Tag: vaughan bankruptcy

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THE RELATIONSHIP BETWEEN YOUR CREDIT SCORE AND INSURANCE RATES

Last week we took a light hearted look at how people are using credit scores to find love. This week we are discussing a more serious matter -the relationship between your credit score and insurance rates. Sadly many consumers have seen their premiums rise as a result. CBC-TV’s “Marketplace” spoke with several people who saw home insurance premiums double after their insurance company began including credit scores as a way to calibrate risk. How prevalent a practice is this? About 55% of Canada’s largest insurers now use credit scoring. And of that segment 42% did not disclose the practice to customers, according to the Canadian Council of Insurance Regulators.

The insurance companies who use credit scoring are trying to put a positive spin on it. According to Desjardins, insurance companies check your credit score only to offer you the best premium possible. The Cooperators offers a slightly different slant. “Credit score is simply a reflection of a person’s level of responsibility and behaviour when it comes to managing their financial obligations.” Donald Hanson of the National Association of Independent Insurers stated, “Research indicates that people who manage their personal finances responsibly tend to manage other important aspects of their life with that same level of responsibility and that would include being responsible behind the wheel of their car or being responsible in maintaining their home.” Cheap down payment auto insurance companies have found that there is a correlation between higher scores and safe driving but I have not seen the research to back up this claim.

Many disagree with the use of insurance credit scoring citing that a driver’s record doesn’t change with his/her credit score, nor does the area where their house is located. Therefore, there is no evidence that the risk factor will change with a high or low credit score. In fact credit scoring has been a controversial topic in Ontario as it is in other parts of the country. The practice is no longer allowed in some provinces, and some groups, including The Insurance Brokers Association of Ontario (IBAO) have been lobbying for several years to have it banned in Ontario. Whether you agree or disagree, the fact that insurance credit scoring exists only goes to show how important it is for all of us to maintain good financial health. Unfortunately, there is not a Canadian credit score calculator tool that anyone can use.

If your credit score is adversely affecting your life, contact Ira Smith Trustee & Receiver. Starting Over, Starting Now you can take the first steps towards financial health.

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CAN YOU BANKRUPT A DEAD PERSON? DEATH OF A DEBTOR, PART 1

death of a debtor, insolvent, insolvency, bankrupt, bankruptcy, boomer retirees, debt, debt products, what is a consumer proposal, what is bankruptcy, vaughan bankruptcy, living wills, funeralsIf you have an aging or aged parent, you no doubt have had discussions surrounding living wills, end of life medical decisions and funerals. However, there is one topic that many families consider taboo – money – because many adult children consider it disrespectful to discuss finances with their parents. But, the truth is that many seniors in Canada are struggling. We began this discussion in our Blog “Grey Divorce Can Create Serious Debt For Boomer Retirees” but serious debt is not the exclusive domain of seniors that are divorced; it is rampant across the demographic. It may shock you to know that Canadians over the age of 65 now have the highest insolvency and bankruptcy rates for their age group and seniors were 17 times more likely to become insolvent in 2010 than they were 20 years ago, according to the Vanier Institute’s 13th annual “Current State of Canadian Family Finances: 2011—2012 Report.” Can you bankrupt a dead person? Can you bankrupt a dead person? Find out here in what we call “Death of a Debtor”.

A TD Bank study revealed that:

  • Debt among the 65 plus age group increased 15% in 2012
  • The average debt for those 65 and older increased by about $6,000 since 2011
  • Average debt among this group is $47,500

A CIBC study revealed that:

  • 59% of retired Canadians currently hold some form of debt
  • Only 27% of retired Canadians said they have made an extra lump sum payment towards their debt in the past 12 months
  • On average, retired Canadians carry 1.65 debt products with a balance (including mortgages, lines of credit, loans and credit cards)

What will happen if your parent(s) pass away in debt? You really have only 2 options?

