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

Credit card debt trap: Introduction

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

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

Credit card debt trap: A storm is brewing

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

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

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

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

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

Step 1. Credit card debt trap: Take control

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

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

Step 2. Credit card debt trap: Minimize rates

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

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

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

credit card debt trap
credit card debt trap

Step 3. Credit card debt trap: Plan choice

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

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

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

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

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

Step 4. Credit card debt trap: Adhere to it

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

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

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

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

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

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

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

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

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

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Secret debt in marriage: Introduction

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

Secret debt in marriage: A recent survey

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

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

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

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secret debt in marriage

Secret debt in marriage: Couples best practices

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

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

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

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

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

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secret debt in marriage
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PERSONAL DEBT LOAD INCREASE: ARE WORRIED PARENTS BUYING HOMES FOR SCHOOL AGED KIDS BEING REASONABLE?

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personal debt load increase

Personal debt load increase: Introduction

The great North American dream is still home-ownership. Unfortunately with soaring house prices, increasing interest rates and stricter mortgage regulations, many Canadians may not be able to realize their dreams. As a result, a new trend is starting which I describe below. The issue is whether this new behaviour, causing a personal debt load increase, is reasonable or not.

Personal debt load increase: The current housing market trend according to Statistics Canada

These factors are making it increasingly difficult for young people to break into the housing market. According to Statistics Canada, young adults today are:

  • More likely to live in apartments than their 1981 counterparts
  • Less likely to live in single-detached homes
  • More likely than ever to still be living at home

Personal debt load increase: Desperate times call for desperate measures

As parents you want to give your children every advantage in life, including helping them realize their dreams of home-ownership. But, what can you do? At the rate at which house prices are rising, if you wait until they reach adulthood and are ready to purchase their first home, will you be able to help them buy that house?

The old adage Desperate times call for desperate measures, seems to apply here. There is a growing number of parents who are buying houses for their children who are still school-aged; some as young as five years of age.

Personal debt load increase: The future value argument

Brad Lamb, president of Brad J. Lamb Realty & Lamb Development Corp. is one such parent. Mr. Lamb recently purchased a condo for his five-year old daughter. He purchased an 800 square foot condo in Toronto for about $450,000 which he estimates that he can rent for $2,500/month. Mr. Lamb calculates that in 15 years (when his daughter is 20) the condo will be worth in the $3 million range.

Personal debt load increase: Is it a good idea to buy a home for your school aged kids?

Clearly Mr. Lamb is in an income bracket that would allow him to purchase a $450,000 condo without putting himself into financial jeopardy. However, the same can’t be said for many parents who are buying homes for their school aged kids. Some are making an enormous financial sacrifice in the quest of guaranteeing their children home-ownership. And it’s difficult to speculate on the real estate market 10 – 15 years in the future.

Over the time you hold the property until your child can live in it. There will be fluctuations in the real estate market. You can’t be the type of person that worries every time there is a temporary decline in the market. For example, will higher interest rates lower home prices? We have been in essentially a zero interest rate environment for 10 years. The Bank of Canada is now slowly increasing interest rates. Remember that the change in value of the home only counts if you have to sell it. Until then, increases or decreases are merely on paper only.

Personal debt load increase: A different viewpoint

Susan Latremoille, director of wealth management and wealth adviser at the Latremoille Group and Richardson Group GMP in Toronto, has very strong opinions on the subject. She says, “I think it’s a crazy idea. I would not recommend my clients to do it. If parents already own their own home, they will have to pay a capital-gains tax should they decide they need to sell the additional property, as they can’t put the children’s names on the property title unless they are adults”.

What if the property is a negative cash flow rental property? It isn’t just being able to afford purchasing the property. You are going to become a landlord for many years. If the costs of holding the property are greater than the income it generates annually? That makes it a negative cash flow investment property. Can you afford to pay out that extra cash year after year? Of course the expectation is that the value of the home will continue to increase. Negative cash flow from assets is still not a winning formula for the long-term.

Personal debt load increase: You can’t put yourself at financial risk today for someone else’s future – even if that someone else is your child

Putting yourself at risk financially to buy a house for your kids is never a good idea. The best thing that you can do is get your own financial house in order. That may allow you to make an investment in your children’s’ educations and perhaps even allow you to help them buy, or at least be able to help with, that first house.

If you need help getting your financial house in order, contact Ira Smith Trustee & Receiver Inc. The results for our clients are financial peace of mind and debt free living. With one phone call you can get rid of the financial stress and feel like you’re in control again Starting Over, Starting Now.

