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What Happens to Debt Resulting from Fraud in Bankruptcy?

Posted by in Bankruptcy
27
Aug 2018

The Details Concerning Filing a Fraudulent Bankruptcy in Canada

There are numerous reasons a consumer ends up in bankruptcy. Despite this, the results remain the same for everyone that files. Once the requirements for the process have been completed successfully, any unsecured debts are eliminated and the individual is assured a clean financial future.

Business man pointing the text

There are some debts that will remain despite a successful filing. This includes any secured debts such as a car loan or a mortgage. There may additionally be a variety of judgements and legal fines. Certain assets are relinquished for a personal filing to enable some debts to be eliminated. This means the individual will not have to pay their unsecured debts.

In certain instances, secured debts do not have to be repaid because the asset securing the debt has been reclaimed by the lending institution. A good example is if the bank has repossessed the individual’s car, they will not be required to pay the car loan.

It is important to understand what happens to the debt prior to deciding to file. This enables the individual to understand the cost for Canadian residents while making an informed decision regarding their finances. Once the process is completely understood, many individuals choose to continue to provide debt relief.

Although some people choose a debt consolidation loan, a debt settlement program, or consumer credit counseling, these options are not generally anywhere near as effective. The majority of unsecured debts are forgiven despite the period of time required for the debts to be discharged.

This process can take anywhere from nine months to a little over three years once the filing has been completed. If the individual does not possess any real assets, the creditors will most likely walk away. If there are any assets, the creditors will want at least a portion of what is owed. They will not receive the full amount of the loan.

Once the filing has been discharged, the individual will not owe anything on certain debts. This includes personal loans, credit cards, specific lines of credit, and unsecured loans such as payday loans, past due insurance premiums, and medical bills. Certain past due utility bills are also included such as gas, water, electricity, and telephone services.

If a minimum of seven years has passed since the individual was a student, their student loans will be forgiven. There are some fines and debts that will not be forgiven. These debts are categorized in two major ways. These are legal judgements and fines and secured debts.

The legal system and the government will not forgive debts even if the individual has filed for relief. Certain judgements are still applicable including child support payments, alimony, payments due to a fraud conviction, fines for restitution and government overpayments from income tax. These charges must be paid.

The difference between a consumer proposal and a bankruptcy is when the conditions pertaining to the consumer proposal have been fulfilled, the creditors are unable to come after the assets of the individual. Other than specific exemptions, the individual will have to let go of their secured assets for their secured debts to be released.

A good example is a consumer with a mortgage line of credit against their home. The banks will not forgive this type of debt and enable the individual to keep their home. The home will be repossessed by the bank. It is also important to note if a student loan is less than seven years old, it must still be paid.

The majority of Canadians who file are honest and simply experiencing severe financial difficulties. Some of the most common reasons for filing include unemployment, divorce, and health issues. Unfortunately, there are certain individuals who purchase expensive items they know they are unable to afford or obtain credit they have no intention of repaying. This is a crime.

Fraud in Bankruptcy

There are several different types of fraud but they all involve the same premise. The consumer is purchasing either services or items with no intention of paying for them. This includes living an extravagant lifestyle or a lifestyle the individual is unable to afford, severely mismanaging their finances, trading or borrowing while aware there is no way to repay the debts, telling a lie to obtain something valuable, creating or using fraudulent documents to receive something of value or a loan, obtaining unaffordable loans while showing preference to a specific creditor, and writing bad checks to juggle payments.

There are specific checks built into the filing process to prevent fraud. Sworn statements must be provided to licensed insolvency trustees regarding the expenses, income, and windfalls such as receiving cash for a gift or winning the lottery. Previous spending and the current financial status will additionally be discussed.

A good example is an individual that purchases several thousand dollars worth of items shortly before filing. In this case, the trustee will suspect fraudulent activity. A red flag will be raised if the home is sold right before or after filing. Fraudulent behaviour can also be reported by family and neighbours when observed.

Regular reports are made regarding this type of activity to the authorities by casinos, banks, and creditors. The OSB maintains a website where suspected fraudulent activities can be reported. The Royal Canadian Mounted Police will investigate all reports. If evidence is recovered, the result is usually an arrest.

