Everyday we’re inundated with stories in the newspapers, on television and online about the average home prices in Toronto and in the rest of Canada. Many are left wondering what they can possibly do to get into this very hot market. Unfortunately as a result there’s been a surge in mortgage fraud.
Average home prices Toronto: What is mortgage fraud Canada?
Mortgage fraud takes place when fraudulent information is used to qualify for a mortgage. A classic example of mortgage fraud is a prospective home buyer submitting fake or altered employment letters, bank statements or tax returns to qualify for a large mortgage.
Average home prices Toronto: How prevalent is mortgage fraud Canada?
The number of mortgage applications flagged as potentially fraudulent has risen 52% since 2013
About 90% of all mortgage applications flagged for potential fraud have come from banks and not other types of mortgage lenders, largely because banks have become better at spotting fraud attempts
13% of Canadians told Equifax it was okay to tell “little white lies” on their mortgage applications
Roughly 67% of mortgage applications flagged for fraud came from Ontario
Approximately 12% of suspected mortgage fraud came from British Columbia
Only 8% admitted to actually falsifying information on their own credit applications
Average home prices Toronto: Why are typically law-abiding Canadians being driven to commit mortgage fraud in Canada?
It’s no secret that home prices are continuing to rise. The latest federal legislation has made it more difficult to qualify for an insured mortgage. Many Canadians are realizing that home ownership is beyond their reach. In fact according to an online survey by Equifax, 84% of Canadians felt the country’s housing market had become too expensive for first-time buyers. Of those who didn’t own a home, 20% said they worried they may never be able to save enough for a down payment. Clearly desperate times are calling for desperate measures and a surge in mortgage fraud is the result.
Average home prices Toronto: What should you do if you have too much debt?
Committing a crime is never the answer. And make no mistake, mortgage fraud is a crime. It can be punishable by hefty fines and/or jail. If your goal is to buy a house, we can’t do anything about the real estate prices, but the Ira Smith Team can help you get your debt issues under control so that home ownership may be in your future. Give us a call today so that Starting Over, Starting Now you can conquer debt and start saving for your future.
Non-profit credit counselors are the good guys in the debt relief industry, which is otherwise full of players that are bursting with lies, scams and sketchy practices.
We have done the consumer proposal or bankruptcy of many people who first paid upwards of $2,500 to for profit “counselors” who ultimately did no more than pass the people on to a licensed insolvency trustee. They could have received a better service just going straight to a trustee for a free consultation.
Contrary to popular belief, a licensed insolvency trustee by law must first evaluate to see if the person can AVOID bankruptcy. So as you can see, not all debt management programs and companies are equal.
Do debt management programs work for everyone?
Debt management credit counselors need to acknowledge that their signature offering — the debt management plan — doesn’t work for everyone.
Debt management programs are promoted as the best bankruptcy alternative and an affordable way to pay back credit card debt. Borrowers make payments to the counseling agency, which then pays the creditors. Thanks to standing agreements that counselors have with credit card companies, the plans typically cut the interest rates, fees and payments that borrowers need to make. Full repayment of the debt often takes four to five years.
If borrowers make all the payments and repay the principal completely, debt management programs have much less impact on their credit scores than other types of debt relief.
Debt management programs were rampant in the United States
During the financial crisis in 2007-2009, debt management programs could be found on infomercials day and night. There were so many shady characters in the industry, the States ultimately had to enact laws to reign the shady operators in.
Needless to say, the shady operators did not give any worthwhile service for the fees they charged. But even the legitimate and well-meaning credit counselors mistakenly believed that their debt management programs were good for everyone. What I have found in my experience as a licensed insolvency trustee, is that no two people’s situations are the same, and one size does not fit all.
The story of Francine Bostick
Francine Bostick, a woman who lives in Kansas and paid off more than $120,000 in credit card debt in 2012, says she emerged with credit scores good enough to buy her first-ever new car. “It was exciting and made me a little nervous when they did the credit check,” says Mrs. Bostick, 66. “We got 0 percent interest for the life of the loan.”
