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How Bankruptcy Affects Student Loans

Posted by in Bankruptcy
Oct 2019

With what many would consider being unfair changes to the student loan process in Ontario, more students will be faced with the challenges of financing their education. Whether you had benefited from student loans prior to the amendments made to the student loan program or are looking at your current financial situation as a student today, student loan repayment is something you will eventually have to face. Paying back student loans can be a challenge, especially if you are trying to establish a career living in an expensive area like the GTA. If you are facing financial hardship due to your student loans, you might be looking for assistance to help reduce your debt burdens. Here, we explore the impact that bankruptcy has on student loans, as well as your options before bankruptcy is necessary.

How Bankruptcy Affects Student Loans

Consider Your Payments

If you have found you aren’t able to meet your required payments each month, look at your budget to determine how much you think you can afford to pay. Don’t worry if it turns out that you can’t afford to pay anything! Once you have an idea, you will be in a better position to speak to your creditors, whether it is the government or a bank that provided your student loan. You can explain your situation and see if you can come up with a more manageable repayment plan.

Government Repayment Assistance

If your loan was through the government, you might be surprised to hear that they tend to be far more forgiving when it comes to loan repayment options.

The government views getting back any amount of money from student loans preferable to having to write them off altogether. Therefore, they are happy to discuss your options. They even have a repayment assistance department for this sole purpose. They have flexible terms and even offer support to students in need. However, it is also important to be realistic and know when you may need more help than their repayment assistance can provide.

Repayment assistance can be a real lifesaver for you if you are struggling financially. In Ontario, the Ontario Student Assistance Program (OSAP), will allow for reduced payments. In some cases, they will even completely defer payments for as long as six months when necessary. In certain scenarios you aren’t charged interest during this period as well.

Your best first optionis to call OSAP to make arrangements, as the online process does not allow you to enter all the personal details of your situation. Speaking with a live person makes it easier to review your issues and come up with a solution that is a little more customized.

They will review your monthly income, your necessary expenses, and discuss possible payment terms that are realistic based on your overall financial situation.

Student Line of Credit

If your loans came from a bank, you are going to have fewer options. Banks are not as forgiving, as they are all about the bottom line. However, these types of debts are dischargeable in a bankruptcy or a consumer proposal as the funds did not come from Student Loans. They don’t offer a formal repayment assistance program like the government but you can still gain from a conversation with your bank. When you are strapped for cash, even though paying more interest is never a good idea, if you can negotiate a longer payment plan, you can reduce the amount owed each month. You can hope to improve your financial situation over time and increase your monthly payments. You will then end up paying less interest. This way, you have better cash flow and can have a more manageable monthly budget that also reduces stress! Be honest and provide a new monthly payment you can afford and, hopefully, they will work with you to help make your repayment schedule work.

Consumer Proposal

If you don’t have any luck with settling your debt issues, speak to our team at Kevin Thatcher & Associates. As Licensed Insolvency Trustees, we can discuss the possibility of a consumer proposal.

A consumer proposal is a negotiation process to reduce debt. We try to propose a repayment plan on your behalf that will significantly reduce your debt. Student loans are unique as they will only be completely wiped out if you have been out of school for more then 7 years however at the very least they can buy you time and get your life and income on track.

If you do file a consumer proposal, it will show up on your credit record. This will be a negative mark that will impact your ability to get any further loans, including a mortgage or auto loan however if you are dealing with an unmanageable debt situation your credit is already being effected.

A consumer proposal stays on your record for three years following the completion of your proposal. That means you could have the mark on your record for up to eight years. You can take steps to get your credit score back up to good standing by ensuring all payments for s your rent, utility bills, and cell phone bills are paid in full and on time each month.


Last, but not least, your final option is bankruptcy. We consider this to be the last resort, however, it can wipe your debt clean, allowing you to start to rebuild your finances. For Student Loans it is important to understand that the debt is only wiped out if you have been out of school for more than 7 years. If you have not been out of school for that period of time then a bankruptcy can provide relief from required payments, garnishees, and harassment but the debt will survive. A trustee can explore this with you and what your options will be to deal with the debt if it is not wiped out.

After 10 Years

For OSAP loans, if you remain in debt beyond 10 years of completing your studies, you can review your situation with the government again. They call this “stage two” of debt repayment. Depending on your finances, they may negotiate the best terms to help you pay off the principal (your loan balance sans interest). You pay what you can afford, and they handle the rest. When you are truly strapped, they will forgive the debt but this is not a guarantee

As you can see, although student loans can create unmanageable debt situations, you always have options. We can help you find the best solution, so you can focus on your career and rebuilding your financial stability.

At Kevin Thatcher & Associates, we offer consumer proposal services and bankruptcy student loans that Ontario clients need to get their finances back on track. Contact us here for more information.

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Six Ways to Track Your Expenses

Posted by in Money Management
Oct 2019

The secret to financial stability is being wise with your money. Many people give money management very little thought. They spend based on what they consider to be safe and find out too late they are in debt over their heads. Money management is more important than ever as the cost of living continues to rise. Learning to spend less than you earn each month can make a world of difference to your credit rating, financial health, and peace of mind. To enjoy financial “well-being”, it takes some artful budgeting to ensure your spending habits are aligned with your earnings. You can, therefore, avoid the need for bankruptcy counselling.

Six Ways to Track Your Expenses

Here, we explore six ways to track your expenses, so you always remain ahead of the game and can meet your long-term financial goals.