Committing fraudulent activities is a serious crime and there are a variety of penalties involved. Recent purchases are generally not included when the individual files. The individual must pay for any profits resulting from fraudulent activities. In the event of a conviction, the filing will be reviewed and the individual will be denied an automatic discharge.

A consumer proposal or another filing may be impossible or difficult to obtain in the future. The penalty involves several different fines and the individual can be sent to jail. A lot of individuals believe they can get away with fraudulent activities but the licensed insolvency trustees and the OSB perform their jobs extremely well.

For more information, please call Kevin Thatcher & Associates LTD at 1-866-719-8547 or contact us here.

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5 Bankruptcy Facts You Need to Know

Posted by in Bankruptcy
20
Aug 2018

No one aims to become bankrupt, but 125,878 Canadians filed for personal bankruptcy in 2016. It’s projected that one in six Canadians will become bankrupt at some point in their lives. When you’re at the point of considering bankruptcy, it’s helpful to know you’re not alone. In fact, you’re in good company.

Bankruptcy Law books with a judges gavel on desk

Filing for bankruptcy is a social security measure put in place to prevent people from drowning in their debt. If your debts are piling up and you have no hope of paying them back given your current circumstances, then filing for bankruptcy could be of great assistance in getting back on track.

Filing for bankruptcy is a major decision. Either you have to live with your debts and come up with an effective plan to pay them off or you have to live with the consequences of filing.

Here are some points to know if you’re thinking declaring bankruptcy is your only option. Bankruptcy should only be considered as a last resort as the ramifications of declaring will be carried with you for the next decade. Filing bankruptcy can be a lifesaver, however, for those who desperately need a fresh start and are at a loss as to how to get there.

1. There are two kinds of bankruptcy

Popular bankruptcy terminology like “chapter seven” and “chapter eleven” only pertains to the United States. In Canada, we only have two types of bankruptcy: personal and business.

Declaring personal bankruptcy allows individuals to wipe the slate clean of their debts and begin working their way back to good financial health. Those who are looking to declare personal bankruptcy must be considered insolvent, the criteria for which are:

  • You owe at least $1000
  • You have stopped or are unable to keep making debt payments
  • If you sold your possessions at a fair market rate, the proceeds would not cover your debt

Personal bankruptcy can be a lifesaver if you are about to get ousted from your house.

If you are a business going into bankruptcy, you will fall under one of two types: small business and corporate. If a landlord is looking to seize your assets for lack of payment, the business is no longer viable. Or, if the business will be imminently closing and requires full disclosure of financials, declaring bankruptcy may be the smartest move.

2. There are consequences

Everyone knows there are consequences to filing bankruptcy, but what exactly are these consequences? First off, your credit score will be reduced to the lowest possible level for six years following your declaration. This will make it much more difficult to find a place to rent, receive a loan, find a job, or even secure a cell phone contract.

It’s easy to take for granted the advantages of having good or even fair credit. Once you’ve declared bankruptcy, you’ll be seen as a major liability for anyone putting their faith in your ability to pay.

You may also be required to liquidate your assets to pay back creditors. In many cases, you’ll be able to remain in your home, but if you need to relocate yourself and your family, that will be made much more complicated by your newly trashed credit score.

You’ll also need to turn over your personal information. It’s true what they say, that our accountants know more about us than our doctors do. Your entire financial situation will be laid bare for lawyers and creditors to assess. While it’s for the greater good, it can be very uncomfortable in the moment.

3. You won’t lose all your debts

Declaring bankruptcy removes the lion’s share of debt from your plate but expenses such as mortgage payments, alimony, court fines, and assault claims will remain attached to your name. It’s your responsibility to continue paying these debts even while you’re filing for bankruptcy.

4. Going bankrupt is expensive

Filing bankruptcy is a legal procedure, and there’s no such thing as a free legal procedure lunch. The costs, which come out to around $1,500, are taken from your liquidated assets. There are also ongoing expenses of credit counseling courses, which are mandatory.