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CHARITIES IN TORONTO AND YORK REGION LOOKING FOR VOLUNTEERS: WHICH CHARITIES ARE WORTHY OF YOUR MONEY

CHARITIES IN TORONTO AND YORK REGION LOOKING FOR VOLUNTEERS 0
charities in toronto and york region looking for volunteers

Charities in Toronto and York region looking for volunteers: Introduction

You work hard for your money. If you’re like many Canadians, you generously share your good fortune with those in need. Charities in Toronto and York Region looking for volunteers need your help also. Volunteering is an excellent way to give back to your community. For those with high debt levels, volunteering will reduce the tension between wanting to contribute to your favourite charity, but not being able to afford it.

Corporations also support the volunteer efforts of their employees. At Ira Smith Trustee & Receiver Inc., part of our firm values is that each staff member must volunteer some of their time to the community, not just make donations.

Charities in Toronto and York region looking for volunteers: Canadians are generous

According to Statistics Canada, a large majority of Canadians make monetary donations to charitable or non-profit organizations. In fact, the most recent statistics shows that just over 24 million Canadians aged 15 years and older donated. This means 82% of the population, had made a monetary donation.

Charities in Toronto and York region looking for volunteers: How much goes to charitable good works vs. administration

It’s important that you know how much of your money is used for charitable good works. How much is going to administration? It may change your mind about which charities ultimately benefit from your donations, time, or how much you decide to give.

Charities in Toronto and York region looking for volunteers: The Charity 100

MoneySense has produced something they call the Charity 100 for the last eight years. This list, composed of the leading charities in Canada, measures them by the following four criteria:

  1. Charity Efficiency – how much of your money actually goes towards supporting the organization’s mission
  2. Fundraising Costs – how much money it takes to raise the money
  3. Governance & Transparency – whether the charity adheres to standard non-profit governance models and whether it lets donors know exactly how their money is being used
  4. Cash Reserves – does the organization have an adequate reserve fund

You can also find great information on charities in Canada on the Government of Canada website.

Charities in Toronto and York region looking for volunteers: How to fix your debt level so that you can give to one day

Some of you reading this blog would love to concern yourselves with researching organizations deserving of your donations, but right now you’re struggling to pay the bills and are looking for a way out of debt. You may feel like you’re in a dark tunnel but The Ira Smith Team is here to shine a light on your financial situation.

We have a cumulative 50+ years helping people just like you get back on track financially. Give us a call today and take your first step towards debt free living Starting Over, Starting Now.

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GAMBLING DEBT BANKRUPTCY: CAN GAMBLING DEBT BE DISCHARGED IN BANKRUPTCY?

Gambling debt bankruptcy: Introduction

Since there are various provincial run casinos, horse racing and lotteries, we are often asked if you can have a gambling debt bankruptcy. More importantly, what clients really want to know is, can gambling debt be discharged in bankruptcy?

Gambling debt bankruptcy: What is gambling debt in bankruptcy?

We first must go back to basics. There are two types of gambling debts:

  1. Debts for loans taken out, either direct loans or through credit cards; and
  2. Loans directly from a casino with “markers”.

In the first case, the loans or credit card debts could be direct – using the cash advance to gamble with, or indirect – used to make purchases for the necessities of life because the person gambles away their employment or other income. The use of markers at a casino is obviously a direct gambling debt.

In the context of this discussion, it does not matter if the gambling debts are direct or indirect. As discussed in this blog, the gambling debts are legally enforceable. As such, gambling debts in bankruptcy (or a proposal) are claims provable under the BIA.

Gambling debt bankruptcy: Gambling debt and bankruptcy

You can declare bankruptcy on a gambling debt. So is it really as simple as declaring bankruptcy? The answer is no. There are various issues that you must first consider with the licensed insolvency trustee during your first free consultation. The major issues are:

  1. Your assets
  2. What is your annual income
  3. Have you ever been bankrupt before
  4. The nature and amount of your other debts because you lost cash in gambling
  5. Have you not been paying your taxes because of gambling losses and Canada Revenue Agency is also a major creditor
  6. Getting gambling addiction advice
  7. Getting a discharge from bankruptcy
  8. Is there another option available to you in order for you to avoid bankruptcy

Gambling debt bankruptcy: There are many issues in addition to just getting gambling addiction debt help