1. Keep debit records

Debit makes it more difficult to track your spending. When you use cash in hand for purchases, you have something tangible you can count and see disappear. However, with debit, it just takes a swipe and barely a glance at the money you are withdrawing from your account, which makes spending far too easy. In order to get a better handle on your spending, you should keep records of every penny. A good way to do this is to always ask for a receipt. It’s a pain to carry them around, but you can place them in an envelope or folder at the end of the day at home. You can then add them up at the end of the month.

If you don’t like this idea, you can also review your withdrawals and transaction in your bank account online. You will begin to see how often you are using your debit card and determine if your spending is out of hand.

2. Review your credit statements

As with your debit spending, keeping an eye on your credit spending is very important. First, you should never blindly pay off credit. Look for discrepancies due to the threat of fraudulent spending. Second, make sure you understand your balance, watch for how close you are getting to your limit, and see if you can make payments higher than the required monthly payment. This helps to keep your debt ratio down. Again, look for big spending to determine where you might need to cut back. The less you are spending on your credit cards, and the lower your balance, the less you have to spend!

3. Address overspending

As you do your monthly account reviews, look for overspending. An easy way to do this is to set up categories of spending so you can look for opportunities to cut back. This would include your necessities such as rent or mortgage, utilities, food, transportation, etc. You can then add other categories such as:

  • Entertainment like dining out, movies, concerts, bars, etc.
  • Fitness such as gym memberships.
  • Wardrobe.
  • Personal care such as hair appointments, nail salons, and massages.
  • Health care such as chiropractors, prescriptions, dentist appointments, etc.

With your categories set, you can take note of the money you have to spend each month and look for areas where you can save money. Categories such as entertainment or wardrobe can be easy to cut back on. Often, your grocery bill can be a bit of a surprise, especially if you tend to shop several times each week, instead of one big shop once a week. You can set a budget for areas where you are overspending, and when you reach your limit, stop spending in this category.

4. Use a consistent tracking method

Whether you find that the receipt or electronic tracking system works better for you, be consistent. If you flip flop, you are more likely to miss something when you are tracking your spending. If you decide to switch methods, wait until the next month to avoid confusion.

5. Lay it out

Because your spending will appear in different forms, such as credit, debit, or line of credit, you should have one central place where you lay out all of your spending. Without this, you won’t get a true picture of your spending habits. You can choose an old-school ledger where you record things by hand, set up a spreadsheet in Excel, or choose one of the many financial tracking apps available. Be consistent in recording your spending each month to make sure you are as accurate as possible. To be even more efficient, you can set up a formula that allows you to enter your income and deduct your spending entries. You can see when you are coming dangerously close to your limit and react before you have to resort to credit!

As a side note, most banks will provide you with some sort of tracking option. For example, RBC provides a pie chart that shows you how much you are spending in each area.

6. Ask for advice

Once you see how your spending is going, set a budget to avoid future unnecessary spending. Speak to a financial counselling professional, such as a Licensed Insolvency Trustee, to ask for advice and to help you set up an effective plan. The more you owe, the more urgently you need advice. A good financial management plan will allow you to find ways to cut spending. In addition it will help by providing an effective savings plan to help grow your wealth.

By adopting these tracking methods, you will begin to gain more control over your finances. You can look for opportunities to save, pay down your debt more effectively, and perhaps most importantly, avoid unmanageable debt.

At Kevin Thatcher & Associates, we offer assistance for financial management and bankruptcy counselling that Ontario clients need to get their finances back on track. Contact us here for more information.

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5 Questions to Ask When Choosing a Bankruptcy Trustee

Posted by in Bankruptcy
Sep 2019

If you are like most people, you never thought that there may come a time when you needed to talk to someone about your financial problems. Something in your life has happened that had made what used to be manageable debts into something too much to handle for one person.

5 Questions to Ask When Choosing a Bankruptcy Trustee

Only a Licensed Insolvency Trustee can offer the support you need during this process. All bankruptcy trustees in Canada are licensed by the Federal Government. They are highly qualified to deal with your situation and know their stuff.

Your lawyer cannot file for bankruptcy on your behalf. Neither can any of the many “debt consulting” companies that have popped up in the last few years. Do not be fooled. While only a licensed trustee can provide you with protection under bankruptcy law in Canada, the good news is that you are not alone.

Technically, any Licensed Insolvency trustee in your province can help you file for bankruptcy, but should they?

All Licensed Insolvency Trustees follow the same set of Federal Laws but ultimately this is someone who you are going to spend the next 9 to 36 months with so you want to make sure you feel comfortable. If you don’t feel comfortable you can always speak with more than one trustee and then make a choice.

Also, below are a sample of five questions you could ask the trustee when you see them.

How do I know which bankruptcy trustee to choose?