  1. Pay the debts
  2. Let the estate go bankrupt

We recognize that this is an emotionally charged issue, but just because your parents were insolvent doesn’t mean that you have to be. Starting Over, Starting Now you can live a debt free life with help from Ira Smith Trustee & Receiver Inc. Contact us today and watch for our next blog – Is It The Ultimate Indignity To Bankrupt A Deceased Person? Part 2 – when we’ll be discussing what you can do if your parent(s) pass away in debt.

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TANK YOUR CREDIT SCORE RATINGS, DECLARE BANKRUPTCY, IMPROVE YOUR LIFE!

credit score ratings, bankrupt, Bankruptcy, Consumer Proposal, credit report, credit score, declare bankruptcy, insolvent, toronto bankruptcy, vaughan bankruptcy, what is bankruptcyAre you the poster child for financial responsibility? You have a good job, you take care of your family, your bill payments are all current and you have an excellent credit score. So, what can possibly be wrong with this picture and why would we think you should tank your credit score ratings, declare bankruptcy and improve your life?

The reality is that as many as 70% of bankruptcy filings are made by people with strong credit scores, according to TransUnion. Why isn’t a great credit score a predictor of whether or not someone will go bankrupt? “Many people are hopelessly insolvent but they’re not delinquent. From a credit report they are making their payments on time but they’ve got no reasonable prospect of ever paying this debt off,” said Mr. Mantin, senior vice-president of E. Sands & Associates Inc. According to Ira Smith, President of Ira Smith Trustee & Receiver Inc., “This is a very telling comment. Most people believe that as long as you make the minimum payment, you are “current”, especially when it comes to credit cards, even though deep down you know that you will never be able to pay off the debt. Current used to mean that when you received the credit card statement, you paid off the balance in full and you were delinquent if all you made was the minimum payment. This is a huge societal mind shift.”

When you are staying afloat by making the minimum payments, it doesn’t take much to tip you over the edge. Any major life changing experience can do it – loss of job, divorce, serious health issues, unexpected major expense – and all of a sudden you go from paying your bills on time and having a great credit score to not paying your bills and looking at bankruptcy.

What should you do? If you are struggling with a mountain of debt, even if you are making your monthly payments and have a great credit score, contact Ira Smith Trustee & Receiver Inc. A great credit score won’t solve your debt problems, but a consumer proposal or bankruptcy can help you both financially and emotionally, alleviating the monthly stress when the bills are due. Starting Over, Starting Now you can take charge of your financial future and improve your life.

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CAN YOU REALLY HAVE SURPLUS INCOME IF YOU’RE BANKRUPT?

bankruptcy faqs, surplus income, bankruptcy, bankrupt, bankruptcy process, trustee, bankruptcy alternatives, Vaughan bankruptcy, Richmond Hill One of the things that seems to confuse many people when it comes to the bankruptcy process is “surplus income”. It’s hard to wrap yourself around the concept of surplus income when you are considering or are involved in a bankruptcy. Can you really have surplus income if you’re bankrupt?

What is surplus income? Surplus income in a bankruptcy refers to an amount that a bankrupt must pay to the Trustee monthly. It is part of the goals of the Canadian insolvency system that balances the elimination of debt with the rights of creditors to be paid. To allow Canadians to maintain a reasonable standard of living during the bankruptcy process, the government has set thresholds or guidelines on net earnings (after taxes and deductions) intended to allow a bankrupt to maintain a reasonable standard of living during the bankruptcy process. The Office of the Superintendent of Bankruptcy sets the threshold limits each year and these limits are indexed to inflation.

How are surplus income payment amounts calculated?

Surplus Income payments are calculated based on a prescribed formula set by the Federal Government and applies across Canada, with no distinction for the region a person lives in. To find out what your surplus income is, contact your Trustee.

Surplus Income thresholds are based off of nationwide “poverty line” statistics and the thresholds are fixed regardless of what the cost of living may be in your region. Although the dictionary definition of “surplus” is excess or leftover, Surplus Income has nothing to do with what you have left over every month in your budget. It is a government formula that looks at only your income, certain non-discretionary spending and your family size, and imposes a duty to make a payment to your trustee.

