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BILL PAYMENT DIFFICULTIES? OUR COMPLETE ROADMAP TO GET CANADIANS SAFELY THROUGH THEIR FINANCIAL DIFFICULTIES

bill payment

Bill payment introduction

Today’s Brandon’s Blog discusses practical ways to take care of financial challenges connected to bill payment in Canada. As the economic climate develops and interest rates keep rising, it’s vital to have a trusted expenditure technique to adhere to. Current research from TransUnion, a Canadian credit bureau, highlights the significance of financial management.

According to the Q1 2023 Customer Pulse study by TransUnion, virtually one-third of Canadian homes checked are facing more difficult times with money, with the rising cost of living being the primary contributing factor.

It can be frustrating to always try to catch up to rising prices, particularly when faced with unanticipated financial setbacks. Juggling all your payments, such as utilities, rent, food and credit cards, can trigger anxiety and stress. Nonetheless, with the ideal knowledge and devices, it’s possible to get rid of these obstacles and reclaim control over your finances and also enhance your general well-being.

Join me as I check out the different techniques you can embrace to effectively manage your bills. I will provide you with detailed advice on developing efficient approaches to bill payment so you can stay clear of late payment penalties.

Financial stability incorporates more than just paying your bills on time. It involves creating healthy financial practices, boosting budgeting skills, and producing a solid foundation for future financial success. This Brandon’s Blog will certainly also delve into these aspects, supplying recommendations on just how to achieve lasting economic stability.

Whether you are a consumer struggling to keep current with all your regular monthly costs or an entrepreneur facing expense management challenges, this information is for you.

So, if you are ready to take control of your expenses and gain back financial stability, stay tuned and don’t go anywhere.

Understanding the challenges of bill payment

The Canadian economy is constantly evolving, influenced by both domestic and global factors. As we navigate through unprecedented times, understanding the current economic landscape in Canada is critical for individuals, businesses, and policymakers alike. Key components of the current Canadian economy, such as GDP growth, inflation, employment rates, and trade all influence how well off we feel. Layer on top of that the impact of the COVID-19 pandemic on the Canadian economy, and the measures that the government took to address the crisis.

All of this combined affects our comprehensive understanding of the state of the Canadian economy, and how it may affect your personal or professional life. Suffice it to say that economists do not agree on the current state of Canada’s economic landscape and whether or not the Bank of Canada should keep raising interest rates.

Canadians are not the only ones affected by bill payment problems. Here is a small sample of issues that were reported in the media last week:

  • Twitter faces lawsuits over alleged non-payment for office services in four countries.
  • New South Wales energy bill relief for struggling families trying to make regular payments.
  • Australian Telcos must offer financial hardship assistance.
  • Low-income Tulsa households are now eligible for federal assistance with their water bills and sewer bills.
  • Millions of Aussies have been placing buy now, pay later (BNPL) payments ahead of their other monthly obligations, according to new research. Around two in five (43%) Australians used a BNPL account in the past six months, a Finder survey of 1,090 respondents revealed.

Bill payment problems can impact the financial security of individuals and their households. Failure to make on-time payments results in extra charges, which can cause serious emotional stress. In addition, missing out on payments will negatively influence your credit score.

For family members, bill payment issues can result in heightened tension as they try to manage their expenditures and make ends meet. This can cause relationship stress, as money worries are a usual reason for arguments.

To alleviate these concerns, households need to develop a spending plan to ensure that they can first understand what their income (net of tax obligations) is, as well as what their essential and non-essential expenses are. It is just after that can any individual appropriately understand exactly how to deal with bill payment concerns.bill payment

Identifying the root causes of bill payment issues

There can be many root causes of bill payment issues. Here are some usual ones:

Financial restrictions: Among the key factors for bill payment problems is financial problems. If an individual is facing financial restraints, they will struggle to have enough money to make all bill payments on time every month, resulting in postponed payments.

Lack of budgeting: Poor or no budgeting or financial planning can contribute to bill payment problems. If individuals don’t properly budget adequate funds for expenses or prioritize their expenditures correctly, they will struggle to pay their bills on time.

Unforeseen costs: Unanticipated costs, such as emergency vehicle repairs, can interrupt a person’s financial security and also make it meet all bill payment dates. These unanticipated situations can trigger short-term money strain.

Inadequate income: Insufficient income makes it impossible for individuals to cover their regular monthly costs. If somebody’s earnings are inadequate to satisfy their financial responsibilities, they will have bill payment problems.

Incorrect invoicing or disagreements: In some cases, bill payment issues result from mistakes in the invoices or disagreements regarding what the cost of a particular item should have been. This is the easiest one to fix, assuming you have proof that you have been improperly billed. This also assumes that you have enough cash on hand to immediately pay off the right amount owing.

Lack of organization: Poor financial habits or disorganization can add to bill payment issues. If people fail to keep track of their expenses, due dates, and what is owed, they might overlook or neglect to make timely payments.

Communication issues: Lack of clear and timely communication between service providers and customers can lead to payment problems. Misconceptions, hold-ups in getting bills, or failure to inform customers concerning when payment is expected can add to bill payment troubles.

Change in personal conditions: Life events such as job loss, divorce, or moving can disrupt a person’s financial security and lead to bill payment problems. Modifications in personal circumstances can cause what is hoped to be only temporary bill payment problems.

Procrastination or carelessness: Often, bill payment problems happen due to laziness or carelessness. Individuals might delay bill payments or neglect them totally, bringing about late payment fees. At its worst, this can lead to service disruptions.