Interview your prospective bankruptcy trustee by asking them the following questions:

  1. Are you licensed by the Federal Government? This is a trick question. The answer to this question should be easy: it should be yes. As stated above, all trustees in Canada must be licensed by the Federal Government. It’s important to confirm that you are dealing with a Licensed Insolvency Trustee and not an unlicensed debt consultant who advertises information about personal bankruptcy. You could be wasting time and money you don’t have by skipping this question. In fact, it might be the most important thing you ask your prospective trustee. Do not get sucked into dealing with a middleman that will eventually have to refer you to a real trustee to get the job done. Also all trustee advertising will say they are a Licensed Insolvency Trustee as this is required by law.
  2. What information should I bring to my consultation? When you have your consultation with a trustee, you want them to be able to give you specific advice on your situation right away. It is a good idea to bring information and documentation about your debts, assets, and monthly income. You want to know the information your trustee needs so they can find out the most about your situation and allow you to make the best possible decision. If you have any doubt you can always bring more information then you need and the trustee can help you sort through what is relevant.
  3. When will I meet a licensed bankruptcy trustee? Often, at the trustee’s office you will meet with a Counsellor before you meet with the trustee. They will talk with you and get all of the information so your options can be reviewed. It is important to feel comfortable that the decision you have made is the right one. A trustee will always meet with you before you complete a filing of a bankruptcy or proposal to ensure you understand your options, the option you have chosen, and your duties in the process.
  4. Once I file, who will I be dealing with at your firm? You don’t want to jump off the deep end and get stranded once your decision has been made. Will there be anyone there to support you once you have filed for bankruptcy? When you call, will you talk to a live person or an automated voice? Can you meet with your trustee to discuss your file? These are important things to know ahead of time.
  5. What assistance will you give me to get me back on track once I’m discharged? All trustee offices will provide two credit counselling sessions during your bankruptcy or consumer proposal process which can help prepare you for life once you no longer need your trustee. However, you may want to ask for extra tips on rebuilding credit in the future during these sessions.

If you are struggling with debt, contact Kevin Thatcher & Associates for a free consultation today. Don’t worry, we won’t limit you to five questions—you can ask as many as you want!

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9 Myths About Bankruptcy Services

Posted by in Bankruptcy
Sep 2019

If you are having financial trouble, declaring bankruptcy is a solution you may want to consider before walking this path. However, many common myths circulate about bankruptcy that are simply not true. Here are nine of them.

9 Myths About Bankruptcy Services

1.Everyone will know you declared bankruptcy

It is true that bankruptcies are public information, but you would generally need to do extensive research to obtain that information. Only major bankruptcies are subject to a legal notice published in the news. More often, it is only the creditors and trustees of the client that are informed of the situation. So, more likely than not, your privacy will be observed, and you don’t have to worry about the embarrassment and fall-out of everyone knowing that you declared bankruptcy.

2.Only the financially irresponsible file for bankruptcy

It is a myth that only the financially irresponsible file for bankruptcy—it can happen to anyone! Although financial responsibility may come into play for some individuals, unplanned life events can create the need to file for bankruptcy at any time. Many such individuals who decide to make this decision have dealt with an illness, divorce, job loss, or other financially devastating situations.

3.Your property will be taken away

Another myth associated with declaring bankruptcy is that you will not be allowed to keep your home or any other property you may own. The reality is that bankruptcy allows you to save some property. What you are allowed to keep is dependent on the province in which you reside. For instance, in Ontario, you can keep up to $13,150 worth of furniture and household goods. You can also keep one free and clear vehicle up to a $6,600.00 value. There are many ways in a bankruptcy to keep some of all of your assets in a bankruptcy and your trustee can walk you through the requirements and expectations before you make your final decision.

4.Bankruptcy clears your debt

The truth is that declaring bankruptcy will clear most of your debt. Some exceptions is that it will not clear child support payments or some student loans (i.e. if you last studied less than seven years ago). This also includes court-ordered fines (such as parking tickets), or debt contacted through fraud. Also, contrary to popular belief, bankruptcy can get rid of income tax debt.

5.Bankruptcy has a permanent impact on your credit

Perhaps one of the biggest myths of bankruptcy is that it will permanently impact your credit rating. The creditor bureaus do keep the information about your bankruptcy for a time but generally that is much less time then it would have taken you to get out of the unmanageable debt that was already affecting your credit. Also, having the information in your credit history does not mean you can’t get credit it just means you have to start slow and rebuild creditor confidence.

6.Bankruptcy is the only solution to your financial difficulties

There are many ways to resolve financial difficulties and bankruptcy is just one of them. In some cases, debt consolidation or a consumer proposal can be the best option for people. A consumer proposal is an offer you can make to your creditors to reimburse part or all of your debt (depending on your situation) with no interest for a fixed time period.

It is always best to talk to a seasoned professional about your issues to see if one of these alternative solutions could solve your financial issues. Bankruptcy is a last resort, and a Licensed Insolvency Trustee can help you navigate your best options.

7.You can’t get a loan after declaring bankruptcy

If you are at the point of declaring bankruptcy (or have already done so), odds are your credit has already been badly affected. Therefore, you would have had to wait the allotted amount of time anyway before being able to obtain credit or resolve bad credit. With time and by adopting good habits (like making your payments on time), you will be able to rebuild your credit successfully.

8.You should get help from a debt management advisor before declaring bankruptcy

It is a myth that you should get help from a debt management advisor before declaring bankruptcy. You may be wasting your money for nothing. Only a Licensed Insolvency Trustee is authorized to file an assignment in bankruptcy and it is in your best interest to deal with them directly as they can inform you of all of your options. At Kevin Thatcher & Associates the first consultation is always free; after that, if you choose one of the options the trustee can administer then you will pay a fee depending on the option you choose and/or the arrangement reached between you and your creditors.

9.You could lose your job due to bankruptcy

Your financial situation should not put your job at risk but it can’t hurt to find out about the potential consequences of personal bankruptcy on your career before going ahead with your decision. However, getting out of the debt you are in is generally always better than continuing with unmanageable debt for the foreseeable future.

If you are considering bankruptcy, a proposal, or a consolidation and would like to find out more information, please contact Kevin Thatcher & Associates today to talk to one of our professionals!