There are many questions people have when contemplating bankruptcy. If you are in financial distress, contact Ira Smith Trustee & Receiver Inc. We will make sure that you have a clear understanding of every step of the bankruptcy process and alternatives to bankruptcy. Also check out our bankruptcy faqs. Starting Over, Starting Now you can take your first step towards living debt free life.

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CORPORATE RESTRUCTURING PART 1

corporate restructuring, financial restructuring, proposal, restructuring, richmond hill, richmond hill bankruptcy, toronto bankruptcy, trustee, trustees, vaughan, vaughan bankruptcy, woodbridge, woodbridge bankruptcy, company bankruptcyMany companies are experiencing financial difficulties as a result of the current climate of economic uncertainty, fast-moving markets, increased competition and outdated business models. As Trustees & Receivers we are often involved in corporate restructuring, a process which many clients find confusing.

We know there is confusion about the meaning of the terminology, the roles played by the various stakeholders and professionals, and the difference between a restructuring business plan and the Proposal. I’ll attempt to demystify it for you.

What is corporate restructuring

Corporate restructuring is a strategy to move from financial harm and return to a financially viable state.

When to consider restructuring

When a company is having trouble making payments on its debt and this situation is one that may lead to the company’s collapse, corporate restructuring should be considered.

Corporate restructuring increases a business’ efficiency – reducing costs, increasing profits – and therefore avoiding closure.

When is a company eligible for restructuring

There is a general principle we use in determining if a business is a good candidate for financial restructuring. It is that they must have a core business that is viable. First they must shed themselves of their debt which is weighing them down. They must also develop a business plan and model that will be profitable. Then they will be able to continue to run.

When should you contact a trustee?

If your company is experiencing serious financial difficulties, the sooner you contact a trustee, the better.

Contact Ira Smith Trustee & Receiver Inc. We will evaluate your situation and create an effective restructuring plan that will help your company to become financially sound, Starting Over, Starting Now. We will help you avoid a company bankruptcy.

Watch for our next blog – Corporate Restructuring Part 2 – when we’ll be addressing the key players, stakeholders and roles in a corporate restructuring.

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GREY DIVORCE IN CANADA CAN CREATE SERIOUS DEBT FOR BOOMER RETIREES

grey divorce in canada“Divorce is the one human tragedy that reduces everything to cash”. – Rita Mae Brown

The terms “silver separation” and grey divorce” sound very benign, but their financial ramifications have spelled disaster for many boomer retirees. Instead of travelling the world or spending carefree days on the golf course, many retired baby boomers may now be saddled with a mountain of debt and are trying to figure out how to pay their bills because of grey divorce in Canada.

A study done in 2012 by Bowling Green State University in Ohio revealed that the divorce rate among people who are retired or near retirement had more than doubled in the United States in just 20 years. According to Statistics Canada, divorces among couples 65 years of age and older are becoming more and more common and that the average age at which Canadians divorce has been rising steadily for a number of years. And, this trend is expected to continue. Susan Eng of the national seniors’ advocacy group CARP said that in recent years her office has been seeing an increase in calls from divorcees who are unsure of how they were going to make ends meet now that they were alone.

Although women seem to be the hardest hit, men are not immune. The nest egg that you have accumulated for retirement now has to be divided and you may also be supporting minor children and helping to support adult children and/or ageing and ailing parents. The financial challenges of your new reality may have created more debt that you can handle.

Grey divorce in Canada summary

Debt is a four-letter word but it can be managed with professional help. If you are experiencing serious debt problems because of grey divorce in Canada, or for any other reason, contact Ira Smith Trustee & Receiver. Credit Counselling, Debt Consolidation, and Consumer Proposals are all options that we can explore and then we will come up with a plan that will work best for you. Although life can be difficult after a grey divorce you can start over and live a debt-free life Starting Over, Starting Now.