This sounds great, but, yet Mrs. Bostick is also an example of what may be wrong with credit counseling because:
Her husband Jim Bostick had Alzheimer’s disease and she was his caregiver
Francine worked 12-hour days to earn the money to make debt payments while also caring for her increasingly incapacitated husband, who died in May
She had to do this when others her age were retiring
She never got to spend quality time with Jim before his death
If she lived in Toronto or Vaughan, what would I have advised?
Francine had never been bankrupt before and she did not have any significant assets. She and Jim rented – they did not own a home. In Francine’s case, she would not have had to make any surplus income payments in a bankruptcy. Although a consumer proposal is a great alternative to bankruptcy, Francine could not afford to complete one by only working one job in an 8-hour day, but she and Jim would be able to live on those earnings and their pensions.
In this case, I would have advised Francine that bankruptcy was a better alternative because:
Francine could have spent more time with her dying husband – that she can never get back now
She would received an automatic discharge after 9 months, and not worked so hard for several years
Just like in bankruptcy, she had no access to credit while in her debt repayment program
She could have begun rebuilding her credit faster after the bankruptcy
There is little leeway for missing a payment in debt management programs – many times if you miss 1 payment the entire program ends
Some people find that they simply can’t afford the payments on debt management programs, while others drop out because of setbacks such as job loss, unexpected expenses or illness
If you cannot fully complete the debt management programs, creditors can resume collection efforts, and borrowers also have flushed thousands of dollars down the drain and might not have enough money left to live on
What should you do if you have too much debt and are considering one of the debt management programs?
So, those thinking about debt management programs should book an appointment with an experienced licensed insolvency trustee first. (The first consultation is free.) That way, they will be able to understand the choice they make.
Ira Smith Trustee & Receiver Inc. brings a cumulative 50+ years of experience dealing with diverse issues and complex files and we deliver the highest quality of professional service. Contact us today and Starting Over, Starting Now you’ll be well on your way to overcoming your financial difficulties.
THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track
We’ve prepared this online video to answer the consumer proposal vs. bankruptcy FAQs that we are normally questioned. This information will hopefully help you understand better exactly what a Consumer Proposal is and how it will also help you clear the money you owe and AVOID individual bankruptcy.
The most asked consumer proposal vs bankruptcy FAQs
Consider some of the advantages of the consumer proposal vs bankruptcy, such as:
You keep all of your assets
Actions against you by creditors, such as wage garnishments are going to be stopped
Unlike informal unsecured debt settlement, the consumer proposal is a forum where all of your creditors must handle your restructuring
You don’t need to declare bankruptcy
Additional reasons are:
The opposed bankruptcy discharge process is not quick. Courts are backed up so your bankruptcy discharge hearing may not happen for many months. So think of 4 months or more being added on to the 21 or 36 months you have already spent in bankruptcy.
The discharge hearing is a Court process. Sometimes, for valid reasons, the Court has to adjourn a hearing. What if it takes another 6 months for your discharge hearing to come back up again? You have now been in bankruptcy perhaps for over 4 years at this stage.
If you could restructure by filing and completing a (consumer) proposal, you are not going to get an absolute discharge from the Court. The Court will most likely give you a conditional discharge. This is a discharge where you have to fulfill a condition being the payment of money to your LIT. The repayment will be in the form of monthly payments over a certain period; perhaps 12 months. You are now in bankruptcy, in this example, for close to 5 years.
In a (consumer) proposal, the maximum time period for making the monthly payments that either the statute or your creditors, be prepared to wait is 60 months. However, there is nothing stopping you from paying it off early if you can. Consider the (consumer) proposal as someone giving you an interest-free loan for up to 60 months, and this loan is just a fraction of the total of your debts, and once you pay off this fraction, all of your debts (other than certain ones such as student loans, child support, and alimony) are all eliminated.