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Pay off Your Debt Without Feeling Deprived

Posted by in Debt
Aug 2019

Nothing is worse than being stuck living with a strict budget. You try your best to make ends meet and, in the end, feel depressed because you aren’t able to do anything for enjoyment. Paying off debt can put a strain on your finances. It can also put a strain on your happiness. When the stress of paying off debt is getting you down, you can find ways to still enjoy life. Here are some tips to help you pay off your debt, so you don’t feel so deprived.

Pay off Your Debt Without Feeling Deprived

Declutter to Sell Stuff

It’s not just hoarders who tend to live with more stuff then they need. Your garage, basement, attic, spare bedrooms and closets can prove to be a goldmine of wealth just waiting to be found. Go through your entire home inside and out, upstairs and downstairs, to look for things you no longer need.

Look for anything from kids’ toys to exercise equipment and kitchen appliances to furniture you are bound to find plenty to sell. You can then hold a garage sale or for stuff in really good condition consider selling it on eBay or Kijiji. And don’t forget your clothes. Vintage is in and if you lost or gained weight you may have a pile of clothes in your wardrobe someone out there might love.

Don’t Buy Stuff You Don’t Need

Before you buy anything make sure you need it. The first step is to stop looking for sales or Groupon offers. It can be tempting to buy something just because it’s such a great deal, however, this is how you probably got into debt in the first place. Stick to this strict rule and suddenly you’ll discover you have money to spend on something more worthwhile. Even if it’s just a nice dinner out.

Tackle That Grocery List

Groceries are ridiculously expensive today. First, create a weekly menu so you only buy what you need. Second, look at your local flyers and see what’s on sale. You can also base your menu on the foods that are the cheapest. Either way, your goal should be to reduce that grocery bill.

A very good tip that most people don’t realize is to avoid buying anything in bulk just because it’s on sale. Even if you think you’ll use it, massive piles of chicken in your freezer often goes unused due to freezer burn. Also, consider eating less meat. There are tons of equally delicious vegetarian options out there. Do this a few times a week and watch just how much you save.

What can you give up?

Although we are looking for ways to avoid feeling deprived, we often deprive ourselves of stuff that is important to us while still indulging in stuff we really could live without. It could be the car, the super cable package, your cell phone, or too much meat in your groceries. Exploring your options might help you find a lot more cash than you might expect.

Enjoy Small Luxuries

This is another moment for self-discovery. What are the small things that will make you happy? Is it that fancy coffee you would love to indulge in once a week? Maybe it’s a really nice dinner out once a month? It could be getting your hair done at your favourite salon. Only you know what little things will bring a little enjoyment into your life. Decide what that is and give yourself a treat now and then but make sure you have accounted for this in the budget.

Set Some Goals

Nothing is more satisfying than crossing something off a list. If you decide to set some financial goals, you are also taking control of a situation that is empowering. Start a checklist of how you want to pay off your debt. There are two ways to do this to make it easier:

  1. The snowball method

    Start with your lowest balances and pay them off one by one. The money you would have paid towards your now paid off balance then goes towards paying off your next balance and so on. This method also gives you a psychological boost as you pay off each debt. However, sometimes this can backfire if you have other cards with high-interest rates because the accumulating interest may be higher than the amounts you are giving to the smaller creditors.

  2. Starting big

    Start with the highest balance / highest interest rate (e.g. a Payday loan) and apply the same rules as option one.

This will keep you focused on your goals so instead of feeling deprived you feel the joy of achievement.

Reassess and Regroup

One thing that might be hard to believe is that once you start giving things up, you realize you never needed them at all. This means there are probably more things you can consider to help you save, depending on how much you owe.

Major debt calls for major decisions. You may realize you could be saving tons of money by selling the house and renting for a year so you can get your finances in order. This works especially if you have a lot of equity built up in your home. Can you downsize your home? Do you need all those rooms, that big backyard? Does everyone in the family need a cell phone? Keep chopping where you can and watch your money grow.

Avoid FOMO

Social media makes it nearly impossible not to feel envious of people who seem to be doing better than you. It can seem like everyone else is taking trips, eating at high-end restaurants, driving fancy cars, and living the high life. You might also have friends who want you to join them in these activities and you feel too embarrassed to say no. The truth of the matter is, you don’t have the money, so don’t let it get to you. True friends will understand.

In fact, confiding in someone about your debt could go a long way in helping you feel less trapped. You can also try to ignore social media, FOMO doesn’t have you reaching for the credit cards. Living a balanced life should be your goal with visions of better things in the future.

Paying off debt should be something that reduces stress, not causes it. These tips will help you still enjoy some treats now and then while chipping away at your debt.

For more information about living life while paying off your debt, call Kevin Thatcher at 1-866-719-8547 or contact us here.

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How to Save Money While Paying off Debt

Posted by in Debt
Aug 2019

If you are having a hard time paying down your debts and staying within your budget you might be going about things the wrong way. When it comes to your finances, you have to make every effort to focus on paying down debt while creating a small cushion for unforeseen emergencies. If you have significant debt you don’t want to save much more then for emergencies as the interest you will be earning on those savings will be much less than the interest your creditors are charging.

How to Save Money While Paying off Debt

When you do this, your finances become easier to manage as you become less dependent on credit. If you are paying down debt but have nothing saved for an emergency, things will have to change. Here are our top recommendations to get out of debt in Toronto, while still managing to save a small amount to help to weather the storm.