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SHOULD SOCIAL MEDIA BE USED TO DETERMINE YOUR CREDIT SCORE?

bad credit, Bankruptcy, bankruptcy alternatives, Bankruptcy and Insolvency Act, bankruptcy in Canada, bankruptcy in ontario, bankruptcy ontario, bankruptcy protection, bankruptcy trustees, Consumer Proposal, consumer proposals, credit report, credit score, credit scores, debt management, debt settlement, declaring bankruptcy, Facebook and LinkedIn, social media, social networks, what is a consumer proposalAre you experiencing problems with debt management or having trouble getting credit due to a bankruptcy or a consumer proposal? If so, you are going to be delighted to hear that there are companies who believe that online reputations can tell lenders more about a person’s trustworthiness than the traditional credit score. Your credit score is established on the basis of how you pay your bills while companies like Lenddo and Neo Finance are analyzing data from social networks like Twitter, Facebook and LinkedIn, and other factors to reach people who have a hard time getting loans. The Lenddo score is based upon:

  • Number of followers
  • Background of peers
  • Education and employers
  • Repayment history of friends

The Neo Finance score is based upon the following information in a person’s LinkedIn profile:

  • How long the user has held jobs
  • The number and quality of connections in their industry
  • The seniority of their connections

Should social media be used to determine your credit score? Probably not. Basing anything on the number of social media followers is categorically unreliable. Social media networks have become a numbers game where there is the mistaken belief that “whoever has the most, wins”. Fake Twitter followers have become a multi-million dollar business. Open networkers on LinkedIn have thousands of followers that they don’t know and the same goes for people who collect Facebook friends. The other problem is that the consumer would have to be willing to connect the financial service to their social media networks’ data which of course brings up privacy issues. Although in theory, this sounds like an interesting idea, I’m afraid that there is no quick fix for bad credit.

If you are experiencing problems with debt management or having trouble getting credit due to a bankruptcy or a consumer proposal, contact Ira Smith Trustee & Receiver Inc. for information on how to fix bad credit so that you can live a debt free life Starting Over, Starting Now.

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Is it Time to Declare Personal Bankruptcy?

bankruptcy, personal bankruptcy, declare personal bankruptcy, bankruptcy alternatives, licensed trusteeIf you are considering personal bankruptcy you are no doubt feeling helpless as a result of a loss or significant reduction of income. The decision to declare personal bankruptcy is a serious one and should be made only after consulting with a licensed trustee. It’s not an easy fix for your financial problems and should be considered a last resort. Bankruptcy is hard on your credit rating, all debts may not be erased, you may have to surrender most of your possessions to your trustee, and you may have difficulty obtaining credit in the future for some time. There are also emotional and psychological effects of bankruptcy to consider. Although your financial problems may seem insurmountable, there are bankruptcy alternatives that may be better options for you. These include:

When is it time to consult a licensed trustee? Consult a licensed trustee as soon as possible if:

  • You have failed to make one or more payments on a mortgage or loan.
  • Your credit cards are constantly at their limit.
  • You are paying bills by taking credit card cash advances.
  • Your creditors have passed your account to collection agencies who are now calling you.
  • You have received notice of legal action against you to collect money you owe.

Why choose personal bankruptcy:

  • It is relatively quick
  • It can be less expensive than other options
  • It eliminates your unsecured debts
  • You will have some protection from creditors, legal action and wage garnisheeing
  • After your discharge your credit risk can start to improve

Can anyone declare personal bankruptcy? Anyone who is insolvent and owes more than $1,000 is eligible for personal bankruptcy in Canada.

To learn more about personal bankruptcy and bankruptcy alternatives please visit our website. Contact Ira Smith Trustee & Receiver to discuss the right option for you. There is no reason to struggle beneath a mountain of debt when you can gain back your former quality of life Starting Over, Starting Now.

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Are Consumer Proposals Right for You?

consumer proposal, consumer proposals, bankruptcy, personal bankruptcy, bankruptcy trustee, vaughan bankruptcy, vaughan bankruptcy trusteeIf you have serious financial problems, there are options in addition to bankruptcy. In fact more Canadians are now choosing consumer proposals instead of declaring personal bankruptcy due in large part to a change in the bankruptcy law that came into effect in September 2009. Previously only consumers with debt up to $75,000 could file a consumer proposal. Now the limit is $250,000. Is a consumer proposal right for you?