It is very important to keep in mind that the root causes of bill payment problems can vary depending on a variety of issues. Addressing these reasons frequently calls for proactive financial planning, budgeting, proper communication and regular ongoing review to make sure that your bills are paid on schedule.

Strategies for effectively managing your bills

Over the years, I have written many articles on various strategies for taking charge of your finances to avoid financial problems. Most recently, it was discussed in Brandon’s Blog “UNDERSTANDING AND OVERCOMING FINANCIAL STRESS: A COMPREHENSIVE GUIDE TO GET FROM WORRIED TO WELL-PREPARED”.

Here are some strategies for helping with bill payments. The following list is not mutually exclusive:

Importance of budgeting in bill payment

Handling bill payments efficiently demands making use of budgeting, an essential tool. Budgeting offers individuals an extensive understanding of their earnings and expenses, enabling them to allot funds appropriately. By creating a budget, people can prioritize their expense repayments, making sure that essential costs are paid on time.

This technique does not just help in avoiding late payments, fees, as well as added interest charges. It also facilitates the identification of non-essential expenditures that can be lowered or gotten rid of entirely. This, in turn, lets you make the most of your funds for what is essential and what isn’t. Welcoming this proactive approach to financial planning is important for recovering your financial security.

Prioritizing bills and negotiating payment plans

Handling your funds properly includes the important job of prioritizing expenses and even negotiating extended payment plans with certain creditors to allow for reduced payments over time to pay off an outstanding balance in full. It’s important to recognize which costs hold the highest possible priority to prevent undesirable repercussions like late fees or a negative effect on your credit rating. Setting up an alternative payment plan with certain creditors may just be what is needed to give you some breathing room.

Once you’ve established what are the most essential expenses, participating in conversations with creditors and getting certain payment plan extensions will relieve your financial stress and anxiety. Clear communication with creditors is essential to finding remedies that benefit both of you. Being transparent about your financial constraints and actively looking for resolutions are very important actions to take. By prioritizing bills and masterfully discussing payment plans, individuals can reclaim control over their finances and stay away from more dangerous financial pitfalls.

Increase your income with a side gig to help with bill payment

It is critical to discover extra income possibilities if you come up short each month in your bill payment. Technical innovations and the surge of side gigs make it very common for people to supplement their income with a side gig. Examples of these alternate income opportunities include freelancing, online tutoring, and running an e-commerce site.

When considering different additional income opportunities, it is very important to examine one’s skills and interests to recognize suitable opportunities. Expanding income streams not only supplies security but also fosters personal development. By welcoming different revenue sources, people can take control of their financial future and chart a much more interesting career path.

Increase your financial literacy through local community resources

When dealing with difficulties with paying your bills, don’t overlook what may be available in your local community resources. There may be free or very low-cost help for you. Community centres regularly run programs or workshops on monetary management, budgeting, and financial literacy. Joining these programs can outfit people with the necessary skills to handle their bills efficiently and regain their financial confidence.

Moreover, social services may give financial help to those in need. By utilizing these resources, Canadians can get the essential support to overcome their bill payment obstacles to get into a better financial state. It is essential to make use of these local resources to develop a solid foundation for financial well-being.

Use technology to get the best cost savings

In today’s digital world, the application of modern technology like apps to save money has ended up being important for people. Price comparison tools and budgeting apps are valuable resources that make it easier than ever to monitor expenditures and make educated choices. These devices not only help recognize the very best offers, but they also supply information on your spending behaviours, letting you save substantial amounts of money and streamline your purchasing and spending patterns.

By staying updated with the huge array of available apps and modern technologies, people can remain competitive with up-to-date information on prices and spending patterns. Incorporating these devices into day-to-day routines and financial monitoring practices people can maximize cost savings and optimize financial outcomes in today’s vibrant marketplace.bill payment

Bill payment: Additional resources and support for Canadians facing bill payment challenges

For those whose financial situation is direr and they need more than just implementing the above tips, I have written many of Brandon’s Blogs incorporating the topics such as:

  • Common traps to avoid such as payday loans, credit card debt, impulse spending and lack of financial education or financial literacy.
  • Debt consolidation
  • Debt settlement
  • Credit counselling
  • Consumer proposal
  • Bankruptcy

I won’t repeat them here but you do not have to go any further than last week’s Brandon’s Blog: “DEBT RELIEF OPTIONS: OUR COMPREHENSIVE GUIDE FOR IDENTIFYING RELIABLE DEBT ADVICE” to read all about it.

Overcoming bill payment challenges requires effective strategies and practical tips. It is crucial to manage bills efficiently to regain financial stability. By prioritizing expenses, creating a budget, and exploring payment assistance programs, Canadians can overcome their bill payment difficulties. It is also important to communicate with creditors and explore alternative payment options. Seeking professional advice and support from financial advisors or credit counselling agencies can provide valuable guidance during this process. With determination and proper financial management, Canadians can overcome their bill payment challenges and work towards a more stable financial future.

Encouragement and support for Canadians facing bill payment difficulties

When people encounter difficulties with bill payments, it is important to employ reliable methods and functional tips to deal with those circumstances. Proper management of expenses plays a crucial function in bringing back financial security. Canadians can manage their bills successfully by prioritizing expenses, developing a budget, and exploring other assistance programs available to them.

Furthermore, open interaction with creditors, as well as the exploration of different repayment alternatives, are essential steps to take. Seeking specialist advice as well as support from financial and debt experts can provide beneficial advice throughout. With persistence as well as correct financial planning, Canadians can overcome their bill payment obstacles and work in the direction of a much more safe and more secure financial future.