Why You Need Savings

Savings are important to anyone’s budget as it provides additional money to cover unexpected costs. This can include car and home repairs, unexpected medical expenses and even funds should you lose your job. Although it is hard to imagine losing your job right now, it can happen to anyone.

Set a Budget

Although you might have a budget in place, if you are facing cash flow issues it might not be tight enough. Revisit your budget to look for ways to save some money. List all of your debt, household expenses including food, entertainment, gas, insurance and anything else you can think of. Then calculate how much you receive on your paycheque to get a realistic number for your income.

Remember if you have creditors with high-interest rates you want to give them as much money as possible every month (preferably well beyond the minimum) or all the money you are paying will be going to interest and you are not actually reducing your debt load. Focus on getting rid of those debts first.

Hopefully, you come out ahead and have some money to spare. If this is the case, the surplus of money can be put towards your savings. If you break even you can always go over your expenses with a fine-toothed comb and review all of your credit and debit transactions. The chances are, you will be surprised at how much you are spending. The more expenses you can reduce the money you can give to those high-interest creditors.

Look for savings opportunities, such as no more coffee and muffins at work, making your lunch instead of buying it, less takeout food and fewer clothes purchases. You can then start putting that money towards increasing the amount you are putting towards your debt. Getting rid of those high-interest creditors will give you more money to work with and then to eventually put towards actual savings.

Assess Your Minimum Payments

Look at your debt and consider the minimum monthly payments. Look for opportunities to pay more than the required. This will help you pay off your debt faster. As suggested you should put money towards the cards with the highest interest and balances to pay them down faster. Once that balance is paid, go onto the next balance adding the extra money you would have used towards the card you just paid off to your payments. This will help pay the debt off more quickly. Continue this process until all of your debts are repaid.

Set-up a Savings Account

Living with just one account for everything can make it difficult to manage your money. Instead, set up a separate savings account. Once you have reached your debt repayment goals you can also set up an automatic deposit from your chequing account into your savings account for a set amount each paycheque. Make sure this is based on what you can afford from your budget. As your savings grow, you can consider speaking to a certified financial planner to help you plan for the future.

Track Your Spending

Most banks provide you with tools to track your spending, such as pie charts that show how much went towards debt, how much to the mortgage, how much through chequing, etc. If you keep track of your budget using a spreadsheet, you’ll have a better handle on your spending and can compare this to the budget you have set for yourself. Make sure to include any money you might use from your savings account.

Look for patterns of spending such as takeout food or car repairs. This will help you look for areas to adjust your budget.

Plan Your Spending

When you have tough months you will be tempted to spend the funds in your cushion savings. Before deciding if this is necessary to consider if you really need what they funds will be sent on (e.g. rent or food) or if you could go without. Avoid splurging on things such as trips, clothes or a fancier car, as this will just get you back in debt. Also, try to make a plan to replenish your savings cushion if you do have to use some of it for an emergency.

Once you have paid off the current debt obligations, you can also set up “expense buckets” in anticipation of expenses that are likely to come up in the future. You can do this based on short, medium, and long-term expenses. Some of the most common expenses include a new car, a down payment for a home or even putting money towards investments or retirement savings.

Best Method to Pay Down Debt

If you find your debt remains unmanageable there are a few things you can consider. As mentioned, you can start by working your way through your debt based on the highest interest rate.

If your debt is becoming a burden due to interest you can look into a debt consolidation such as a consumer proposal. Debt consolidation provides you with a loan at a lower interest rate while a consumer proposal can freeze the interest altogether. This provides more cash flow for savings while also reducing the money you pay towards the interest with more focus on paying down the principal.

Carrying debt should never become unmanageable. These tips will help you get back on track so you can begin building your savings.

To learn more about how to save which getting out of debt, call Kevin Thatcher at 1-866-719-8547 or contact us here.

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Protect Yourself From Bankruptcy

Posted by in Bankruptcy
Jul 2019

Without bankruptcy protection, debt is the kind of thing that can sneak up on an individual or family. It only takes a few weeks of not paying close attention to your finances and they can start to spiral out of control.

Tips to avoid bankruptcy

You can become distracted by:

  • Taking care of an elderly parent
  • Overspending on vacation
  • A change in personal circumstances, such as job loss, divorce or bereavement
  • Sudden and unexpected expenses, such as a vehicle repair or a new washing machine

The next thing you know, you’ve racked up debt on a credit card or withdrawn from your savings account and your struggling with both payments and cash flow. Things continue to spiral out of control and you begin to worry that you have a serious problem where you don’t have enough money to repay your loans and may need to file for bankruptcy.

Bankruptcy Protection is Key

When you don’t know how to manage money or don’t do it very well, you’ll find yourself short of cash at the end of the month on a regular basis. You might feel embarrassed and even ashamed. It’s not good for anyone to experience these emotions on a regular basis. The frustration you feel can be dealt with by using some simple techniques.

The primary way to avoid bankruptcy is to practice bankruptcy protection, but what exactly is bankruptcy protection and what does it mean? In the simplest terms, it means taking care of your money. You might be one of the lucky ones who had a parent or friend who explained to you the value of money and money management skills. But thousands of us grow up without those skills, or don’t take the time to learn them and money itself doesn’t come with any instructions!

Having said that, even people with money management skills can find themselves in financial trouble, especially if their life circumstances change suddenly. With careful budgeting you can minimize the risk of having to declare bankruptcy in the future. These skills can be learned and practiced. With these skills, you’ll be able to do everything in your power to avoid bankruptcy. There are even options such as a consumer proposal which can debt you out of debt without having to file for bankruptcy.