If you are insolvent and you choose the bankruptcy route, you will face the following issues:

  1. If you have non-exempt assets or equity in non-exempt assets, your interest in those assets will be taken over by your trustee. For example, your interest in the matrimonial home would come to the trustee and now your spouse, or other friend or relative, would have to purchase your interest back to the cash could go to your creditors. Go explain that to your spouse!
  2. Earning more than essentially a poverty line amount will cause you to have to pay surplus income to the trustee for the benefit of your creditors. If you are a first time bankrupt, with surplus income, you will have to pay the surplus income for 21 months. You can’t seek a discharge from bankruptcy until then.
  3. If you have been bankrupt before, the 21 months becomes 36 months.
  4. Once you show that your debts are due to gambling losses, you can expect your lenders and credit card companies to oppose your discharge from bankruptcy.

    gambling debt bankruptcy
    gambling debt bankruptcy

Gambling debt bankruptcy: Including your discharge from bankruptcy and your gambling addiction

  1. If you owe a large amount of unpaid income tax to Canada Revenue Agency, you can expect them to vigorously oppose your discharge from bankruptcy.
  2. Your trustee must oppose your discharge from bankruptcy when your bankruptcy is a result of gambling debt. The reason is under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(“BIA”), there are various facts, if proven, it is impossible to get an absolute discharge from bankruptcy.
  3. Section 172 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3(“BIA”) allows the Court to make an order of discharge which is either absolute, conditional or suspended. Where a fact under s. 173 of the BIA is proven, an absolute discharge is precluded.
  4. Gambling which brings on or contributes to bankruptcy is a recognized s. 173 fact. (BIA, s. 173(e)). That is why your trustee would have to oppose your discharge from bankruptcy.
  5. In reaching any decision on your discharge, the Court and the trustee need to maintain the integrity of the Canadian insolvency system. You can assume that your discharge will at least be conditional upon you paying a certain sum of money to your trustee for the benefit of your creditors. A bankruptcy discharge suspension for a certain time after you fulfill the payment condition is also possible. If your behaviour was especially egregious, your discharge from bankruptcy may be outright refused.
  6. The bankruptcy discharge hearing is a full Court hearing. You will be well advised to retain experienced insolvency legal counsel to come with you to Court. This is an expense you may not even be able to afford.
  7. If you want to have a chance in obtaining a discharge from bankruptcy, you will also have to show that you are taking concrete steps to deal with your gambling addiction by getting gambling addiction advice. That will include proving in Court that you enrolled, attended and completed at least one recognized rehabilitation program for gambling addicts.

Gambling debt bankruptcy: Going bankrupt doesn’t seem to be an easy fix

You are right about that. As if the above 11 issues weren’t enough, depending on your specific circumstances, there could be more. Therefore, I always recommend to debtors that if there is hope for the person to be able to successfully restructure through either a consumer proposal or Division I BIA Proposal, that must be seriously looked at and considered preferable to going bankrupt.

Gambling debt bankruptcy: What must you do if you have gambling debts and are considering personal bankruptcy?

Do you have unmanageable debts from gambling, other addictions or for any other reason? Be proactive; it’s time to rehabilitate yourself and deal with your debt while you still have alternatives.

The Ira Smith Team has years of experience assisting Canadians like you, getting you back on track to debt free living. Call Ira Smith Trustee & Receiver Inc. today so that we can help you regain control of your life and be stress-free, Starting Over, Starting Now.

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gambling debt bankruptcy
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BANK OF CANADA INTEREST RATE HIKE: THE HARSH REALITY WHY CANADIANS FEAR INTEREST RATES GOING UP

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bank of canada interest rate hike

Bank of Canada interest rate hike: Introduction

Unfortunately for many Canadians, their fears are about to be realized. On Wednesday, January 17th the Bank of Canada interest rate hike began. The Bank of Canada raised its key lending rate by a quarter percentage point to 1.25%. This is the third time it’s moved its benchmark rate from once-record lows last summer.

Bank of Canada interest rate hike: How will changes in the prime lending rate affect Canadians?

Changes in the prime lending rate affect variable-rate mortgages, lines of credit and other lending linked to the benchmark rate, and this means that borrowers will be paying more. And the Bank of Canada interest rate hike has a ripple effect.

The Royal Bank of Canada raised its prime lending rate by a quarter of a percentage point, to 3.45%, effective Thursday, January 18th. Canadians expect that Canada’s other big banks will do the same. Already all of Canada’s Big Six banks raised their listed five-year mortgage rates by 15 basis points to 5.14%.