Bill payment conclusion

I hope you enjoyed this bill payment Brandon’s Blog. Problems with making ends meet are a growing concern in Canada, affecting individuals of all ages and income levels.

Creating a solid financial plan can be the key to unlocking a brighter and more prosperous future. By taking control of your finances, you can prioritize your expenses, set clear financial goals, and build a strong foundation for your dreams to come true. With the right mindset and approach, financial planning can empower you to regain control, eliminate this issue as a source of stress in your life and find peace of mind.

Individuals must take proactive measures to address financial difficulties and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now!

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.bill payment

 

 

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Brandon Blog Post

MAXED OUT CREDIT? YOU NEED TO KNOW HOW TO INCREASE CREDIT SCORE: OUR 13 INTRIGUING TIPS TO IMPROVE YOUR CREDIT SCORE

how to increase credit score
how to increase credit score

Our mission includes helping you know how to increase credit score with our free online course

The objective of this Brandon’s Blog is to furnish readers with comprehensive insights on improving their credit rating, alongside introducing them to our complimentary no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”. This user-friendly course provides a definitive guide on increasing your credit score, thereby paving the way for better financial prospects. The brief video above describes the course and how you can access it.

This Brandon’s Blog provides highlights common problems faced by those with low credit scores, including being declined for credit or having to pay high-interest rates. I also provide valuable tips on how to increase credit score. The focus is primarily on the significance of maintaining a good credit score in order to get approval for reasonably priced loans, mortgages, or credit cards.

Explanation of maxed-out credit: Know how to increase credit score

Maxed-out credit happens when an individual has reached their credit limit and is unable to borrow any more and make further purchases. It results in high-interest rates, missed payments, and damaged credit scores. However, there are effective ways to increase your credit score and eliminate debt. This Brandon’s Blog, combined with our free e-learning course, delivers easy-to-understand strategies and expert counsel to equip consumers with everything they need to know to improve their credit scores to unlock better financial prospects.

Through the knowledge I am sharing, individuals can successfully navigate the complex world of credit ratings and experience marked improvements in their daily lives. By embracing sound fiscal practices, one can effectively manage their money, avoid bankruptcies or consumer proposals, and ultimately earn a more favourable financial life. So take control of your financial situation today and with our help, begin your journey towards a more stable and prosperous financial future with our “How to Increase Credit Score: How To Improve Your Canadian Credit Score”.

how to increase credit score
how to increase credit score

Importance of improving credit score: Know how to increase credit score

In today’s world, a good credit score functions as the cornerstone for getting financial freedom. For people that have grappled with debt, insolvency, bankruptcy or consumer proposals, improving their credit rating may look like an overwhelming obstacle. Yet, with the specific devices and insights we are supplying to you, any person will be able to take control of their very own financial life heading in the direction of a brighter tomorrow.

This is exactly why we have created “How to Increase Credit Score: How To Improve Your Canadian Credit Score“. Our recommendations and our tried-and-tested techniques will move you toward a better credit score, eventually unlocking excellent loan and mortgage opportunities from Canadian lenders, and enabling you to accomplish your financial goals. Take control of your future and bid farewell to higher interest rates and declined credit applications by going through our “How to Increase Credit Score: How To Improve Your Canadian Credit Score” today.

Description of what a credit score is, how it is determined and then how to increase credit score

A person’s credit worthiness is represented by a numerical score known as the credit score. This score is derived from various financial information such as payment history, credit utilization rates, length of credit history, types of credit used, and new credit inquiries.

Credit scores range from 300 to 900, where a higher score is indicative of better credit history and financial stability. The credit report, maintained by Canada’s two credit reporting agencies, Equifax Canada and TransUnion Canada (Equifax/TransUnion), is the source of credit ratings and it is what the Canadian banks will look at.

how to increase credit score
how to increase credit score

Importance of knowing your credit score and how to increase credit score

Maintaining a good credit score is a key factor in today’s financial landscape, irrespective of whether you are a student, a young professional, a business owner or are retired. Knowing your credit score is important so that you can stay informed on what others think of your creditworthiness and financial standing. Sometimes adverse information may find its way into your credit report as an error. By knowing what your credit report says, you will be able to prove any errors that should be eliminated which produces a lower credit score than what you are entitled to. It is important to have any errors fixed to avoid any negative impact on any assessment of your creditworthiness.

A low credit score can lead to being denied for credit, higher interest rates, and unfavourable loan terms from Canadian lenders. It is essential to maintain a high credit score as it paves the way for obtaining the best possible deals on loans and credit card products from financial institutions at the most favourable rates. Therefore, it is crucial to keep a tab on the various financial factors that contribute to your credit score to ensure a sound financial standing.

That is why we developed our complimentary no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”. To teach you how to improve your credit score.

Knowing how to obtain your free credit report is the 1st step in how to increase credit score

Maintaining vigilance over your credit report is a prudent method for verifying the precision of your credit history and score, both of which serve as significant benchmarks of your monetary stability. Fortunately, procuring a complimentary credit report has become effortless. It is your lawful right to receive an annual free credit report from each of the two Canadian credit bureaus.

Submit a formal request for your credit report via their digital portal or through the Canadian postal service. When you get it, meticulously examine it to identify any inconsistencies or inaccuracies that may be impeding your creditworthiness.

If you find yourself struggling with debt, don’t despair. Our complimentary e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score” can provide you with valuable insights and practical strategies to enhance your credit score and overcome financial setbacks. You can trust us to help you take control of your financial future today.

how to increase credit score
how to increase credit score

Common credit score issues that create lower credit scores: How to increase credit score

A low credit score can present significant obstacles, particularly when making significant purchases on credit or seeking loans. Although there are many parts contributing to an individual’s credit score, certain concerns are regularly associated with reduced scores.