How to Protect Yourself from Bankruptcy

One of the first things you need to do is create a household budget. It doesn’t matter if you’re a new graduate from university and living in a bedsit. You still have a household, so you should have a budget. This will be good practice for when your finances are more complex too.

To create a monthly budget, you must first list all your monthly income and expenses. It’s a good idea to double-check your bank and credit card statements to make sure you’re not missing anything. However, for most people, this will not result in a comprehensive list of expenses.

That’s because every family has what is called leakage, which means they are spending more than they realize and it’s not obvious, or cannot be tracked. Examples could include a last-minute meal with a friend, drinks with work colleagues, or an automated bank payment for a gym membership you rarely use.

To be certain about what you are spending money on, record outgoings for at least two or three months. This exercise will enable you to track your family’s spending. Where your money is going will become transparent. Don’t forget to include any contributions to savings accounts, education funds, or an RRSP. Yes, these are savings, but they are also going to come out of your income. Use an online tracking tool, a spreadsheet, or even just a notebook for your budget tracking.

Budget Accurately

Another point to remember with tracking is that it’s not guessing. Don’t record how you think you spend your money, because this won’t reflect your actual spending. When you start tracking, you may be tempted to track how you think you should be spending.

Now that you have calculated your income and expenses, you may discover that your expenses are more than your income. If this is the case, you must take immediate action. Make decisions today about what you will cut from your expenses and consider seeing a credit counsellor for assistance.

If your income is higher than your expenses and you’re not saving, this is an excellent time to make some decisions about saving, which we cover in the section below. Beware the trap of having disposable income and not making plans for it, or just spending more. Again, without proper planning, this could land you in serious trouble.

Saving to Prevent Bankruptcy

Now that you have spent two or three months tracking your income and spending pattern in detail, you’ll have an accurate picture of where your money is going, hopefully down to each cent.

However, we’re going to look at setting aside an emergency fund. Now, you may feel that you don’t have the funds to save at the moment but having an emergency fund is an important part of bankruptcy protection. If you ever find yourself in a difficult financial position your emergency fund could be your lifeline.

Additionally, you can also look for something you can cut back on. For example, replace your daily coffee bought at the local bistro or convenience store with one made at home and taken to work in a thermal travel mug.

Ideally, you should have enough in a reserve fund to fund your living expenses for two to three months. Remember, during this time you will need money for your mortgage or rent, as well as food, utilities, transportation, and health expenses.

Next, everyone should focus on accumulating regular savings, invested in the best way possible for your future. Your bank can help with setting up a transfer immediately after your salary has been deposited into your bank account. A financial advisor can provide information on which types of savings accounts or investments will help you meet your financial goals.

These ideas may not be plausible if you are already in debt or are spending more than you earn. In these scenarios you want to seek professional advice on how to get out of debt, such as with a consolidation or a proposal, so you can more forward debt free with a positive financial future.

To learn more about how you can protect yourself from going bankrupt or your bankruptcy options, call Kevin Thatcher at 1-866-719-8547 or contact us here.

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How to Talk to Your Family About Debt

Posted by in Debt
Jul 2019

Being in debt is a very difficult situation to be in, and you may have trouble being open about your financial issues with your loved ones. In fact, millions of people suffer from debt or debt-related issues every year, with many not having anyone to share their financial burdens with.Also, while there are financial options available for people with substantive debts, such as debt consolidation, talking to one’s family about debt can still be challenging due to the stigma of being in debt, or because they may fear that they may cause their loved ones to also worry. Here, we will discuss some of the ways that you can talk to your family about your financial obligations.

How to talk to your family about debt

Why You Should Talk to Someone

Being in debt can be very stressful, can increase your anxiety, and in some cases even lead to depression. As such, you should try to talk to someone that you trust. By doing so, they may be able to help you plan a proper budget so that you can get out of debt easier and quicker. They can also help you cope with any collection agencies that may be harassing you via the phone or by sending you threatening letters.

Furthermore, they may be able to share tips with you that can help you save more money in the future or help you earn more money. In fact, a family member may also be dealing with debt issues of their own, so talking to a loved one can help motivate both parties to work harder and smarter towards erasing their debts. The end result is you will not only have a cheerleader on your side but you will also not feel alone while dealing with the burden of debt.

Discussing Your Debts With Your Partner

If you are currently in a committed relationship with someone, are married, or are thinking of moving in with a partner, then you should discuss your debts with them as soon as possible. While it may be difficult to do so, repressing stress will only lead to spillover in other important areas of your life. In fact, trying to conceal the truth from your partner can actually make things significantly worse, as it can lead to feelings of anxiety, depression, and resentment, as well as a lack of proper communication, and ongoing arguments over money.

A breach of trust can also lead to the dissolution of the relationship, and trying to conceal your debts can also affect your partner financially. For instance, if you have a joint account with your loved one then you can impact their credit file, due to either missed or reduced debt repayments on your end.

In fact, if they were to apply for a financial product, such as a credit card, in the future, then the missed or reduced payments will be reflected on their credit file, which may cause their application to be delayed or outright rejected.

What to Tell Them

The first thing that you should tell your family is that you are already working towards a solution that will satisfy all parties involved. For instance, you can tell them that you are currently working with a confidential debt resolution company that provides pro bono counselling. You should also assure them that you are making progress, in the sense that you are moving ever closer to becoming a debt-free person.