In a (consumer) proposal, the self-reporting you need to do with your LIT is significantly less than in a bankruptcy. In a restructuring, all your LIT really cares about is that you don’t miss a payment.
During your bankruptcy, you will have to report your monthly income and expenses to your Licensed Insolvency Trustee (“LIT“). The LIT is required to perform the surplus income calculation again and if your new income means that your surplus income obligation has increased, then you have to make up the difference by paying more surplus income to your LIT to get your discharge from bankruptcy. In a restructuring, the amount you initially agreed to pay that your creditors accepted, is the same amount you pay. There is no monthly reporting of your income to your LIT and no recalibration to an increased amount if your income rises.
If you win a lottery or receive an inheritance while being an undischarged bankrupt, you have to pay that over to your LIT for the benefit of your creditors. If the amount is more than needed to pay your creditors off in full, with interest, then you receive the difference back. In a (consumer) proposal restructuring, if you receive such an amount, good for you. You get to keep it and if you like, you can use part of it to pay off your (consumer) proposal early.
Excessive debt? Get the help you need now!
We hope you enjoy this video about consumer proposal vs bankruptcy. Click on this link to find out more about Consumer Proposals. You can also have many of the questions about bankruptcy answered by exploring our Bankruptcy FAQs link.
Instead of going deeper into debt and just putting your head inside sand like an ostrich, heed the advice of a licensed insolvency trustee and contact us today. Seek the help from a professional trustee, even if you’re definitely not considering bankruptcy at this stage.
We will evaluate your situation and provide help to arrive at the ideal solution for the problems, whether that solution is a bankruptcy alternative similar to credit counselling, consolidating debts or a customer proposal or individual bankruptcy. With immediate action as well as the right plan the Ira Smith Team can solve the financial problems Starting Over, Starting Now. We’re just a phone call away.
The issue of a business restructuring proposal of Goodwill Toronto has recently been in the news. This video is an interview aired on TV Ontario, The Next Ontario show, with Dr. Sarah Kaplan, Professor of Strategic Management at Rotman School of Management, University of Toronto. The purpose of the interview is to obtain Dr. Kaplan’s views on the Goodwill Toronto closure of 16 Goodwill stores.
Toronto Goodwill thrift stores were operated, not unlike a Salvation Army thrift store, to raise funds to support the aims of the non-profit; in this case job skills and job creation for those who might otherwise be unemployable.
It takes money to restructure
We have all heard the expression “It takes money to make money”. I would like to make a slight twist on that expression by stating that it takes money to have a successful business restructuring proposal. Not only does the company and business have to be able to have sufficient cash flow in order to operate during the restructuring period, but there are also extraordinary one time expenditures related to the restructuring. Examples of such one time expenditures are reasonable one time exit fees to get out of uneconomical contracts, bonus payments to key personnel to ensure that they perform throughout the entire restructuring rather than resign for a new position elsewhere and professional fees.
Our Goodwill Toronto analysis
Our firm was consulted early in January to act as the licensed insolvency trustee in a business restructuring proposal of Goodwill Toronto. We spent half a day meeting with representatives of Goodwill Toronto in order to learn of their plight and to determine what sort of restructuring proposal might be possible.
In our meeting we learned that the main assets of Goodwill Toronto consisted of: (i) cash or liquid investments pledged to a Canadian chartered bank on account of business loans; (ii) accounts receivable with a certain percentage collectability; and (iii) inventory of items for sale, mainly used clothing, spread across 16 stores in leased locations.
We also learned that there were over 400 unionized employees, the majority of which had long term service with Goodwill Toronto. This is significant for three main reasons: (i) a viable restructuring proposal would be required to save the jobs of many, but probably not all of the employees; (ii) if the business restructuring proposal was unsuccessful, Goodwill Toronto would automatically be deemed to have filed an assignment in bankruptcy (a deemed assignment); and (iii) in a bankruptcy, the employees would have a claim under the Wage Earner Protection Program Act (WEPPA).
