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Can you still buy or rent a home after consumer proposal in Canada?

Posted by in Bankruptcy
25
Oct 2018

A bankruptcy (BK) or consumer proposal (CP) agreement could impact a borrower’s ability to rent or own a home. However, often these options are helping people clean up overwhelming debt which would also provide barriers to credit and rental options. There are several common sense options for people who want to pursue home buying or renting after or during a consumer proposal.

Renting after a consumer proposal

For anyone who has entered into a proposal agreement t is helpful to know the basic statistics about insolvency and understand that CPs are growing in popularity. Consumers need to comprehend the ways in which a CP will impact their situation.

Canada Bankruptcy Stats

Recent figures reveal a trend in Canada’s BK and CP filings. Data from 2016 showed that slightly more than 125,000 people filed at least one insolvency proposal. During that same year, however, CPs were trending up at an annual rate of 7 percent, year-to-year. This compares to bankruptcies, which were trending slightly down. For the first time in Canada’s history, consumer propsoalss outnumbered bankruptcies in 2016, and that trend is expected to continue.

Key Points for Home Buyers/Renters

-Consumer proposal (CP) differs from standard bankruptcy in several ways. Though both actions need to be approved by a licensed insolvency trustee, a bankruptcy remains part of your credit history for at least seven years. A consumer proposal remains for only three years after you complete the repayment agreement.

-Consumer proposals are not a straight discharge of all unsecured and non-exempt debt, as is the case in a bankruptcy. On the contrary, consumer proposals are carefully structured repayment agreements that require monthly payments of a portion of your original debt. Consumer proposal must be repaid in five years or less.

-The faster you fully pay a CP agreement, the easier it will be to buy or rent a home. Lenders are more willing to offer competitive interest rates to consumers who demonstrate consistent repayment behavior within the CP agreement.

How to Maximize Chances of Loan or Rental Approval

After a CP repayment plan has started, consumers can improve their chances for loan or rental approval by doing the following:

-Minimize your risk profile by actively working on your financial situation.

-Use credit responsibility. Lenders will usually closely examine your behavior since the CP was filed and approved. Even if you only have one credit card or retail account, don’t miss a single payment. This rule also applies to the repayment plan within the consumer proposal.

-Attempt to maintain a stable employment history after the CP goes into effect. Typical industry guidelines consider two years at the same job as a minimum definition of “stable.”

-Keep written proof that you are managing our finances wisely. Some lenders will ask to see your monthly budget and banking statements. Keep meticulous records and if possible, use approved household budgeting practices as outlined in authoritative financial literature.

-Save for a down payment. Even if you don’t plan to buy, a savings account with regular deposits will improve your overall credit profile. If you do intend to purchase a home, a savings account is a must. If you are able to amass 20 percent of a home’s purchase price, you will be able to get more favorable interest rates from lenders.

-Use your monthly budget and current income levels to calculate a realistic price range for the house or rental property that you want. A common mistake is to overestimate the size of a loan for which you can be approved. Be realistic and take every monthly expense into account when arriving at the price range for your future home or rental.

-Avoid dealing with finance companies because their interest rates are significantly higher than bank rates. CP filers are sometimes attracted to finance companies for the simple reason that approval is easier than it is with banks. That easy approval comes with a high cost in the form of interest rates as high as 38 percent.

After filing for any type of insolvency, the goal of home ownership or rental is still a realistic one. The essential component of a successful loan or rental application is planning. All the best advice for CP filers can be summarized in two sentences: Keep detailed budgets and financial records. Maintain stable employment and avoid credit balances above the bare minimum and pay all bills on time. Paying off a CP sooner than the five-year time window will also help improve chances for obtaining a home loan or rental agreement.

For more information about renting and owning a home after or during a consumer proposal bankruptcy filing in Canada, please call Kevin Thatcher & Associates Ltd. at 1-866-719-8547, or contact us here.

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Reasons to Choose a Debt Consolidation Loan

Posted by in Bank Loan
18
Oct 2018

A debt consolidation loan is a loan can be used to pay off all other outstanding debts. Often a bank, credit union or finance company will combine the amounts owed to your various creditors into one comprehensive loan that you pay down altogether rather than separately. The structure of a debt consolidation loan and its payment schedule are intended to be affordable and intuitive, with no hidden fees or misleading terms.

Need for debt consolidation

Debt consolidation is often considered preferable over other ways to consolidate debt, such as a home equity/second mortgage loan, a line of credit/overdraft, a credit card,, or by borrowing from family or friends. However, sometimes when we are in a proof credit situation sometimes bank or finance company loans have high interest rates and long terms that make getting out of debt feel impossible.