For instance, even your reduced payments will be reflected on your file, which means that your credit file is slowly but surely being repaired with every payment that you make. You should remind them that debt repayment is not a race, but a marathon, and that you will eventually become completely debt-free by sticking to the financial plan.

In the end, a family should work together to help reach common goals. Hence, your debts can actually serve as an opportunity for your loved ones to band together in order to eliminate your debts. They can even help you get out of your debts quicker by reducing some of their own outgoings.

Cell phone contracts can be cancelled or renegotiated, and the same can be said for utilities. In addition to bills that can be reduced with some negotiation, you can also cut back on any frills or nonessentials, such as alcohol, cigarettes, magazine subscriptions, paid streaming services- such as Netflix, Hulu, or Crave-and recreational activities.

How To Reduce Stress in Other Areas of Your Life

It goes without saying that if you are feeling stressed about your debts then you will also start to feel stressed about other things that are happening in your life. Ergo, being open about your debt issues with your family will not only help you obtain some much needed moral and emotional support but can also serve as an opportunity for you to spend more quality time with your family.

For instance, your children or your significant other can help you with household chores to help reduce your stress. In addition to helping keep a clean house, which can help reduce stress on a subconscious level, they can also help with the cooking. Preparing meals together will not only help you bond with your family but also reduces your expenses, as eating out is not only unhealthy but also adds up rather quickly.

You can also workout with your loved ones, as it is very important to eat healthily and exercise when you are dealing with debts, as doing so can help keep your mind sharp and focused, and also reduce stress and its associated psychosomatic symptoms.

For more information or advice on talking to your family about debt or solutions to your debt problems, call Kevin Thatcher at 1-866-702-9801 or contact us here.

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How to Actually Keep Your New Year’s Debt Resolution

Posted by in Debt
Jan 2019

Some might say that New Year’s resolutions were made to be broken. However, looking at becoming more financially sound is never a bad idea. If you are considering a New Year’s debt resolution for 2019 there are a number of things you can do to not only stick to your plan but also maintain healthy spending habits for life. Here’s what we recommend you do to pay down debt and become a smarter money manager in 2019.

How to Actually Keep Your New Year’s Debt Resolution

Reality Check

Managing debt starts with a clear understanding of all of your outstanding debt. This should include all debt from credit cards, phone and utility bills, to outstanding taxes. By knowing what you owe you can get a realistic look at what your monthly payments should look like for your debt resolution plan.

Assess Your Budget

Take inventory of your monthly income and all of your monthly bills. Don’t forget the automatic payments you set up for things such as magazine subscriptions or Netflix, as everything adds up. Deduct your entire monthly obligations from your income to see where you land: Extra cash, breaking even, or in the hole. Then do the following:

  1. Got extra cash

    If you have extra cash, consider how much of that cash you can put toward your debt. A good formula to use is to put 50 percent towards your necessities, 30 percent towards wants, and 20 percent towards debt. That 20 percent than becomes savings once your debt is paid off. However, if your debt has high interest rates you may want to forego wants and give everything possible to the debt to reduce the interest you will pay overall.

  2. Breaking even

    Although this is not ideal it is better than being in the hole. Breaking even will not allow you to work on that debt, so this is the time to take a look at your expenses and see where you can do some slashing. A good place to start is your entertainment budget for things such as movies and dinners out. Other good places to save can include making your own lunch, avoiding take-out food whenever possible, and maybe even cutting out that morning and afternoon $6 latte. Also don’t be afraid to renegotiate cell phone or cable plans and remove non essential items such as call-waiting or unneeded channels.

  3. In the hole

    If you are in the hole, you will have to start slashing, but in a far more aggressive manner. Look at putting a stop to all non-essential spending so you can stop adding to your debt and instead start trying to pay it down. Also, stop using your credit cards and use cash or debit instead. If you are still unable to manage your debt it’s time to speak to a credit counsellor or Licensed Insolvency Trustee about your options for cleaning up the debt.

Assign the Cash

Now that you know how much you owe and how much extra money you can put towards that debt, you can start allocating cash to help reduce your debt payment each month. Look at how much you are currently paying on each balance monthly. If you are only paying the minimum amounts, consider taking the extra cash you have and adding it to the minimum payment for the lowest balance you owe or to the balance with the highest interest rate. You will pay that balance down more quickly and once it is paid, you can choose the next lowest balance to start upping the monthly payments. Also pay attention to the dates provided on statements what show, at the minimum payment, how many years it will take to pay the balance. This can be a reality check and good indication if you need help from a trustee to resolve your debt issues.

If you are able to pay off one account remember you will not only have the extra money you used to pay off the first credit card but the minimum payments you were paying on that card as well. Apply all that money to the minimum balance of your next credit card until it is paid off and continue doing this until all your balances are zero.

Debt Consolidation

Another option for paying off debt more quickly is debt consolidation. Debt consolidation consolidates all of your outstanding debt into one loan or in the case of a Licensed Insolvency Trustee; a proposal. If you do a consolidation loan or a proposal not only do have one easy payment, but you will also be paying less towards interest and more towards the principle, which means your debt will be paid down more quickly. Of course, for the loan, this only works if you have good credit and the balance is not so high that a lender would not be willing to provide the loan.

Manage Future Spending

The key to debt is not getting into debt in the first place. To do this effectively, never use credit cards for charges you can’t pay off when your statement arrives. You can have good debt, which is a balance you pay off in full each month. This is important as it helps keep your credit score looking good. You want this in case you apply for a larger loan for a mortgage, vehicle or even to start a business.