It takes money to implement a successful business restructuring proposal
So, why is this significant? The reasons it is significant for a restructuring vs. bankruptcy are:
The secured portion of the employees’ WEPPA claim coming ahead of all creditors, including the chartered bank, totalled approximately $900,000.
Next in priority was the claim of the chartered bank.
There were no free assets after the above 2 claims that Goodwill Toronto could use to fund operations or the extraordinary expenses associated with a business restructuring proposal discussed above.
So as you can see, with no free cash flow, no excess realizable assets or a third party who could fund a business restructuring proposal (or in the worst case a bankruptcy proceeding), it would not be possible for a knowledgeable licensed insolvency trustee to agree to act as there was no source of funding available.
This is why the best of intentions and goodwill (toronto) is not always enough!
The Sarah Kaplan interview
Professor Kaplan raises many good points in this interview, including:
We should first think about what the whole business model of the goodwill is.
The goods that they get to sell are aimed at just generating revenues that allow them to perform their actual services like job.
It may be that the retail environment is tougher in some ways if we think about the alternative for people who buy things at goodwill would be to go to discount stores or dollar stores.
As the market is becoming more and more competitive we could imagine that people would not need to shop at Goodwill if they can get a t-shirt for $5 at WalMart.
Goodwill’s in other areas though are doing fine so we may need to look a little bit more deeply into the problem.
The entire board resigned so there could be some other management issues that led to Goodwill Toronto to be running a deficit.
You have to be well managed and being a social enterprise is not an excuse to not be well managed; you need the same skills capabilities and maybe even more skills and more capabilities than in the for-profit world.
The fact that they’ve taken this extraordinary really drastic measure leads me to believe that the difficult retail environment is not the whole story and therefore not the whole story for other social enterprises.
NOTE: After writing this blog, Goodwill Toronto filed an assignment in bankruptcy.
Is your company in need of a business restructuring proposal?
If your company is trapped with too much debt, you need a professional trustee to help you manage debt and create a viable business restructuring proposal (either under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act – BIA or CCAA) before it reaches a critical stage where bankruptcy is your only option. We have been able to help many companies carry out a successful business restructuring proposal. Successful completion of such a program, will free you from the burden of your company’s financial challenges to go on to be a productive, profitable employer allowing management to focus on business growth and not be plagued by debt problems.
Contact the Ira Smith Team today in order to look at the bankruptcy alternative of a business restructuring proposal. We can help and Starting Over, Starting Now you can be restored to financial health.
Financial infidelity occurs when couples with joint finances lie to each other about money. For example, one partner may hide significant debts in a separate account while the other partner is unaware.
Couples need financial infidelity help
The media describes the topic of financial infidelity often. We have also written about financial infidelity help advice in the past:
in 2011, the National Endowment for Financial Education discovered that 31% of Americans who responded to a poll admitted lying to their partners about their finances
67% of respondents said the secrets – when revealed – led to arguments, 42% said it damaged trust, and 16% said it even led to divorce
their updated survey in 2013 showed an increase from 31% to 33% of respondents
9 signs that financial infidelity help is required
We can provide financial infidelity help to get you out of debt
When it comes to marriage finances, honesty is the best policy. If you have committed financial infidelity or have been the victim of financial infidelity, you may be in serious financial jeopardy. Don’t wait until you are out of options. Contact a professional trustee as soon as possible. The Ira Smith team is a full service insolvency and financial restructuring practice serving companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. We can help. Call today.
My definition of Canada middle class is the group under a new economic attack because of housing costs. Affordable rental housing for Canadians has become an oxymoron in term. In fact, rental housing has enslaved young Canada’s middle class, forcing them to spend so much of their incomes on a place to live, that many are in danger of becoming homeless.