A Licensed Insolvency Trustee, such as Kevin Thatcher & Associates Ltd, are licensed by the federal government to offer proposal options that help you consolidate your unsecured debt without interest and, depending on the situation, where you may not have to pay back the entire debt.

If you are considering applying for a debt consolidation loan, Kevin Thatcher & Associates are licensed experts with over 15 years of experience. We offer free consultation to provide guidance and advice on these matters. For more information, please call Kevin Thatcher & Associates Ltd. at 1-866-719-8547 or contact us here.

Advantages of a Debt Consolidation Loan

  • There is just one monthly payment, rather than several to coordinate.
  • The duration of your debt payment is a set period of time
  • Unlike many credit cards and home equity loans, service fees are typically very low.
  • Lower interest rates are available, especially if you have a good credit score, a moderate to high net worth, an existing relationship with the lender, and collateral for the loan such as a valuable vehicle, term deposit or other liquefiable asset.
  • In recent years, interest rates on debt consolidation loans have hovered around seven to twelve per cent, whereas, rates for other loans range from fourteen per cent (for secured loans) to thirty per cent (for unsecured loans).
  • Overall, this means that a debt consolidation loan will save you money in interest fees while allowing you to pay off the total amount sooner and providing a single, straightforward means of debt payment.

Advantages of a Debt Proposal

  • There is just one monthly payment, rather than several to coordinate.
  • The duration of your debt payment is a set period of time, usually up to 60 months.
  • No interest or hidden fees.
  • Your credit situation does not affect your ability to file a proposal.
  • Assets, collateral, or a cosigner are not required to file a proposal.
  • Because you are making a deal with your creditors to clean up the debt based on your situation, you will often pay much less than the original amount owing.

Risks of Not Consolidating Your Debt

Firstly, by leaving your debt spread out among various creditors you are choosing to pay high interest rates on your credit cards and loans. If you apply for further credit and loans, you may not be approved because your debt service ratio is already quite high.

You may experience difficulty getting approved for an apartment lease or home loan. Landlords perform thorough credit history and background checks on potential tenants, and having outstanding loans to multiple lenders can be a red flag. Similarly, it can be difficult to receive a future loan for a vehicle, boat, or other large item with multiple outstanding debts.

Conclusion

Seeking financial guidance can be a stressful idea, so it often feels easier to postpone and procrastinate. Yet, the sooner these matters are addressed and a solution is implemented, the sooner your anxiety can be alleviated. The need for a debt consolidation is commonplace in today’s financial climate, and can be a stepping stone on the path to a solid and secure financial future for yourself and your family.

Kevin Thatcher & Associates is your best choice for reliable advice and consultation regarding proposal related debt consolidations . We have many years of experience in diagnosing financial situations and can help find a solution to suit your unique circumstance. Our services are transparent, and straightforward. We offer free consultation where you can all of the necessary information to make a confident and informed decision on your best route forward. We pride ourselves on providing debt consolidation services that exceed expectations and allow people to move forward debt free.

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

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What Rights Do Secured Creditors Have?

Posted by in Bankruptcy
27
Sep 2018

When one is forced to contemplate filing for bankruptcy, it’s an important process that is not entered into lightly. Contrary to popular belief, not everything you own is seized when you file for bankruptcy. Not only is there a long list of assets that are exempt from seizure, but there is also a hierarchy among your creditors as well. Their relationship to you will determine how much of the money you owe they will receive (if any).

What Rights Do Secured Creditors Have

Unsecured Creditors

Unsecured creditors are those creditors to whom you owe a debt that is not related to any assets you may own. Examples of unsecured debts include credit cards, lines of credit, consolidation loans, utility bills and even old bills for services you no longer use.

When you buy something with a credit card, the merchant doesn’t register a lien on that item and the credit card company doesn’t have the right to seize your purchases if you don’t pay your credit card bill. It’s this risk of not being able to recover their money that they charge much higher rates of interest than a conventional bank loan or mortgage.

In the case of utility companies, they can simply decide to disconnect your service but they can’t go after assets to recover the money you owe. If you file for bankruptcy and owe a debt to a utility company, they cannot refuse you service if they are the only utility provider in your area, however, they are not obligated to offer you service on a credit basis, and you may have to pay for services up front or remit a deposit to the company to get service.