It’s now going to be more difficult for home buyers to qualify for mortgages, particularly with the new stricter guidelines. As you can see, a rise in interest rates can have far-reaching effects.

Bank of Canada interest rate hike: Reasons Canadians are concerned

With so many Canadians walking a financial tightrope, the last thing they wanted to see was an increase in interest rates. A recent survey by Ipsos showed that:

  • 48% of Canadians are within $200 of not being able to meet their financial obligations
  • 40% of Canadians worry that they’ll be in financial trouble if interest rates keep rising
  • 33% of Canadians can’t keep up with their monthly bills and make their debt repayments
  • 30% of Canadians are concerned that rising interest rates could push them close to bankruptcy

Bank of Canada interest rate hike: Are you worried about the interest rate hike?

If you’re like many Canadians who worry that the rise in interest rates will push you over a cliff financially, now is the time to seek professional help. A licensed trustee can give you answers, options and a realistic plan for recovery.

Contact Ira Smith Trustee & Receiver Inc. We’ll evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Give us a call today and Starting Over, Starting Now you can be on your way to debt free living.

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REVERSE MORTGAGE DEBT: THE SHOCKING DETAILS OF THE INCREASE IN CANADA REVERSE MORTGAGE DEBT MIGHT MAKE YOU SQUEAMISH

reverse mortgage debt
reverse mortgage debt

Reverse mortgage debt: Introduction

The number of Canadians who aren’t able to retire comfortably is alarming. Let’s face it, Old Age Security (OAS) and Canada Pension Plan (CPP) is just not enough, and seniors are in search of ways to supplement the government programs. Some are going back to work full time, part-time, consulting, selling their homes or borrowing against their homes with reverse mortgage debt.

According to the Office of the Superintendent of Financial Institutions (OSFI), reverse mortgages experienced double-digit growth in October 2017. And, they’re gaining in popularity.

Reverse mortgage debt: What is a reverse mortgage?

Aptly named, a reverse mortgage is a mortgage in reverse. It allows you to borrow against the equity in your home and you don’t have to repay the debt until you sell or transfer your home. . For some people, a reverse mortgage to pay off debt, may be attractive.

Reverse mortgage debt: Is a reverse mortgage a good idea?

There are pros and cons to a reverse mortgage and every situation is different. We’ve written a blog explaining if a senior reverse mortgage is a good or bad idea to fund your retirement.

Reverse mortgage debt: How fast is reverse mortgage debt in Canada rising?

According to OSFI filings reverse mortgages held at banks:

  • Increased by 2.02% in just one month from September 2017 to October 2017
  • Increased 22.27% in one year from October 2016 to October 2017
  • Is estimated to be rising at $1.25/second

Reverse mortgage debt: Are you struggling with debt?

With more seniors struggling in retirement, using their homes for equity is gaining in popularity and as a result reverse mortgage debt could be the fastest growing segment of debt in the country. The keyword here is debt.

If you’re struggling with debt, let’s sit down and discuss other options before resorting to a reverse mortgage. A professional trustee is an expert in debt and is in the best position to give you sound advice on how to deal with your financial struggles.

Call Ira Smith Trustee & Receiver today to book a no cost, no obligation appointment and you can be on your way to conquering debt Starting Over, Starting Now.

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RETIREMENT IN CANADA HOW MUCH DO I NEED: OUR FOUR REASONS RETIREMENT IS MORE EXPENSIVE FOR CANADIANS

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retirement in canada how much do i need

Retirement in Canada how much do I need: Introduction

When we think of things becoming more expensive, we naturally think of consumer goods. As a rule we don’t pay attention to the cost of retirement, even though it’s been getting more expensive for Canadians for quite some time. And, interestingly enough, the cost of living is not a significant factor. But there are four main factors which will answer the question “Retirement in Canada how much do I need?”.

Retirement in Canada how much do I need: Our 4 reasons why retirement is becoming more expensive for Canadians?

Increased life expectancy: Canadians’ life expectancy will increase by three years, placing many of us in the 90-plus age bracket. The Chief Actuary with the Office of the Superintendent of Financial Institutions Canada told this to a Florida symposium. “Over the next half century, Canadian life expectancy at age 65 will increase by 3 years to reach 25 years,” said Jean-Claude Ménard, Chief Actuary with OSFI. “It means that half of Canadian retirees expect to live past age 90. Retirement is expensive and will become even more expensive in the future with improved longevity.”