What Statistics Canada says
According to the experts, spending more than 30% on housing is unaffordable. This doesn’t take into account food, clothing, transportation or any of the other necessities of life. According to data from Statistics Canada:
There are more than 4 million renters in Canada
Over 40% of all renter households are spending in excess of 30% of their gross income on rent
20% of all renter households are spending in excess of 50% of their gross income on rent which housing advocates say puts them at high risk of becoming homeless
In Vancouver and Toronto, 45% of renter households are spending more than 30% of their income on rent
Not just a big city problem for Canada middle class
The lack of affordable rental housing is not a problem exclusive to the big cities. Renters in small cities across Canada are also struggling financially. In the Toronto area, average rents are higher in the suburban communities of Milton and Vaughan than in the City of Toronto. And, Mississauga ranked among the worst cities in the country when it comes to a shortage of affordable rental housing.
Traditionally people rented apartments to save money and eventually buy a house. With young Canada middle class enslaved by rental prices, buying a house isn’t even on their radar; keeping a rental roof over their heads is a primary concern.
This short video (found at the bottom of this page) explains the differences between a consumer proposal vs. personal bankruptcy. A consumer proposal is a deal to end your debts. A consumer proposal is a legally binding process that is administered by a licensed trustee. Ira Smith Trustee & Receiver Inc. is a Toronto bankruptcy trustee and consumer proposal administrator.
We have written previous blogs about consumer proposals, including:
We offer personal bankruptcy and consumer proposal services, as well as corporate restructuring and corporate receivership and bankruptcy services to residents of the Greater Toronto Area. We explain the differences between a consumer proposal vs. personal bankruptcy. In most cases we can get a consumer proposal done and it usually results in a substantial reduction in the amount you have to repay. The amount you are required to pay when you file a consumer proposal depends on a number of factors as explained in this short video. We hope that you find the short video informative and interesting. If you have any topics about debt, insolvency or finances that you would like us to cover in future videos, please let us know by leaving a comment.
If you are experiencing financial problems, or you know that you are insolvent and are considering a consumer proposal vs. personal bankruptcy, or looking at all of your realistic options, including all alternatives to bankruptcy, contactIra Smith Trustee & Receiver Inc. We offer sound advice, a free consultation and a solid plan for Starting Over, Starting Now so that you’ll be well on your way to a debt free life in no time.
It’s commonly believed that all parents dread having the “sex” talk with their kids, but a recent study from BMO shows parents would rather talk to their kids about sex than their financial situation and managing debt. Imagine that! Canadians are stressed about money and probably feel ill-equipped to educate their kids about finances and managing debt.
Personal debt in Canada
According to a new national study conducted by Leger:
Canadians struggle with regret over financial decisions
Argue over spending
Feel pressure to keep up with friends or colleagues
Bend the truth to friends and family about their financial situation in order to save face
A Bank of Montreal study reports that:
More than 33% of all Canadians are ashamed of the debt that they have
Almost 40% say they stress over debt levels multiple times a day
There’s no doubt about it, money and managing debt is the top source of stress in our lives. Why are we so financially stressed? Why are Canadians stressed over debt and have so much trouble managing debt? Here are 10 of the most common reasons:
It’s time to become financially literate and educate your kids, not just about the birds and the bees, but about finances and managing debt. Foresters recently offered 5 tips to get smarter about your finances:
Learn everything you can about your finances, including your mortgage terms, bank interest rates and credit score
Start with the simple things like contributing to RRSPs, setting up RESPs for your kids and protecting your family’s financial future with life insurance
Keep track of every penny you spend for a couple of months and look for ways to cut back and start saving. Even a small commitment to saving will make you feel better about your finances
Look ahead 10, 20 and 30 years. Imagine the life you want and what it will take to make that happen
Talk to your kids regularly about money, involve them in household budgeting, open bank accounts for them and encourage them to save for things they want
How to get help with debt
All of this is great advice to avoid financial problems, but if you are already in serious financial difficulty and don’t know where you will begin on how to manage your debt, you need professional help now. ContactIra Smith Trustee & Receiver Inc. Don’t ignore your debt issues. Face them head on and with the help of the Ira Smith team you’ll be on your way to conquering debt Starting Over, Starting Now.
