA CLOSING DOWN 1

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Brandon Blog Post

PRENUPTIAL AGREEMENTS MAKE FAMILIES STRONGER: THEY AREN’T JUST FOR THE RICH & FAMOUS – PRENUPS IN ONTARIO ARE FOR YOU TOO

prenuptial agreements make families stronger prenups in ontarioPrenuptial agreements make families stronger: Introduction

Every time we hear about another celebrity divorce, there’s talk about their prenup. But prenups are not new, nor are they only for the rich and famous. In fact, prenups have been around for thousands of years and historians believe they were first used in ancient Egypt. Prenuptial agreements make families stronger by hopefully, stating clearly what happens if divorce occurs.

The reality is that with the divorce rate as high as it is (over 40% in Canada and over 50% in the U.S.) prenups make good financial sense for everyone. I know it’s not romantic to plan for when divorce or death happen, but should the worst happen, you’ll be prepared and protected. In this blog, we focus on married couples, but keep in mind most of this applies to people living in a cohabitation arrangement too. We are not lawyers and this blog is not meant to give legal advice. We recommend you seek the advice of an experienced family law lawyer in dealing with any situation.

Prenuptial agreements make families stronger: Prenuptial agreements definition

What is a prenup? A prenup, or prenuptial agreement, is a legal agreement entered into before marriage. It establishes the financial and property rights of each spouse if divorce or death happens.

Prenuptial agreements make families stronger: Why prenups in Ontario?

Why should I get a prenup? As we discussed in our earlier blog, very few couples have had serious discussions about their finances before getting married. Many were not aware of the other’s debts or what their soon-to-be-spouse earned.

Even if you’ve avoided the discussion until now, a prenup will put everything on the table. It legally requires both parties to show all of their assets (including any debt) and will help you formalize your plans for the future. A prenup gives you control instead of the courts “just in case”.

Prenuptial agreements make families stronger: The practical reasons

There are many practical reasons why you should get a prenup. If divorce or death happens it can:

  1. Make sure that the divorce doesn’t turn into a war zone that takes no prisoners
  2. Prevent a long drawn out legal battle
  3. Protect spouses from each other’s debts
  4. Dictate how one spouse’s property can be passed on to children from a previous marriage
  5. Indicate whether one of the parties is to receive alimony
  6. Ensure that upon your death that your assets are distributed according to your wishes
  7. Prevent your spouse from owning a part of your business
  8. Decide who gets custody of the dog, cat or other pets

Prenuptial agreements make families stronger: Don’t be destroyed financially

Prenuptial agreements make families stronger: they aren’t just for the rich and famous – prenups in Ontario are for you too! They can protect you from the financial ravages of divorce.

We’ve seen many couples destroyed financially due to divorce and we could help them get back on track. The Ira Smith Team can help you too. Give us a call today and Starting Over, Starting Now we can set you on a path to debt free living.

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INTEREST RATES CANADA 2017: HOW TO REDUCE DEBT WITH EVERY GOVERNOR STEPHEN POLOZ SPEECH

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Interest rates Canada 2017: Introduction

Canada, the United States and much of the globe has remained in an extended period of reduced rates of interest. But the Bank of Canada, led by Governor Stephen Poloz and the US Federal Reserve, led by Janet L. Yellen as Chair of the Board of Governors of the Federal Reserve System, are the independent bodies in Canada and the US, respectively, that set base rate targets for the financial markets. They have now begun to slowly raise interest rates, so interest rates Canada 2017 are on the rise.

Interest rates Canada 2017: They are on the rise

On July 12, 2017, Governor Stephen Poloz announced the benchmark interest rate increase to 0.75 per cent from 0.5 per cent. Most economists expect that rates will continue to climb at least one more time before the end of the year.

Changing interest rates can impact our ability to service our debt on variable rate or prime based interest rate loans. One way to keep our debt load under control is to adjust our spending and saving behavior to pay down debt appropriately.

Interest rates Canada 2017: They are on the rise – so how much debt should I try to pay off?

When the Bank of Canada signals a rise in its benchmark rate, or a Governor Stephen Poloz speech on interest rates signalling an increase, the Canadian banks then raise:

  • its prime rate of interest;
  • the interest rate on variable rate loan products;
  • the interest rate on loans based off the prime rate;and
  • the interest rate on fixed rate loan products such as mortgages.

When those interest rates rise, we should try to look at paying down some debt so that our total cost of borrowing does not increase. We try to figure out how much debt to pay down by using the following formula:

New Debt Balance = Annual interest expense from older interest rate divided by the new interest expense of the new rate

We use the annual rate of interest of our portfolio before the rate hike due to the fact that we understand that’s what we could currently manage to pay every year. Simply take the weighted average of all the various rates of interest that we’re paying, and separate it by the complete amount of debt we have.

$ 100,000 x 3% = $3,000

Using the example above we understand the annual interest expense I was originally paying was $3,000. So, we could use the formula to figure out how much debt I ought to be reducing to maintain my capacity to service my obligations.

Annual previous interest cost/ the new expense (%) of borrowing = New Debt Balance

$ 3,000/ 3.25% = $92,308

This implies that to keep paying $3,000 a year in interest, I must have a debt balance that’s around $92,300. Because I in fact have $100,000 of debt I have to make some difficult choices.3bestaward

Interest rates Canada 2017: They are on the rise – so it is now decision time

I could either pay down my debt by $7,692 ($100,000 – $92,308), or accept paying more interest each year as well as make my regular monthly payments. The first alternative implies I will need to sacrifice personal costs to conserve more to pay down my debt. The second choice enables me to spend even more now, however will cost me an extra $250 yearly (in this example, 0.25% x $100,000) that I’m providing to the bank with nothing in return.

It really depends on what the purpose of borrowing in the first place was. Debt to pay for consumer purchases, you would want to try to reduce the debt as quickly as possible.

When you incur debt for investment purposes, then you might prefer to pay a little more tax deductible interest. If a stock’s price typically follows earnings, and earnings will grow, then the stock price should eventually grow as well.

The rate of interest we pay is simply one reason. Changes to our income, financial investment income, household scenarios, place, as well as situations around tax obligations all comes into play when making a choice about debt.

Interest rates Canada 2017: The effect of higher interest rates on the economy

Higher interest rates end up causing a slower economic climate. As people rush to pay for debt or spend more cash to service their present financial debts they must spend much less on consumer goods. Every person should set up a financial portrait that captures their scenario precisely so they can plan for further interest rates in the following 12 months.

Interest rates Canada 2017: What should you do if you have too much debt?

I hope that you have found this vlog helpful. If you’re looking for ways to end your financial debt call Ira Smith Trustee & Receiver Inc. Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you stroll in the door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress free life.interest rates canada 2017 10

Call a Trustee Now!