A number of widespread credit score difficulties can bring about lower scores, such as:

  • Late payments: Not making your payments on time will have a major negative impact on your credit score, whether we are talking about credit cards, loans or lines of credit. Late payments reflect badly on your credit report and can significantly affect your overall score. Paying your debts on time, and not just your minimum payment, has a positive impact on your credit rating.
  • High credit utilization: A higher credit utilization rate will adversely impact your credit score. Financial institutions prioritize borrowers who exhibit responsible credit management practices; hence, maintaining a low credit utilization ratio (usually below 30%) is fundamental.
  • Errors on your credit bureau report: As already stated, inaccuracies on a credit report, ranging from erroneous personal details to accounts that are not legitimately attributable, can harm your credit rating. To safeguard against such potential pitfalls, it is imperative to maintain an annual review of your credit report and promptly challenge, with evidence, any inaccuracies that may be encountered.
  • Defaulting on a loan: Be it a mortgage or an automobile loan, defaulting will lead to a deterioration in your creditworthiness. Therefore, you have to make sure when you are approved for a loan that you can afford the monthly payments and meet all other repayment terms. This is of prime importance.
  • Applying for too much credit: Requesting too much credit can have negative effects on your credit rating. Potential lenders, and especially credit card companies, may interpret this as a sign of your nervousness over your financial hardship and a greater chance of you eventually defaulting on the loan. As such, you should exercise moderation when applying for credit. Moderation and realism is the key to maintaining a healthy credit profile.
  • Accounts in collection: Having accounts in collection leads to a decrease in your credit score. This is because you have now shown that you cannot handle credit responsibly. It is imperative that you promptly settle any outstanding amounts and work with the creditor or its appointed collection agency to eliminate that account from your credit report. If you don’t, there will be a negative impact on your creditworthiness.
  • “Hard credit check” versus “soft credit checks”: See the next section for this discussion.

By steering clear of these typical credit score complications, you can keep a good credit score and heighten the probability of obtaining credit approval in the foreseeable future.

“Hard hits” versus “soft hits”: Know how to increase credit score

The first issue is having too many hard inquiries on your credit report. These hard inquiries occur when lenders pull your credit report and do a credit score check as the first step in determining if you’re going to be approved for a loan or other credit product you applied for.

What are hard inquiries on your credit report?

When seeking new credit such as a loan, credit card or mortgage, hard inquiries are initiated on your credit report. A hard inquiry is a request for a copy of your credit report and it remains on your credit report for two years. However, it only affects your credit score for one year.

What are soft inquiries on your credit report?

A soft inquiry is an informational check of your credit that does not impact your credit score. Soft inquiries appear when you or an authorized user view your own credit report, or when a business checks your credit for pre-approved offers or account reviews.

Soft inquiries are also known as “soft pulls” because they do not impact your score, unlike hard inquiries which do.

how to increase credit score
how to increase credit score

13 tips on how to address these issues and how to increase credit score in Canada

We understand that managing finances can be challenging, especially when you are maxed out on your credit and can’t repay the debt. You may be feeling overwhelmed and unsure of what to do next, but don’t worry, we are here to help.

Developing sound credit practices is the cornerstone of financial literacy. Learning and regularly practicing such practices is crucial as it will improve your financial outlook. By timely payment of bills, responsible use of credit cards, and staying on top of what is in your credit report, you can improve your credit score and secure a path to financial triumph.

This, in turn, can enable you to establish a robust credit history, thereby qualifying you for lower interest rates on all credit products. Sticking with the sound tips indicated below, it will grant you access to more advantageous lending options that may not be easily available to the masses.

Developing sound credit practices means unfailing commitment, meticulous planning, and unwavering attention to detail. However, you will reap the benefits because these tips and activities will help you achieve your long-term financial goals and establish a solid foundation for your and your family’s financial future.

Here are our 13 tips on how to address these issues and how to increase credit score in Canada:

  1. Assessing your debt situation

    You have to start by truthfully analyzing your whole financial status to successfully manage your financial debt. This involves meticulously gathering all the information from charge card statements, and loan agreements, and identifying all other outstanding debts to calculate the total amount owed, the individual interest rates you are being charged by product, and all your monthly payments. Only by doing so, can you after that begin to create a realistic plan to pay off your financial debts in a timely and efficient way.

  2. Creating a budget plan

    Now that you have collected all of your debt information, it’s time to develop a household budget that includes all incomes as well as expenses. Ensure you include all of your fixed expenditures like rent or mortgage payments, utilities and vehicle loan payments. Then you need to list all of your variable costs like food and entertainment.

    Once you have a clear idea of your expenditures, compute your income on a monthly basis and subtract your expenses from it. This will show you where you need to cut down on expenses and/or take on a side gig to raise your income.

    Keep in mind that you cannot be spending more than you earn in any month. Ideally, you want to spend less each month than your monthly income, so that you can then have money to dedicate to paying down your debts and building up an emergency savings fund.

    Incidentally, do not neglect to include the income tax you need to pay on your income, broken down into a regular monthly cost. Include that amount as a monthly expense also.

  3. Contacting your creditors

    It’s crucial to reach out to your creditors promptly if you’re having trouble keeping up with your debt payments. You might find that they’re receptive to collaborating with you on a customized repayment scheme that meets your financial capabilities. By disregarding your debts, you’ll only exacerbate the problem, which could lead to late charges, sanctions, and a negative impact on your credit report.