5. Your spouse is safe

If your spouse has co-signed on loans with you, their credit score will be affected by your filing for bankruptcy. If this isn’t the case, however, and they’ve maintained their financial independence, they won’t be touched by your bankruptcy. It can be hugely helpful to have a spouse with good credit while you’re climbing out of bankruptcy.

Filing for bankruptcy is a huge decision, but chances are if you’re thinking about it, then the problem has already become unmanageable. That’s how debt tends to work; it creeps up over time, and before you know it, you’re barely treading water.

Bankruptcy is a lifeline for those who have run out of options and energy. The major consequences, primarily the reduction in your credit score, are definitely points to consider before filing. It’s good to know it’s an option, however, and that it’s never truly hopeless.

For more information on bankruptcy and personal finance, call Kevin Thatcher & Associates today at 1-866-719-8547 or contact us here.

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Is Debt Management or Debt Settlement Better for Me?

Posted by in Debt
16
Jul 2018

Being in debt is an unpleasant experience for anyone. When your debt exceeds your ability to pay it off, it is certainly something to be concerned about. People are forever looking for easy ways to tackle such problems. Most people keep wondering about what solution is right for them and what isn’t. To know what is suitable for each individual, we must start by looking at what these terms actually mean and how they work.

young couple worried need help in stress at home living room

Let’s take a look at debt management and debt settlement solutions, and compare them.

What is Debt Management?

Debt Management refers to extending the time period of your debt by collaborating with unsecured creditors in an unofficial manner. Once you sign the agreement, you have to pay money in installments to the company in much smaller amounts for a longer interval of time.

Disadvantages

If you’re not sure about your ability to make regular payments, do not go for a debt management plan. If you make a late payment or skip it for a month, you will be disqualified immediately and could end up losing all your previous money and benefits.

This is an ideal solution for those who have small amounts repayable in the time frame of less than 60 months. However, if you owe a huge amount, this would hardly benefit you. Also, though there are non-profits in this field, most of the for-profit agencies charge a heavy fee for this provision. This eventually increases the total amount to be paid by a huge number. Therefore, it’s best to avoid private debt management companies and stick to non-profits.

Another demerit is that you will have to surrender all your credit cards and will not be able to use them until the debt repayment is over.

Advantages

Lower interest rates are often a part of these plans. By opting for this you may end up saving money and may even improve your credit score, thanks to regular payments. Moreover, you don’t need to send money to each of your creditors since one consolidated payment would do. The debt management agency will take care of who receives the money and how much of it. In the end, you reduce a lot of headache and risk.

What is Debt Settlement?

Also called debt arbitration, it refers to the process where the creditor and the debtor agree on an amount that is lesser than the original amount to be paid. However, in this case, the debtor has to pay a lump sum payment to the creditor at once.

Disadvantages

Unless your account is 4 months delinquent or more, creditors won’t be willing to negotiate. Additionally, you will also have to pay taxes on the debt forgiven. If you approach third-party providers to fix the deal for you, they are likely to charge you a very hefty amount. Also, there is no guarantee that the negotiation would take place since it depends entirely on the will of the creditor. Consequently, debt settlement is more of a gamble than anything else.

Another glaring disadvantage is that debt settlement tends to affect your credit score as you stop paying your creditor and don’t return the full amount.

Advantages

You will be saved from bankruptcy. One doesn’t need to dive deep into the demerits of bankruptcy; to put it crisply, you would not have to worry about asset liquidation. Also, this is a great way to reduce the principal amount of your debt. If you’re seeking a one-stop solution for your debt issues, debt settlement is the option for you.

Which is the best for you?

Though this is a question that varies from person to person, debt settlement happens to be the more popular solution. We must remember that debt management would keep your principal amounts constant and would increase the time frame. But debt settlement may reduce the principal amount to up to half the original amount.

If you have a huge amount to pay back, debt settlement is probably your best bet. It will reduce your cost, as the creditor would realize that they might end up with nothing otherwise.