If your debt becomes too large and attempts to resolve the issue are unsuccessful then a credit card company can take you to court and obtain a judgement against you, which could result in a lien being placed on assets such as your home that is why it is always easier to try and deal with your financial problems before this happens.

Unsecured Creditor Rights During Bankruptcy

A proven unsecured creditor has the right s ask questions related to your filing and the circumstance that led you to a bankruptcy. They also have the right to oppose your discharge if they feel you have done something unfair or that requires additional investigation.

Secured Creditors

Secured creditors are creditors to whom you owe a debt and who have a lien on your property. That is to say, the creditor retains a registered interest in the asset or property until it is fully paid for. The most common examples of secured debt are mortgages and car loans. A business loan where you put up your house and/or any other asset as collateral would be another example. Other creditors such as; leasing company, a rent-to-own company, or a finance company, may also require security on their loans but a trustee can help you sort through the information to determine. All of these are called voluntary liens, meaning the borrower willingly entered into an agreement with the lender. Other types of secured debt are involuntary liens, such as described in the paragraph above when an unsecured creditor sues and wins a judgement.

You are not protected from a secured debt in bankruptcy proceedings unless you give up the security. It’s important to understand that if you have any secured debts at the time you file bankruptcy, if you want to keep them the secured item you will still have to keep making the agreed-upon payments on that debt they hold as security. A secured creditor, by law, cannot end your contract because you filed for bankruptcy. However, if you are unable to continue making those payments they can then take action to seize the assets you pledged as security for the loan you received.

Secured Creditor Rights During Bankruptcy

If you are continuing to make payments to your secured creditor after you file for bankruptcy then generally your business with them continues as usual. If you decide to give up the asset when you file for bankruptcy then that creditor will have to deal with the trustee directly so resolve the situation.

As an example, suppose a debtor in bankruptcy owns a summer cottage with $150,000 remaining on the mortgage. Because the bank that holds the mortgage is a secured creditor, when the bankruptcy trustee sells the property, the bank gets their money first. So, if said cottage is sold for say, $250,000, then the bank receives the $150,000 still owed on the mortgage with the rest being distributed to the other claimants as per priority rules.

In addition, if the secured creditor believes that it will lose money as a result of a trustee holding a property in bankruptcy it can petition the court to force the trustee — or debtor — to either make payments to cover any potential losses or release the property. If you have a secured debt, the trustee must determine if that asset has any value for creditors, and if so, obtain that amount either from the sale of that asset or by having the debtor do so and pay the trustee the equity or value of that asset. Either way, the creditor secured on a particular is taken care of first when it comes to proceeds from said item.

For more information about your rights during bankruptcy, call Kevin Thatcher toll-free at 1-866-719-8547 or contact us here.

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What Can You Keep in a Bankruptcy?

Posted by in Bankruptcy
12
Sep 2018

Most, if not all of us aspire to be the kinds of people that pay their bills on time and have no significant money issues. Unfortunately, sometimes financial pressures, bad decisions, and just plain bad luck can bring things to the point where bankruptcy is the best – even only – solution.

What Can we Keep in a Bankruptcy

If this should ever happen to you it’s important to know your rights and obligations and to understand the process so that you can get through it with the minimum amount of pain, get discharged, and move on with your life.

Contrary to what you might think, not everything you own is up for grabs when you make the decision to declare bankruptcy. In fact, there are a number of items known as bankruptcy exemptions that no trustee is allowed to seize under any circumstances. Bankruptcy laws are not designed to leave you poverty-stricken. Rather, they are designed to offer a lifeline to honest people who have incurred difficult times, allowing them to get back on their feet.

When you file for bankruptcy, your trustee will be appointed to work with you and help you sort out what specific exemptions apply to you depending on your circumstances. While there are federal guidelines that govern the bankruptcy process for all Canadian bankruptcies the types and financial amounts of bankruptcy exemptions vary from province to province and territory to territory in Canada. In Ontario the exemptions are outlined in the Executions Act.

The exemptions themselves vary by province and territory. Your LT (Licensed Trustee) can help you figure out which exemptions apply to your case and circumstances. This can vary depending on the province and territory you live in. All areas allow you to keep essentials like sufficient food, an adequate amount of clothes, pensions, furnishings, health-related supplies, funds that are specifically secured for retirement, and tools that are necessary for work. Below are some details on the assets you may be able to retain through bankruptcy.