Pay Cash

Another good budget idea is to pay cash. Not using your debit card, but actual cash. This works well because you set yourself a daily or weekly budget, take that money out of the bank, and when that cash is gone, no more spending. This ips perfect for managing expenses that often go unnoticed when you use debit or credit. This can be those morning lattes, cocktails after work, or everyday items from your lunches to magazines. You’ll definitely notice when there’s no more money in your pocket or wallet which forces you to stop spending.

Get Counselling

If all these ideas seem well and good but just don’t seem to work, you can consider speaking to a credit counsellor. They can look at your current debt and come up with ways to help you manage your debt more effectively. It is always best to speak to a counsellor before your debt becomes unmanageable. This will help you make tough decisions about how best to clear the debt efficiencially and within your means.

Anyone who has paid off a major debt will tell you that staying the course is worth it. Having a plan and sticking to it will allow you to live a debt-free life and begin focusing on saving for the future.

For more information about getting out of debt, call Kevin Thatcher at 1-866-702-9801 or contact us here.

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Social Status of a Canadian Citizen After Filing Bankruptcy in Canada

Posted by in Bankruptcy
Jan 2019

Filing for bankruptcy is never an easy decision. It often comes at a time when you are in dire circumstances that can include loss of a job, illness, unmanageable debt, and marriage breakups. All of these situations are stressful enough without having to file a bankruptcy proposal. If you have looked at all of your options, such as a consumer proposal or consolidation, bankruptcy could be your only option. However, there is life after bankruptcy once all of your duties have been fulfilled.

Social Status of a Canadian Citizen After Filing Bankruptcy in Canada

What happens when I declare bankruptcy?

Bankruptcy is a process and is handled with the assistance of a Licensed Insolvency Trustee, who will file your bankruptcy. You will be responsible for completing several duties during bankruptcy, including surrendering all of your credit cards and non-exempt assets. The day you file for bankruptcy you will have to provide your T-4 slips to your trustee and other paperwork required. Monthly financial reports will also be required to determine if you have any “surplus income”, which means any income beyond what is required to cover your monthly expenses based on government standards. Although your monthly reports can be a timely process, once you get the hang of it, you will be able to do it quite quickly each month and they will help you learn important budgeting skills.

Other duties following bankruptcy include:

  • Reporting a move of residence to your trustee
  • Providing all requested information in a timely manner to your trustee

Credit Counselling

When you declare bankruptcy, you will also be expected to take two credit counselling sessions in order to qualify for automatic nine-month discharge. The first session is to take place between 10 days to 60 days following your assignment. They are usually about an hour long and are intended to help educate you on wise credit management and looks at the causes of your financial difficulties.

Lifetime Implications

After your first bankruptcy if completed a record will remain with the credit bureaus for six to seven years. However, once discharged, you will have a free and clear credit record and you can begin to rebuild your credit. You do not have to wait six-years period to try applying for new credit. However, you will have to start slowly and make bill payments on time to build lender confidence.

Rebuilding Your Credit

You can request your free credit report from the credit bureaus and look for any discrepancies you might see on the report. This will ensure your report does not contain inaccurate information. You can fill out a form to let the credit bureau know where inaccuracies appear and they will be required to investigate and respond. When attempting to rebuild lender confidence there are items such as a secured credit card that will provide you with revolving credit and a spending limit that is refreshed as long as you pay your balance and maintain your payments. With a secured credit card, you also have to provide a deposit that the credit card company will hold onto in case you default on your payments. This can be worth the effort as it will help you start rebuilding your credit, and the deposit is usually a reasonably manageable amount.

If you successfully manage your credit you can usually request the lender returns your security deposit after about six months. You will also begin to reestablish your credit score, which will allow you to consider other credit options when or if necessary.

Why do I need credit?

For many, filing bankruptcy is a traumatic and embarrassing experience that might make the thought of applying for credit again a scary prospect and you should not be applying for and obtaining credit you don’t need or can’t afford. However, there are cases in which a loan might be needed including:

  1. Vehicle loans

    There are special financial services that specialize in vehicle loans for those with bad credit reports who can assist you in getting an affordable rate you can manage. However, you must do alot of research as there are also many lender who are willing to take advantage of people in poor credit situations. Never consider a vehicle that is beyond your budget to avoid getting too far into debt again and also ways look as the overall cost of the financing and the cost breakdown as sometimes there can be additional fees you have not budgets for or that can be misleading.

  2. Mortgage

    Mortgages lenders will consider your income, debt level and credit score. Bankruptcy affects your credit score so you have to show the lender that you are rebuilding your credit and that you are financially capable of supporting a mortgage. By doing so you will increase your chances of qualifying for a mortgage.

Lessons Learned

Recovering from debt issues can be very stressful. It can also cause feelings of failure, depression, and insecurity. But filing for bankruptcy can be a way to release you from the burden of debt, which can often is acquired through circumstances beyond your control.

There is life after bankruptcy, as long as you have the wherewithal to learn from your mistakes and focus on rebuilding your life and financial security. Most people feel relief once all is said and done and dealing with a Licensed Insolvency Trustee provides valuable lessons on financial management that you will keep for the rest of your life. The credit counselling provided will help you reach your financial goals and build a future that is more financially secure.

For more information about bankruptcy in Toronto, Scarborough, Mississauga, Hamilton, Kitchener, Cambridge, and Guelph, call Kevin Thatcher at 1-866-702-9801 or contact us here.

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