Payday loan lenders only no credit checks are predators
There are 10 ways a payday loan charges an illegal interest rate. Payday loan companies (also known as alternative lenders, fringe lenders and high risk lenders) are predators. Payday lenders prey upon the population that can least afford it – people in financial difficulty who don’t qualify for a loan from a traditional financial institution because they deem them too high risk. Some of these predators don’t even have to pay for store fronts as many are payday loan lenders online and issue a payday loan online only.
There is no such thing as the best online payday loan companies
The legal limit for interest rates on a loan is 60% per annum according to the Criminal Code of Canada. So how do online payday loan companies get away with charging way over 60% for payday loans online?
The ten ways payday loan companies charge illegal interest
They get away with it by charging fees instead of calling it interest, however the Criminal Code of Canada considers the following interest, which are all charged on a payday loan:
Interest
Administration fees
Setup fees
Processing fees
Convenience charges
Verification fees
Brokers’ fees
Collection fees
Loan repayment fees
Renewal fees
What does this mean in dollars and cents? Service fees for high risk loans online usually cost $10 to $35 for every $100 borrowed, or 10% to 35% of the amount of the loan. A $300 payday loan, due in two weeks, may cost you between $30 and $105, depending on the fees that apply. This is the amount that you’ll owe in two weeks! Not a per annum interest rate! As you can see in almost all cases these charges by this type of lender only will push the true interest rate for payday loans way above the legal limit of 60% per annum.
Are new payday loan companies regulated?
Alternative lender companies online, or in store fronts, new or old, are privately owned and not regulated by the federal government; however, several provincial governments have taken payday lenders to court over the amount of interest and fees that they charge for these high risk loans. In the U.S. 25 states have passed laws against predatory lending, placing restrictions on high-cost loans.
Can payday loan companies sue you?
The answer is yes, but it will be worth your while to challenge the fees charged by payday loans online (which are actually interest in disguise) and allow yourself to be taken to court. Otherwise the consequences can ruin you financially. There are many cases where when people defend and show they are not intimidated, these companies do not pursue the lawsuit.
There was a recent case in the U.S, where a $1,000 loan ballooned into a $40,000 debt and the worst part was that it was legal. A woman in St. Louis borrowed $1,000 from an alternative loan company and like many, she couldn’t pay it back in time. The lender sued her and even though she agreed to pay it back in instalments, the loan continued to grow at 240% interest. Investigative journalists stepped in and the case settled quietly. Had there been no settlement the $1,000 loan would have ballooned to $40,000.
For more information on the risks of payday loans online please review our blogs on the subject:
There is never a good reason to take out a high risk loans online. There is also no such thing as safe payday loan companies. Contact a professional trustee instead. The Ira Smith team can help. Starting Over, Starting Now you can take the first step towards financial health.
Payday loan companies are an industry that should be put out of business. We’ve discussed their unscrupulous operations in several of our previous blogs.
Governments in Canada and the United States have passed legislations aimed at cracking down on the industry, yet payday lenders continue to operate. In its latest move the Consumer Financial Protection Bureau in the U.S. has proposed new regulations designed to put payday loan companies out of business. The most damaging to the industry is the proposal to limit the number of loans per customer to six per year which is expected to hurt lending volumes and revenue by as much as 75%.
Payday loan companies that have substantial pawn operations are positioned to weather the storm and survive the new U.S. regulations while the smaller payday lenders will most likely disappear from the landscape. Is this better for the consumer? Absolutely! Payday loan companies take advantage of people who are seriously strapped for cash. They see a catchy ad and have no idea that their loan could be costing them almost 600% in annual interest. The consumer gets trapped into borrowing money they can’t hope to repay. A pawnbroker lends money against valuables. If you have something to pawn (typically jewelry), then you can walk away with some cash. At least the consumer isn’t being sucked in a borrowing cycle that will eat him alive.
If you’re considering a payday loan from one of the payday loan companies or a pawn shop, stop! You need professional financial help, not more debt. ContactIra Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you could be well on the road to financial health.
Average home prices Toronto: Introduction