    Please keep in mind that unless you have first done the two steps listed above, you will not have a good understanding of what kind of accommodation you need to ask each creditor for. If you go in well-prepared knowing all of your numbers, you will significantly increase your chances of success in these negotiations.

  4. Explore debt consolidation

    If you’re dealing with numerous debts, you could want to take into consideration debt loan consolidation. It’s a viable option where you can secure a single loan at a lower rate of interest than the weighted average interest rate from every one of your debts that you’re currently paying.

    You then use the funds from this new loan to fully pay off or otherwise settle all your other debts. As a result, you will then only have one debt to concentrate on, with a reduced month-to-month repayment. This will certainly assist you handle your debts successfully and reduce the amount of interest you’re paying. This also saves you cash that you can then put toward building up your emergency fund and savings.

  5. Reduce credit utilization

    Decreasing credit utilization is an essential part of increasing your credit score. Firstly, take stock of your existing credit usage, and attempt to pay off the balances on the highest-interest accounts first. Think about settling your debts with a debt consolidation loan or a zero-percent balance transfer credit card. You can enjoy a healthy financial future by reducing your credit card balances and limiting how many times you apply for credit within a year. Enhance your credit score by lowering your credit utilization ratio.

  6. Pay your bills on time

    Always paying your bills on time is key to maintaining your credit rating in good shape. A constant history of timely repayments will help you build a higher credit score and which improves the look of your credit report. It is critical to keep your bills paid on time to show a positive payment history and not have a damaging influence on your credit history.

  7. Use Your Credit Responsibly

    Avoid maxing out your charge cards and try to keep your credit utilization rate low as previously stated. It will help you keep a great credit rating or improve your existing one by showing lenders that you are a responsible borrower.

  8. Monitor Your Credit Report

    Maintaining an accurate credit report and safeguarding against identity theft are critical financial practices. You are legally entitled to get from the Canadian credit reporting bureaus a complimentary copy of your credit report annually.

    Thoroughly review it so that you can detect any fraudulent activities or errors that could result in severe damage to your credit rating. Hopefully, there are not, but you must remain alert and well-informed about your credit standing to ensure your financial well-being.

  9. Limit New Credit Applications

    It is important for you to remember that each credit application you make reduces your credit score. Therefore, you must be cautious and limit the number of credit applications you make. You should only try to get new credit when it is absolutely needed. This advice also goes for applying for a credit limit increase of an existing credit product.

  10. Developing a Strong Credit Profile

    Having no or very little credit history can pose a huge problem when you make a credit application. Your credit file does not have enough information in it to show that you can handle credit responsibly. It is recommended to begin developing a positive credit history early on in your adult life. You should consider alternatives such as getting a secured credit card account or a 1-year term personal loan that requires you to make regular monthly payments. If you make your payments on time, you will begin establishing an excellent credit track record which brings about a good credit score.

    A word of caution. As you are just starting out, make sure that you only set reasonable loan or credit card limits so that you can afford the monthly payments to repay what you owe on the credit accounts during the period of time allowed by the lender.

  11. Explore professional credit counselling

    Individuals grappling with financial challenges may find it advantageous to seek the expertise of a seasoned credit counsellor. This prudent move can afford them a series of invaluable benefits, all of which serve to bolster their financial literacy and improve their overall monetary management. Prominent advantages of credit counselling include, but are not limited to:

    • Enhanced Debt Management: Credit counselling can help individuals struggling with debt to manage their finances better. The counsellors can offer valuable advice on debt repayment strategies, budgeting, and managing the debt load effectively.
    • Financial literacy: The acquisition of financial knowledge is essential for individuals to navigate the complexities of financial management with success. To this end, credit counsellors offer an imperative service by imparting essential financial education that equips individuals with the necessary skills to cultivate sound financial habits, make informed financial decisions, and preemptively avoid potential financial obstacles.
    • Improved credit score: Credit counselling services can provide individuals with the valuable expertise necessary to improve their credit scores. People who go through credit counselling obtain the tools necessary to practice the habit of responsible financial management which over time improves their credit scores.
    • Emotional Support: The credit counsellor can help people through the rough patches of anxiety and worry about their financial situation until they start feeling better about themselves and their improving financial situation.

  12. Speak to a licensed insolvency trustee

    There are benefits to having a no-cost consultation with a Canadian licensed insolvency trustee if you are facing financial difficulty. Here are a few:

      • Expert advice
      • Protection from creditors
      • Debt relief
      • Guidance through the process
      • Financial education

    Overall, speaking with a Canadian licensed insolvency trustee can help you take control of your finances and achieve a fresh start.

  13. Watch the video at the top of this Brandon’s Blog

You will find out how to access our no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”.

Conclusion: How to increase credit score

Managing your debts can be challenging, but with the right plan in place, it’s possible to get back on track. Remember to assess your debt situation, create a budget plan, contact your creditors, explore debt consolidation, and consider bankruptcy only as a last resort option. With these steps, you can take control of your finances and work towards a debt-free future. Having a maxed-out credit can be stressful and overwhelming. However, it is also an opportunity to take control of your finances and work towards improving your credit score.

With our complimentary no-cost e-learning module, “How to Increase Credit Score: How To Improve Your Canadian Credit Score”, you can learn practical strategies and expert advice on how to boost your credit score and secure better financial opportunities. By following our simple steps, you can finally put an end to being denied credit or paying high-interest rates. With dedication and perseverance, you can unlock financial freedom and achieve your goals. So, don’t wait any longer; start your journey towards a healthier credit score today and join countless individuals who have already benefited from our guide.

I hope you enjoyed this how to increase credit score Brandon’s Blog.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind. Coming out of the pandemic, we are also now worried about the economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy proceedings. We can get you debt relief now.