As seen from this brief analysis, both methods have their respective pros and cons. In the end, it really depends on the person in debt as to which approach is better suited to them and what risks they are willing to take. For some, a destroyed credit score is better than bankruptcy. For others, the ability to pay it in an expanded time period is what they need. Irrespective of the alternatives one chooses, the industry has a solution.

For help with managing your debt, call Kevin Thatcher & Associates Ltd. at 1-866-719-8547 or contact us here to book your free consultation.

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7 Strategies to Pay off Your Credit Card Debt Fast

Posted by in Credit Cards
9
Jul 2018

There is no denying that we often get lured into getting credit cards even if our common sense warns us against it. After all, they are accepted everywhere, do not require us to carry cash most of the time and help in getting loans sanctioned easily. With all their perks, we often end up overusing our credit cards until one day we land ourselves in deep trouble — with all the debt piling in one after the other.

Manage debt text on cubes

While it is true that credit cards provide you with an emergency line of credit to cover any unexpected rise in expenses, they can be a nuisance if the debts are not paid off in time, leading to higher rates of interest and a bad credit score to your name.

If you too are reeling under the pressure of excess credit, you should come up with a systematic plan based on a specific financial goal. The trick to reducing your pending dues includes the reduction of further credit before the debt consolidation of the outstanding one – that is, you should know how to reduce credit cards usage without discarding it altogether. This will prevent your credit card interest from snowballing further.

Listed below are a few tactics to handle your credit card woes to help pay off your debts faster.

1. Keep your credit cards out of reach

The most obvious way of reducing the outstanding credit is to stop yourself from adding more dues to your existing ones. Hiding your credit card until you have cleared off all the debts and getting into the habit of buying things with cash is a great way to discipline yourself. This not only helps you prioritize your needs from your wants but also puts less pressure on your current dues. You will then be extra cautious about spending money and think twice before you indulge in an extravagant spending spree.

2. Set a financial goal

You should set yourself practical targets which can be achieved without much hassle. Jot down all your debts and prioritize them in order to ensure the least possible penalties. The list should include all your outstanding debts, including mortgage, car loans, overdraft, etc. While some people prefer to pay off their mortgage and car loan first, there are others who prefer to ease the burden of higher credit card interest first. Proper planning can help you stay focused on clearing off your dues and allows you to keep track of your monthly progress.

3. Reduce your expenses

You can gain pace in repaying your debt by cutting down on your expenses and freeing up some cash. You can closely monitor your monthly expenses by tracking your expenditure every week or month. This will lead you to seek more opportunities to reduce present costs as you become fully aware of the inflow and outflow of your money.

4. Maximize your savings

Your savings can help you pay off your loans faster. If you are one of those who has been regularly depositing money in a provident fund or an investment plan, you can take the help of these funds to free yourself of the burden of credit card dues. Availability of lump sum cash can relieve you of what you owe immediately. Besides, you can keep funding of your saving bonds on hold until you accumulate the money to pay off all the outstanding dues.

In the longer run, the money saved by you in paying off your dues quickly will be considerably higher than the interest gained by depositing the same amount of money in a savings bond. So, make intelligent choices and creatively utilize your tax refunds, interests or salary increases to erase the records of your debts clean.

5. Decide on a monthly expenditure plan

If you’re someone who frequently finds themselves burdened by loans, you should design a monthly spending plan for your family. Not only will this keep flamboyant purchases in check, but it will also give you the awareness to live within your means. This will, in turn, reduce your use of credit cards along with giving you a rough estimate as to when you can be entirely free from your debts.

6. Adopt the Snowball Method

Arguably, the most efficient way to come out of your outstanding dues is to clear off the small credit card debts first, as this has a psychological impact and encourages you to achieve your goals faster. Paying off smaller amounts first makes you feel that you are progressing faster, can give you a sense of relief and prepares you to face future hurdles in debt consolidation. Paying down one small due after the other will keep on chipping away at the outstanding amounts to be paid while you are simultaneously saving money to pay off bigger loans.