The cost of retirement homes: The average price for a small seniors’ retirement apartment in the Toronto area is close to $5,000 a month. This is according to a report published by the Toronto Star. Although most seniors would prefer to stay in their own homes, physical limitations often dictate the move to a retirement facility.

The Defined Benefit Pension Plan will disappear: Defined benefit pension plans have disappeared from the landscape. This is because of their cost and that they can be risky for employers if investments do poorly.

The cost of prescription medication and paramedical services: Although our Canadian universal healthcare system covers us for almost all medical expenses, there are prescription drugs that are not covered and can be very costly. So for middle-aged Canadians and some retirees, this is an issue. In addition, our healthcare system doesn’t cover much in the way of paramedical expenses.

So, if you need ongoing physiotherapy, see a chiropractor or an acupuncturist, you will be paying out-of-pocket.

Retirement in Canada how much do I need: What if you have too much debt to retire?

When planning for your retirement, it’s important to realize that retirement is becoming more expensive for Canadians and will continue to rise. It’s important to get your financial house in order as early as possible.

If you’re having difficulties dealing with debt, now is the time for professional help. Ira Smith Trustee & Receiver Inc. has helped many people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. Give us a call today.

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CANADIAN BANKRUPTCY AND INSOLVENCY LAW: WHAT TO THINK ABOUT BANKRUPTCY

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Introduction

The holiday gift buying season is over. Next month the credit card bills will be arriving. Maybe you overspent on holiday gifts this year. Maybe you had too much debt to start with, and you know this new spending will put you over the top. Perhaps you already have questions about Canadian bankruptcy and insolvency law.

Perhaps you spent wisely but modestly because you were acutely aware of your financial problems. Maybe you never were an uncontrollable spender. Perhaps a specific damaging event outside of your control caused you to wind up deep in the red. So far you have worked hard to overcome the financial challenges, but for the first time you are thinking that you should read up on Canadian bankruptcy and insolvency law.

Either one unfortunate life issue or one foolish monetary choice is all it could take. Despite how you arrived, there is no simple escape, except perhaps winning the lottery or an unexpected inheritance.

Bankruptcy is one alternative

If you’ve fallen under just what seems like impossible financial debt and you have no chance to get out of it, bankruptcy is one alternative. It’s not constantly an excellent one– and never ever one to be taken gently.

Below is exactly what you should understand prior to making any kind of choices about filing personal bankruptcy.

Long-term results

Almost 63,372 people declared bankruptcy in 2016, an action that will certainly have an effect on them for a long time to come. They have certainly started learning about the Canada bankruptcy and insolvency law regime.

While declaring bankruptcy relieves debt pressures caused by decisions and/or issues of the past, it could adversely influence your future. The record of your filing for bankruptcy will certainly stay on your record for up to 10 years.

Numerous companies run a credit check on job applicants. The record of your bankruptcy will come up. Potential employers have either their own bias or unique interpretation about this. Perhaps the job you are applying for requires you to be bonded. Faced with many qualified applicants, a potential employer may very well choose the person who does not have a bankruptcy on their record. As I have previously written, it can likewise have an influence on insurance coverage costs.

The Canadian bankruptcy and insolvency law system is designed to financially rehabilitate the honest but unfortunate debtor. As a licensed insolvency trustee, I certainly believe in our system. However, it is also my role to point out to anyone considering personal bankruptcy, there are many issues to consider before taking this choice.

Evaluating your alternatives

For some people bankruptcy many not be the only option. Just how do you recognize its the right one for you? What are the options under Canadian bankruptcy and insolvency law?

Prior to making any type of choice about filing for bankruptcy, you should first contact a licensed insolvency trustee (LIT) in your area for a free consultation. The LIT will review with you your current financial situation and ask you various questions. The purpose is for the LIT to gain an understanding of your current financial position and how you got there. Based on this information, the LIT will be able to give you a preliminary opinion about what your realistic options are.

In general, the options available to someone experiencing difficulty in paying their debts on time include: (i) credit counselling; (ii) debt consolidation; (iii) (consumer) proposal; and (iv) personal bankruptcy.