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

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Brandon Blog Post

IMPORTANT LEGAL DECISION: HOW PRIORITY IS ASSIGNED BETWEEN CONSTRUCTION ACT LIEN AND LICENSED INSOLVENCY TRUSTEE FEE

construction act
construction act

Construction Act, R.S.O. 1990, c. C.30: Introduction

 

In May 2020, I wrote Brandon’s Blog CONSTRUCTION LIEN ACT: CAN YOU TRUST AN INSOLVENCY PROCEEDING?

In October 2021, I wrote CONSTRUCTION LIEN ACT OF ONTARIO: THE GRIPPING FIGHT BETWEEN LIEN FILING, A PRIOR MORTGAGE & RECEIVER FEES. In that blog, I wrote about what a construction lien is and a decision of the Court of Appeal for Ontario in a receivership context.

Now there is a decision released by the Alberta Court of King’s Bench of Alberta on February 15, 2023, regarding Golfside Ventures Ltd (Re), 2023 ABKB 86 (CanLII). This decision relies on the Court’s inherent jurisdiction rather than following a specific rule set out in the Bankruptcy and Insolvency Act (Canada) (BIA). Based on the specific facts of this case, this decision sets the priority between a construction lien and the fee and disbursements of a licensed insolvency trustee (formerly called a bankruptcy trustee).

I have compiled a comprehensive guide to help you understand the case’s implications. Our guide provides information on the Ontario Construction Act, R.S.O. 1990, c. C.30 (Construction Act) the background of the case, the decision, and what it means for stakeholders in the construction industry if this decision is not overturned on appeal (should an appeal be launched) and if this line of thinking was adopted in Ontario.

Our understanding hopefully provides clarity for contractors, builders, lawyers, lenders and other construction industry players. Following the Alberta Court’s decision, it is necessary to understand how a Construction Act lien will rank against other claims and especially the licensed insolvency trustee fees. Our guide will help readers learn:

  • the importance of a construction lien
  • the background of the case;
  • what the Court’s decision was;
  • the implications of the case; and
  • how to protect their interests under similar circumstances.

We caution that we are not lawyers and especially not construction lawyers. Anyone involved in the construction industry needs to seek the advice of their legal counsel.

Our specialty is that of a licensed insolvency trustee. We will be jumping between the requirements of the Construction Act in Ontario and the Alberta Court decision. Since bankruptcy matters are federal law, while the Construction Act is provincial law, I feel that the comparison is apt.

What is the Ontario Construction Act?

The Construction Act is a piece of legislation in the province of Ontario. The act regulates the construction industry in Ontario and outlines the rules and requirements for construction contracts, requests for payment, the prompt payment regime and payment dispute resolution.

The Construction Act is divided into various parts, each dealing with different aspects of construction. Part II outlines the trust provisions and the interim dispute resolution provisions. Part III deals with the construction lien, which allows contractors and subcontractors to secure payment for work they have done. Part IV outlines the holdback provisions Part V of the act deals with the expiry, preservation and perfection of construction liens.

The current Construction Act came into being in September 2021. Before then Ontario had the Construction Lien Act. Overall, the Construction Act is an important piece of legislation for the construction industry in Ontario, providing a framework for fair and equitable treatment of all construction contracts, payment, and dispute resolution. As a business owner or contractor in the construction industry, it is essential to understand your rights and obligations under the Construction Act.

One very complicated area of this provincial law is the ranking of a Construction Act Lien against licensed insolvency trustee fees in the event of a company’s insolvency and bankruptcy. The recent decision from the Alberta Court sheds light on this topic and provides valuable insights for contractors, business owners and insolvency professionals.

construction act
construction act

What is a construction lien under the Construction Act?

A construction lien is a legal claim against a property that is created by a contractor, subcontractor, or supplier who has provided labour or materials for the improvement of that property. The purpose of a construction lien is to secure payment for the work or materials provided by the claimant.

In Ontario, construction liens are governed by the Construction Act, which outlines the process for creating, perfecting, and enforcing liens. A construction lien arises when a contractor, subcontractor, or supplier provides work or materials to improve a property but is not paid for that work or materials. The lien gives the claimant the right to take legal action to enforce the claim for payment.

Please note: While I cannot claim expertise in this particular field, I have served as a Court-appointed receiver for incomplete construction projects as a licensed insolvency trustee. As such, I have gained valuable experience dealing with a variety of construction lien issues within the context of receiverships.

Improvements to the Construction Lien Act of Ontario in making the Construction Act has focused primarily on implementing prompt payment provisions and establishing mechanisms for resolving disputes, such as the adjudication regime. Under provincial construction law, the prompt payment rules refer to the timely payment of an invoice following the issuance of a “proper invoice.”

Specifically, contractors must receive payment for their work within 28 days of their invoice being received by the owner. The owner has 14 days to object to the amount, quality, or invoice of the work outlined in the invoice. Additionally, the time limit for filing/preserving liens has been extended from 45 days to 60 days.

The primary objective of this revised policy is to enhance cash flow management within the construction hierarchy by expediting conflict resolution and avoiding either late payment or non-payment. The newly implemented adjudication provisions are designed to resolve construction disputes proficiently with qualified adjudicators and a code of conduct for their ethical conduct.

In the event of a failure to extend the timeline, the adjudication regime mandates that the decision must be rendered within 46 days of initiation. If a party fails to comply with the adjudicator’s decision, the aggrieved party is entitled to halt or terminate work under the contract.