7. Opt for a debt consolidation loan

When planned efficiently, debt consolidation loans and balance transfers can pull you out of your credit card woes successfully. Block your credit cards temporarily while you look for a consolidation loan to stop yourself from using them further. Make sure you conduct proper research before you opt for a loan to ensure that you do not end up paying more interest for the loan than for the credit card debt and that the loan doesn’t come with any hidden charges or conditions.

Paying off your debt is a systematic process and requires a well thought out approach. Talk to our professionals and let them help you in designing your payoff plan as per your convenience. Call us at 1-866-719-8547 or contact us here to book your free consultation.

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The Nature of Equity Receivership and Why it Happens

Posted by in Uncategorized
18
Jun 2018

An equity receivership, or equitable receivership, is a form of receivership which is neither a plain care-taking pending foreclosure nor an action initiated by the government. A receivership remedy is an equitable form of remedy, one which emerged in the English chancery courts, where receivers were appointed to oversee and safeguard real property. A receivership is a legal remedy open to secured creditors to recover funds owed under a secured loan in cases where the company defaults on its loan payments. Another role of a receiver is to be appointed in a shareholder dispute to complete a project, liquidate assets or sell a business.

equity receivership details are written on a wood block

How the Process Works

The process starts with the appointment of a receiver by a secured creditor under a security agreement or by the Court on behalf of a secured creditor. Only a Licensed Insolvency Trustee is eligible to act as a receiver. The powers and rights of Court Appointed Receivers are outlined in the court order that appointed them.

The receiver is entrusted to take possession of the assets secured by the security agreement and sell or liquidate them to repay the debt left owing. Under a receivership, both a secured creditor and the Court itself are able to appoint a receiver-manager to handle the company until such a time as it is sold as a going concern.

Additionally, a receiver’s duties include giving creditors notification that the receivership is taking place and regular reporting on the status of the receivership to the Official Receiver, who is a representative of the Office of the Superintendent of Bankruptcy and of the Court.

Receivership and bankruptcy are not mutually exclusive. A receivership can occur in the absence of a company going bankrupt. The same entity can perform the roles of both trustee and receiver, but commonly there are different firms appointed to the distinct roles.

It is the job of the receiver to sell the assets secured under the security agreement. Then, after subtracting the receivership’s fees and expenses, the receiver disburses the profits from the sale to creditors in a priority-driven manner. For cases where the proceeds from the sale of assets are insufficient to cover the liabilities of the secured creditor in full, no realizations are to be accessible for distribution to the unsecured creditors.

Advantages of a Receivership for Creditors

Once a company enters a period of financial instability, the first reaction for many creditors is to try to place the indebted party under bankruptcy. Yet an equitable receivership may be the more advantageous action available.

The main advantages of a receivership are twofold. Firstly, an equity receivership supplants management with the receiver straightaway, whereas a bankruptcy keeps management in place indefinitely. If finances were truly the issue, bankruptcy might present a good course of action. But in cases where money problems are just a symptom and the real problem lies with management, then a receivership may prove a better circumstance for creditors.

The second advantage of an equitable receivership is that it presents greater flexibility than a bankruptcy. Any person or team that is able to serve well as receiver can be appointed. A receivership judge can demarcate just about any procedure that is found suitable.

The Wells Fargo Case

In a battle between a receivership court’s inherent equitable powers and property rights that were pre-existing, that is, the Wells Fargo case, the Eleventh Circuit had examined whether a district court’s inherent authority to establish a claims submission process permitted the Court to terminate a security interest in real property based only on an unfortunately timed proof of claim.

Secured creditors across the land were glad to see that the Eleventh Circuit determined that the district court had erroneously discontinued the creditor’s pre-existing property rights in those circumstances.

Background Information on Wells Fargo

Equity empowers a district court to set out procedures for the submission of claims to a receiver, and to establish a claims bar date. In the Wells Fargo case, the SEC sought and attained the appointment of a receiver over several entities that perpetrated a failed Ponzi scheme.

Though not a named party to the receivership action, Wells Fargo Bank, National Association (Wells Fargo) possessed security interests in three properties taken over by the receiver.
After appointing the receiver, the district court entered an order that outlined procedures for submitting claims to the receiver, set a due date for submission of claims, and prevented any claims submitted after the due date from being upheld.