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canadian bankruptcy and insolvency law

The proposal option used for half of all personal insolvency filings in 2016

I am using brackets around the word “consumer” when talking about the proposal option. A consumer proposal is available to anyone who owes the amount of $250,000 or less, not including the amount you owe on loans registered against your home. If you owe more than this $250,000 threshold, a proposal may still be the most viable option for you. That proposal process just falls under a different section of the Bankruptcy and Insolvency Act (Canada) (BIA). It is not called a consumer proposal, but rather a Division I proposal. The BIA governs Canadian bankruptcy and insolvency law.

As I mentioned above, in 2016, 63,372 Canadians filed personal bankruptcy. However the total number of people who filed an insolvency proceeding in 2016 in Canada was 126,843. So what did the other 63,471 people do? They filed a proposal. So roughly half of the people who filed an insolvency proceeding in Canada in 2016 to solve their debt problems, were able to avoid bankruptcy.

In 2016, 63,471 individuals filed a (consumer) proposal. This bankruptcy alternative is an organized settlement of your financial debts for an amount less than the total you owe. You can take up to 60 months of regular monthly payments to complete your (consumer) proposal.

The proposal provisions of Canadian bankruptcy and insolvency law allow those people “in the red” to keep their assets they can afford to continue paying for, including their home. At the same time, they made a monthly payment to the LIT to be distributed to their creditors for their past debts that they could not afford to repay.

Canadian bankruptcy and insolvency law: Beginning the insolvency filing process

If you believe that bankruptcy may be for you, your first action is to speak with a LIT. Remember, you are not only looking to them for solutions. The LIT is not only interviewing you. You are also interviewing the LIT to decide if this is someone you feel you can work with.

If you don’t feel comfortable after speaking to that first LIT, there is nothing wrong with you getting a second opinion from a different LIT. Not only is that not anything wrong with that, I urge it. You are going to be working with your LIT for quite some time. Make sure that you believe it will be a comfortable relationship for you.

The bottom line is if you got in over your head with money, you do have alternatives. Get an expert viewpoint on just what your options might be under Canadian bankruptcy and insolvency law. If you can’t make your monthly payments, you need professional help; and you need it now. Contact a professional Toronto bankruptcy trustee.

The Ira Smith Team has a cumulative 50+ years of experience helping people who are facing a financial crisis and we deliver the highest quality of professional service. Make an appointment for a free, no obligation appointment today and Starting Over, Starting Now you’ll take your first steps towards financial freedom.

We wish all of our readers and subscribers a healthy, happy and prosperous New Year 2018.

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ENOUGH MONEY IN RETIREMENT: HOW CAN YOU BE WORTH OVER A MILLION DOLLARS &WORRY ABOUT BEING BROKE

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enough money in retirement

Enough money in retirement: Introduction

For most Canadians the thought of being worth over a million dollars is a totally unattainable dream. Yet, there are now almost 357,000 Canadians with at least $1 million in wealth, not including their primary home (Capgemini). And, as difficult as it is to believe, some of these millionaires worry about being broke. They worry about having enough money in retirement. The reality is that they may have reason for concern.

Enough money in retirement: What do the ultra rich worry about?

  • 20% of ultra-high-net-worth investors (defined as those with a net worth between $5 million and $25 million), are concerned about having enough cash to last throughout retirement. (a 2017 survey by the Illinois-based Spectrem Group, a financial research firm).
  • People feel angst about running out of money in retirement whether they have $1 million, $10 million or $50 million”, says Gordon Stockman, a fee-only financial planner and principal of Efficient Wealth Management Inc. in Mississauga.

Enough money in retirement: Why do the rich worry about running out of money?

The rich have very expensive lifestyles to maintain. They’re used to the finest things in life – mansions, vacation homes, household staff, exotic cars, first class travel, designer clothes – and they don’t want to give anything up. But, how will they be able to maintain these fabulous lifestyles for what could be a 25 – 30 year retirement? Something’s got to give.

Enough money in retirement: Is it possible to be worth over a million dollars and go broke?

Unfortunately, although difficult to believe, yes it is. There are examples in the news every day about actors, actresses and professional athletes who earn unimaginable amounts of money, and declare bankruptcy. It also happens to doctors, lawyers and other “regular rich folk” who lost track of their spending and blew through their money. It can happen to anyone. Very few people are rich enough to be immune from money problems.

Enough money in retirement: What about you?

No matter how much money you have, take a good hard look and your finances. And if you find yourself in a financial danger zone, contact Ira Smith Trustee & Receiver Inc. We’re 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. Your financial problems can be solved with immediate action and the right plan. Give us a call today.

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