Under industry standards, holdbacks necessitate that the landowner, the contractor, or the subcontractor withhold a sum of 10% from the overall expense of materials or services rendered. It is permissible to furnish a bond or security deposit in place of the holdback contingent upon the provisions outlined in the contractual agreement.

To perfect a construction lien under the Construction Act, the claimant must follow a specific process. First, the claimant must provide written notice of their intention to lien to the owner of the property, the general contractor, and any other parties with an interest in the property.

After providing notice, the claimant must register the lien with the Ontario Land Registry Office after the last day the claimant provided work or materials. The registration of the lien must include specific information, such as the amount claimed, a description of the property, and the names of the parties involved.

Once the lien is registered, the claimant must take legal action to enforce the lien within a specific timeframe, or the lien will expire. This legal action results in the filing of a lawsuit to enforce the lien or participating in mediation or arbitration to resolve the dispute. There are specific time frames to all these steps under the Construction Act which must be followed.

Overall, construction liens provide important protections for contractors, subcontractors, and suppliers by allowing them to secure payment for their work or materials. However, the process of creating and enforcing a lien is complex. It is important to seek legal advice to ensure that the lien is properly perfected and enforced.

Definition and criteria for awarding licensed insolency trustee fees in a Canadian bankruptcy

In accordance with the BIA, a licensed insolvency trustee (LIT) in Canada is authorized by the federal government to oversee bankruptcies and proposals. It is mandatory for individuals or companies that file for bankruptcy to designate a LIT to manage the process.

The fees of a LIT in small consumer personal bankruptcy files are determined by a tariff established by the Office of the Superintendent of Bankruptcy. This tariff is meant to fairly compensate LITs in these small files.

In all corporate bankruptcy and larger personal bankruptcy administrations, the LIT’s fee depends on the complexity of the case, as well as the value of assets and liabilities involved. The LIT must have its fee and disbursements approved by the Court in these larger files.

It is imperative to acknowledge that a particular hierarchy is established in the BIA that determines the order of priority in which a LIT’s fees are paid from the assets of the bankrupt estate. Prior to any ordinary unsecured creditors, LITs are compensated after trust claimants, secured creditors, and preferred unsecured creditors. Consequently, any remaining funds earmarked for LITs’ remuneration will curtail the amount accessible to cover the claims of ordinary unsecured creditors.

This is where the issues in the Alberta case arise. Before agreeing to accept an insolvency assignment, the LIT needs to understand how they are going to get paid. In a bankruptcy where there are secured creditors, those creditors may suffer a shortfall and therefore there will be no money available for the LIT fees and disbursements, even if they are fully approved.

In such cases, the LIT must first get a sizable cash retainer or the indemnity of a third party who can afford to pay the fees and costs upfront. This must be done by the LIT BEFORE accepting the file. It is most important for the LIT to pay attention to how it is going to get paid for administering bankruptcy. There are certain red flags that must be identified when assessing a potential bankruptcy administration, especially for an unfinished construction project.

construction act
construction act

Different types of licensed insolvency trustee fees in a Canadian bankruptcy

LIT fees pertain to the charges levied by a Trustee for the range of services provided in the administration of a bankruptcy estate. These fees are extracted from the estate’s assets and are contingent on the intricacy of the case, the amount of time and effort invested by the Trustee, and the overall value of the assets in question.

According to the BIA, LIT fees are determined based on specific criteria that govern the administration of bankruptcy proceedings. Both the fees and expenses incurred by the Trustee and their legal representative must be approved by the Court. As a result, the LIT must acquire the Court’s authorization for their expenses and charges.

The Court holds the power to decide the amount and fairness of the Trustee’s fees. The Court considers several factors such as the complexity of the case, the amount of time invested by the Trustee, the value of the assets involved, and the quality and level of services rendered by the Trustee. The Court also takes into account the evidence of any party opposing the approval of the LIT’s fees as submitted for approval.

The services rendered by a LIT are subject to regulatory oversight under the BIA, which has established a framework for fees that can be charged by LITs. These fees are bifurcated into two categories:

  • Administrative Fees: These fees are levied by LITs for the administrative work they perform during the bankruptcy process. They encompass a range of activities such as document preparation and filing, communication with creditors, and asset collection, realization and distribution.
  • Disbursement Fees: LITs charge disbursement fees for expenses incurred while managing the bankruptcy. These expenses can range from fees for appraisers, Court filing fees, and legal fees, and are typically reimbursed from the debtor’s estate.

Importance of paying attention to bankruptcy trustee fees

Bankruptcy cases entail a diverse range of fees that creditors and relevant parties must meticulously monitor. Trustee fees are a significant aspect of these fees, as they could significantly impact the funds available for creditor payments. Thus, understanding the mechanics of these fees and their implications on your bankruptcy interests is crucial.

This is especially pertinent for those affiliated with the construction industry or those who supply products and services to construction projects. In recent years, there has been some confusion and uncertainty surrounding how Construction Act liens rank against Trustee fees in bankruptcy cases.

Regrettably, in my view, the recent judgment from the Alberta Court of the Golfside Ventures Ltd (Re), 2023 ABKB 86 (CanLII) decision has only served to exacerbate this ambiguity, rendering the matter even more perplexing.

The following is my take on the Golfside Ventures Ltd (Re), 2023 ABKB 86 (CanLII) decision.

construction act
construction act

Background of the case

In February 2019, Golfside Ventures Ltd. and Hustle Holdings Ltd. joined forces through a Joint Venture Agreement to develop forty-four parcels of barren land in Redwater, Alberta, commonly known as the Lands. However, shortly after the agreement was made, Golfside was declared bankrupt, with the Lands remaining as its sole asset.