The receiver thus mailed a claims packet to Wells Fargo, who did respond, but only deigned to identify one of its three secured loans in the claims form.

Approximately one and a half years following the expiration of the claims due date, Wells Fargo filed a motion to argue that either it was unnecessary to file a proof of claim to preserve its security interests, or that leave to file a late proof of claim should be granted.

The district court ruled against Wells Fargo, concluding that it had failed to preserve its security interests because it failed to comply with the court orders establishing the claims procedure. Wells Fargo then appealed, and the Eleventh Circuit reversed.

Let’s Analyze This

The Eleventh Circuit decided that even though a secured creditor can submit a proof of claim that in turn submits the secured creditor to the jurisdiction of the receivership court to preserve its ability to recover an unsecured part of its debt from general receivership assets, it is not required do so in order to preserve its inherent rights.

Tough questions arise from the issue of whether the broad powers of receivership courts can affect the interests of a third party. The Wells Fargo case puts to bed one of these ambiguities, by having concluded that the pre-existing security interests of secured creditors do survive a receivership, despite a court-established claims submission process.

For more information, please call Kevin Thatcher & Associates Ltd. at 1-866-719-8547 or contact us here.

 

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What Happens to My Leased Car If I Go Bankrupt?

Posted by in Bankruptcy
11
Jun 2018

Consumer proposal and bankruptcy laws both deal with the same thing: a person’s unsecured debts. These can be anything from lines of credit, credit cards, debts on income taxes, and personal loans. Thus if you are filing a proposal or for bankruptcy, you have the option of keeping the secured item and continuing payments or giving up the item and having the debt included in your filing, which includes your car loan, mortgage, and any secured credit lines that you have.

Bankruptcy Law books with court gavel

What is a Secured Debt?

A secured debt has been tied to one of your assets. Assets can include your car, house, or other items a creditor has taken security on. When assets are tied to a debt, you can risk losing them if you fail to make payments on the debt.

When you have a secured debt, the lender will place a lien or mortgage on the particular asset. This security allows them to take the necessary steps to repossess the asset should you fail to pay according to the schedule that you’ve agreed to. When the lender is forced to repossess the asset, it will then be sold. This is what happens when repossessed cars and foreclosed homes are sold. If the sale price from the asset doesn’t cover the entire debt, the lender has the right to demand the remaining difference from you.

It is also important to understand that when you have a secured debt, you’re not the full owner of the related asset until you’ve finally repaid the loan. The asset always belongs to the lender.

What is an Unsecured Debt?

Unsecured debts don’t have the same assets as secured debts. The lender has not registered a lien against your asset(s), which means that they don’t have any collateral to use should you cease to make timely payments. Lenders might use a number of different actions to secure payments, such as garnish wages or pursue a court order to go after assets.

Also, credit bureaus will be informed that you have a delinquent payment status, and your credit score will suffer.

The most common type of unsecured debt is credit card debt. Other types of unsecured debt include certain lines of credit, some income tax debt, medical bills, payday loans, court-ordered child support, and student loans.

Is a Leased Car a Secured or Unsecured Debt?

If you lease a vehicle it actually means that it is not registered in your name. The leasing company has the right to repossess the car if you fail to make payments on your lease according to the payment schedule. In this way, it is very similar to having a secured debt.

If you aren’t behind on any of your lease payments, the leasing company has no right to cancel your lease. If you are able to maintain your payment schedule, lease cancellation isn’t an option, even if you file for a consumer proposal or bankruptcy. If the leasing company threatens to cancel your lease despite your payments being current, you should inform your trustee as soon as possible so that your trustee can place the company on notice.

What to do if You Break Your Lease

You have the choice to break your car lease when you initially complete your filing paperwork for a bankruptcy or a proposal. The trustee can help you navigate the process of returning the vehicle properly.

Before you complete your filing, you should give your trustee detailed information about your car lease. This includes your monthly payments, the amount of time left on your lease, whether you’re up-to-date on paying, and whether or not you intend to break the lease.