What is a consumer proposal? A consumer proposal is a way to make a deal with your creditors to repay your debts, but you can’t pick and choose the debts to be included. It’s a contract – a legally binding agreement that’s offered to your creditors through a licensed trustee, as an alternative to bankruptcy. It may be proposed that you pay a lower amount each month over a longer period of time, or pay a percentage of what you owe, and the consumer proposal must be completed within five years.

Is a consumer proposal a viable option for you? If you are an individual or a couple with total debts that does not exceed $250,000, not including debts secured by your principal residence, a consumer proposal might be the right choice for you. You will need to have cashflow from income to enable you to make your proposed payments and/or a third party able to assist you with a lump sum payment.

Why can a consumer proposal be a better option than bankruptcy? You’ll have control of your assets and more cash in hand to deal with daily expenses because a consumer proposal extends the time over which creditors are paid. Creditors like consumer proposals as well because they get more of their money repaid than if you opted for bankruptcy. However, you must be able to make the monthly payments. Your credit rating will also recover faster following the completion of a consumer proposal than from a discharge from bankruptcy. This way you consolidate all of your debts into one monthly payment that you can afford.

Be aware that a consumer proposal will not:

  • Eliminate your support and alimony obligations
  • Eliminate your student loan obligations if you ceased being a student less than 7 years prior to filing the consumer proposal
  • Deal with your secured debts, such as your house mortgage and car loan

Only a licensed trustee in bankruptcy can act as the administrator of your consumer proposal. Go to our website for more information on consumer proposals.

Contact Ira Smith Trustee & Receiver today for a free, no obligation consultation today and take your first step toward living a debt free life Starting Over, Starting Now.

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Everything You Wanted to Know About Credit Scores But Were Afraid to Ask

everything you wanted to know about credit scores but were afraid to ask, credit, credit scores, credit score, credit report, credit reporting agencies, problems with credit, toronto, bankruptcy, vaughan bankruptcy
everything you wanted to know about credit scores but were afraid to ask

Everything you wanted to know about credit scores but were afraid to ask: Introduction

Credit may not be sexy but it does make the world go ‘round. That is why it is important for you to know everything you wanted to know about credit scores but were afraid to ask.

Everything you wanted to know about credit scores but were afraid to ask: Our lives revolve around credit

Our lives revolve around credit – mortgages, car loans, student loans, credit cards…. Take out your wallet and look inside; how many credit cards do you have? According to a poll conducted on behalf of Credit Canada:

  • 43% of Canadians have more than 3 credit cards
  • 80% of Canadians do not know their credit score
  • 63% of Canadians do not know how their credit score is determined

The more you understand about credit the less likely you are to get yourself into trouble.

Everything you wanted to know about credit scores but were afraid to ask: What is a credit score?

A credit score indicates the risk you represent to lenders compared to other consumers. In Canada we have two credit reporting agencies – Equifax and TransUnion. They use a scale from 300 – 900 to rate your credit score. The number is calculated using a mathematical formula based on the information in your credit report (has detailed information on a person’s credit history including identifying information, credit accounts and loans, bankruptcies and late payments, and recent credit inquiries). You get points if lenders believe that you use credit responsibly. Conversely you lose points if you manage credit poorly. The higher your number is the better. A high number means that you are a good risk for credit. There are many factors that figure your credit score:

  • Length of time you’ve had credit
  • The types of credit that you use
  • Do you pay your bills on time?
  • How much debt are your carrying?
  • How many people have inquired about your credit?
  • Have you been bankrupt before?

Everything you wanted to know about credit scores but were afraid to ask: Why is my credit score important?

At some point in your life you will want access to credit whether it’s for a credit card or to borrow money to buy a house or a car, or to start a business. If you have a high credit score, you may be able to get a lower interest rate on loans, which can save you a lot of money over time. A good credit score will allow you to meet your goals for the future.

If you’re experiencing problems with credit, contact Ira Smith Trustee & Receiver Inc. We can help you get your life back on track Starting Over, Starting Now.

Call a Trustee Now!