Prior to the bankruptcy, the Trustee conducted due diligence and determined, notwithstanding the registrations against the title, that there was sufficient equity in Golfside’s assets to cover the associated fees and expenses. The Trustee also obtained an agreement with a third-party company to postpone and subordinate any of its claims against Golfside.

Despite these measures, one of the mortgagees filed a Builders’ Lien against the Lands after the bankruptcy commenced, claiming approximately $5,500,000 in relation to the joint venture. The Trustee disallowed the lien claim, prompting the creditor to appeal.

The Trustee, in seeking guidance and direction from the Court, filed a motion for the granting of an Order creating a first charge on the assets of Golfside in favour of the Trustee’s fee and disbursements, including legal fees. This request was made to ensure that the Trustee’s reasonable professional fees and disbursements are secured in their payment. The Trustee is relying on the principles of fairness and the inherent jurisdiction of the Court in making this request.

The Respondents asserted that the Trustee should have been aware of the existence of a lien prior to their appointment. They argue that the rights of secured creditors, as outlined in the BIA, should govern this situation, with secured lien claims taking priority over the payment of fees and disbursements to a bankruptcy trustee.

So the issue before the Court was can, and if so, should, the Court exercise its inherent jurisdiction to grant a charge in favour of the Trustee against the Lands and the proceeds from the sale of the Lands to secure the Trustee’s costs?

Court’s ruling and reasoning

Section 39 of the BIA sets out Trustee remuneration. Secured claims rank in priority over a trustee’s fees and expenses. A trustee should arrange to protect itself before incurring fees, expenses, and legal costs to administer the estate.

The lien claimant as a secured creditor would have priority over the Trustee‘s fees and expenses in the case of bankruptcy. The BIA provides the priority scheme for distributing proceeds of a bankrupt’s estate. It is not clear if the Court’s inherent jurisdiction can be applied in this situation. If so, the claim for lien would have precedence over the Trustee’s fees and expenses.

The Trustee would be entitled to a portion of the amount remaining out of the realization of the property of the debtor after the claims of the secured creditors have been paid or satisfied (s 39(2) in this case). The claim for lien would have priority over the Trustees’ fees and expenses.

The Trustee submitted that the Court may exercise its inherent jurisdiction to grant the requested charge. The Respondents take the position that the BIA is very clear and that the Trustee who incurred fees and expenses did so at its own peril. The Trustee’s responsibility is to ensure that only valid claims to the assets under administration are recognized. Determining the validity and priority of claims has a real cost.

In a prior decision, the Court ultimately granted a Trustee a charge over funds in its possession to the extent necessary to permit recovery of 50% of its reasonable fees and disbursements.

The Trustee in this case applied to have priority over the creditor in its capacities as both a mortgagee and as a lien claimant. Because each amount of these two claims exceeded the value of the assets, the Trustee applied for priority over the creditor as mortgagee also.

The Respondent mortgagee and lien claimant stated that the Trustee’s request is plainly contrary to the priority rights afforded secured creditors under the BIA. The court ultimately granted the Trustee the charge over the funds in Its possession, relying upon the inherent jurisdiction of the Court.

Construction Act: Impact of the decision on businesses, contractors and owners

We must remember that this is an Alberta court case, so, unless this decision is overturned on appeal, it only affects insolvency proceedings in Alberta. However, it will be interesting to see if this same approach is ultimately followed in other provinces. There are two parts to the secured claims of the Respondent: (i) a mortgage registered against title prior to the bankruptcy; and (ii) an unregistered security interest at the date of bankruptcy.

The Respondent’s submissions were correct. The BIA is clear. The claims of trust claimants, secured creditors and a very small type of special claims come ahead of the right of the licensed insolvency trustee to obtain its taxed fee and costs from the realization of the assets in a bankruptcy administration.

As stated above, the Court chose to use its inherent jurisdiction to override the relevant provisions of the BIA to grant the charge ahead of all secured claims, registered and unregistered. Albeit the Trustee had disallowed the construction lien claim which was unregistered at the date of bankruptcy and that disallowance was under appeal.

Whether other provincial courts will follow this decision only time will tell. If they do, will it then be common for courts to rule that the fee and expenses of a licensed insolvency trustee in administering a bankruptcy can prime a registered mortgage against lands? What about personal property security?

The recent decision from the Alberta Court concerning the lien claimant vs the Trustee fees is significant for anyone involved in any industry including the construction industry. Businesses, contractors and owners deserve certainty when dealing with insolvent companies. Unfortunately, this decision does not provide any certainty as the Court allowed the Trustee to prime both an unregistered charge, albeit of unknown value and a registered mortgage charge.

It seems to me that this decision should be appealed. I currently do not know if it is being appealed. In my opinion, the Court did more than just use its inherent jurisdiction. It used that authority to essentially rewrite the portion of the BIA that says creditors with valid security are outside the bankruptcy process, should be allowed to enforce their security and the Trustee’s fee and costs comes after the claims of secured creditors. Parliament did not intend this.

Also, by making this decision, the Court made moot the right of the construction lien claimant to appeal the Trustee’s disallowance of its claim to the Court. If there will not be any funds available after the Trustee’s fee and costs and the claimant’s mortgage, then the resulting effect is that the construction lien claim, assuming there is a valid monetary claim, is rendered to the class of ordinary unsecured even without the Trustee’s disallowance.

construction act
construction act

Construction Act: Conclusion

I hope you enjoyed this Construction Act Brandon’s Blog. Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind. Coming out of the pandemic, we are also now worried about the economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

construction act
construction act
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