To speak to a trustee about booking a free debt consultation, call Kevin Thatcher at 1-866-702-9801 or fill out the contact form available online.

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How To Manage Credit Card Debt

Posted by in Credit Cards
21
May 2018

Are you worried about your credit card debt? Credit card debt is something millions of Canadians are struggling with. For example, in America, the public owes over one trillion dollars in debt. In Canada, the numbers are equally discouraging.

Managing Credit Card Debt

What You Should Know

The first thing you should know is that if you have credit card debt, you have to come up with a plan to pay off the debt or seek financial assistance from a counsellor who can help you make a plan. If you are not careful about how you spend your money, your debt will only go up.

Come up with a plan for paying off your credit debt, little by little. When you get extra money, such as money you receive as a gift or a raise, use it to pay off your credit debt. Paying off your credit debt should be your number one priority. You should also always pay attention to the period of time it will take to pay off your loan at the minimum payment. This information will be on your credit card statement each month and can be a good indicator of when to obtain financial help. If this date seems totally out of control it might be time to talk to a counsellor.

Watch Your Spending

Be smart about your spending habits. If you continue to use your credit card without paying attention to what you are spending your money on, you will continue to a have problem with credit debt.

Ideally, a credit card should only be used when you know you have enought funds in your bank account to pay off the amount spent. . If you are having trouble keeping cards under control try to stop using them and instead take out a specific amount of cash and spend only that over a certain period of time. This can make you a lot more careful about what you are spending your money on.

To learn more about paying off credit debt, call Kevin Thatcher & Associates today at 1-866-719-8547 or contact us here.

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4 Reasons to Consolidate Your Debt and Improve Your Finances

Posted by in Debt Consolidation
14
May 2018

Being deep in debt is stressful. Debt can make it impossible to have financial freedom and can grow worse if you don’t take action to get a handle on it. People can also need bankruptcy protection because they think have left the issues to long to have many other options. It’s not the only option available and it is important to discuss all of your options with a financial counsellor before making the right decision. Bankruptcy is a last resort for those who are unable to formulate another viable plan. Fortunately, it’s easier than people think to improve their finances with a consolidation loan.

Reasons To Consolidate Your Debt

Lower Monthly Payments with a Consolidation

If you have 10 multiple credit cards maxed out, you’re paying 10 monthly payments and 10 different interest rates. Let’s say your credit cards all carry a $1,000 balance with a minimum payment of $45 per month. That’s $450 per month, and less than half of that is going to the balance owed and the rest is interest. If you take out a consolidation loan or a consumer proposal for $10,000 and pay off all those cards, you can potentially lower payments by hundreds of dollars every month.

Lower Interest Rates

Not only does a consolidation loan offer lower monthly payments, it also offers you the benefit of paying less interest. A $10,000 consolidation loan at 7.5 percent interest for 10 years means you are paying $119 per month, of which only $35 per month is interest. This means you will have less to pay off overall.  Consumer proposals can often be for far less than you owe and freeze interest so your balance is not constantly creeping upwards.

Pay Off Debt Faster

Consumers get to choose the length of their consolidation loan. Making minimum payments to multiple credit cards can take many years to pay off. A consolidation loan marks an end date, and it helps consumers pay off their debts faster and for less money. Consumer proposal are also for fixed period of time so an end date is always in sight and there are no surprise extra amounts owing.

To learn more about debt consolidation and consumer proposals, call Kevin Thatcher & Associates today at 1-866-719-8547 or contact us here.

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5 Important Facts about Income Tax Debt in Ontario

Posted by in Income Tax Debt
20
Apr 2018

It is tax season in Ontario and the dealing with unexpected Income Tax debt can be overwhelming.

Important Facts About Income Tax Debt In Ontario

Here are 5 things every person should know about Income Tax and Income Tax debt:

  1. Not filing your taxes on time will only make matters worse.

    Even if you can’t pay the amount you owe to CRA, filing your return on time will help you avoid significant penalty fees. As of 2017 tax year, filing penalties start the day after the tax deadline with an immediate 6%. Then there is a monthly non-filing penalty on the balance 2%.It is also very important to understand that if a taxpayer files late twice with penalties within a four year period, the penalties double.

  2. A different deadline for filing self-employed tax returns does not mean a different deadline to pay amounts owing.

    Taxpayers who are self-employed technically have until June 15th 2018 to file their taxes (which is 1.5 months more then a regular tax filer) but it is important to understand that even though the return date is later, the deadline to pay any amount owning without interest is still April 30th 2018. Revenue Canada interest rates are compounded daily and can quickly get out of hand so it is important to understand that they start on May 1.

  3. You can be held personally responsible for Corporate income tax debt.

    As a director or a corporation you are personally responsible for some of your corporation’s tax debt. A failure to file or pay a company’s corporate income tax can cause Revenue Canada to go after your personal bank accounts and assets.

  4. Revenue Canada does not go to court to garnishee your wages or seize your bank account and assets.

    The CRA can register your debt with the Federal Court of Canada and once registered it has the same effect as a judgement obtained against you. You are normally not notified of this and if you are you will received very little notice. This means that you must pay the amount in full, and if you do not, the CRA may seize assets and property to try and pay our outstanding debt.

  5. Income tax debt can be included in a bankruptcy, proposal, or consumer proposal.

    If you file a bankruptcy or a consumer proposal as soon as you know you can’t afford to pay the CRA what they are owed you can eliminate the tax debt and stop Revenue Canada from registering a lien against your home or going after other assets and bank accounts. The sooner you deal with the problem the faster you can avoid CRA selling your assets.

Are debt problems keeping you awake at night? Are you are struggling to make your monthly minimum credit card payments, loan payments, Revenue Canada debt payments? Are you worries about losing your house, car, or investments?

Contact a debt counselling professional today at 1-888-329-5198 to eliminate the stress of Revenue Canada debt.

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How To Discuss Financial Problems With Your Partner

Posted by in Financial Problems
26
Feb 2018

Money is a major cause of why couples fight, so most partners may prefer to ignore the topic altogether until it’s really necessary. Couples tend to follow the financial habits they learned from their parents or role models, which makes it sort of an emotional subject to discuss. Things get even more complicated when the difference in attitude is combined with a imbalance in power.

Tips To Start Money Conversations With Your Partner

Discussing money may cause a lot of anger, but it is an essential conversation that you must have to avoid strain in your relationship. Here are a few tips to discuss financial problems with your partner:

  • Understand each other’s financial attitudes: Everyone has a unique approach to money based on life experience, so it’s unlikely that your partner’s attitude towards finances will be exactly like yours. Money can mean security, freedom, or power for you or your partner, which will influence how his or her spending and saving habits. It is important to recognise your partner’s financial behaviours and find a common ground to avoid conflict.

  • Set mutual goals early in the relationship: Ideally, you should discuss money in the early stages of your relationship when discussing other matters like children and a place to live. As soon as the two of you are committed to being in a long-term relationship, you should have a plan for how to save and spend your money. If you don’t have equal income, you should settle on a plan that allows you to share financial responsibility in your relationship.

  • Proper timing: To start an unbiased money conversation, pick the right moment when both of you are calm. Consider establishing a “time-out rule” to stop the conversation temporarily when one of you is getting angry, cynical, or combative, as these emotions inhibit rational thought.

  • Avoid the blame game: When financial problems arise, it is easy to blame the spending on your partner. Instead, try to budget, share financial obligations, and find solutions to any problems together as a team.

  • Face the situation: If you are facing a money problem, start by working out where your money is going. If you’re open about your finances, you shouldn’t have a problem reviewing bank statements, credit card debt, and household bills together. Find ways to reduce your expenses, cut down on debt, and start saving.

Having a money conversation with your partner shouldn’t be difficult. If you want to, tackle debt, take a holiday , save for your children’s education, or buy a home, you need to agree on a financial plan. If you’re already in some kind of financial trouble, it is often helpful to talk to a professional about getting out of debt together, gain financial literacy, and move forward debt free together.

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