Pensions

Some provinces have exemptions for certain types of pensions, typically company pension plans that are locked-in. In Ontario, pensions are exempt from seizure in a bankruptcy. A type of investment that creditors are also unable to touch is RRSPs, with the exception of contributions that were made in the 12 months prior to filing for bankruptcy. The 12-month contributions, in some cases, are considered assets that can be withdrawn and cashed in to pay your creditors.

Necessary Food and Clothing

This is an exemption in every province but the definition will vary in each. In Ontario, for example, an unlimited amount of necessary clothing for a debtor and their family is exempt.

Household Furnishings and Goods

All provinces and territories have an exemption for this, although there is a fair amount of disparity here depending on where you reside. Ontario has by far the most generous exemption of $13,150.00. Remember this is on the current value of the items and not the value at the time they were purchased.

Tools and Equipment

Vocational tools and equipment that are necessary for you to make a living are exempt in all provinces and territories but there is a significant range in the dollar value amounts. In Ontario this exemption if $11,300.00.

Motor Vehicles

If bankrupt in Ontario, you are allowed an exemption of one motor vehicle worth up to $6,600. If there are no liens on the vehicle and its current value is deemed to be more than $6,600 you can still keep the car by paying the trustee, for the benefit of your creditors, the difference between the value and the exemption. The rules are essentially the same everywhere, though the dollar amounts will vary.

Medical Devices and Equipment

All medical devices and equipment deemed necessities are completely exempt in all provinces and territories.

Farm Property

This one will apply to a relatively small number of people, as according to the last census, only 2% of Canadians live on farms. However, others may own farm property that is worked by someone else while the owner resides elsewhere. Any exemption for farm property will differ from province to province. In Ontario this exemption is $29,100.00.

Wages and Salary

Filing for bankruptcy stops creditors from getting to your wages. However, if your income is above a certain threshold, you will have to make surplus income payments during the bankruptcy process.

Home Equity

Depending how much equity you have in your home, you may not have to part with it when you file for bankruptcy. In Ontario, if your equity in your home is less than $10,000, then it is exempt from seizure. Similar to motors vehicles, if your equity is above the exemption limit you can make an agreement to repurchase this equity from your trustee for the benefit of your creditors. Alternatively, the trustee has other options you can explore, such as a consumer proposal, if you decide bankruptcy is not the right fit for your situation.

Bankruptcy is a last resort but it need not be a shattering experience. As stated earlier, the goal is not to shame you but to provide you with financial relief and a fresh start so you can regroup and get on with your life.

For more information about bankruptcy, call Kevin Thatcher toll-free at 1-866-719-8547 or contact us here.

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How to Recover from your Holiday Debts

Posted by in Money
23
Jan 2014

Holiday DebtsThe Holiday season celebrates with friends and family over food and gifts. Often that means travel to see family. If you went beyond budget or did not make your savings goals going into December, and relied on credit to tide you over, there are steps you can take to manage your debt. It’s important because credit can be very costly, which will reduce your income for spending and saving. Furthermore, a good credit standing is important for future loans, like applying for a mortgage or renewing your mortgage.

Target expensive debt first

Your credit cards come with different interest charges. Review the terms to see which credit cards have the highest interest rate. Credit cards with low balance and high interest rates are good to pay off first. Do note that cards which are nearly maxed out with low interest rates will be less expensive to pay off gradually, but it may affect your credit rating, as rating agencies like to see credit cards at use around 20-30% the credit limit. Consider transferring balances from more expensive credit cards to cheaper ones, but again be careful about the credit limit and transfer charges.

Increase income

If you can pick up an extra shift at work or take on a part time job, increasing income is a great way to reduce debt. You can also find money in other ways, such as selling unused items around the house.

Contact your creditors

Before your debt escalates into collections, take initiative and speak to your credit card company’s representative. Ask to see if they can waive fees or lower rates. If you let them know your situation and show sincere interest in repaying your loans, credit card companies will see you as a customer who is cooperative and communicative.

Reduce spending

We’re left with many gifts, clothes, and new gadgets after Christmas, but spending continues into the new year. It is important to stick to your budget, or even adjust if necessary. For daily use items, consider switching temporarily to less expensive options (generic brands or cheaper alternatives). Instead of enrolling at the gym, find other ways to fit in exercise.

If you struggled with debt prior to the holidays, and the holiday spending is only a small portion of it, consider consolidating lines of debt. Consolidated debt is easier to manage. Exercise caution when consolidating debt, use reputable financial services, and be sure to research all your options.

At Kevin Thatcher & Associates Ltd. we offer free consultations to ensure that you can explore all of the options available to you and make informed decisions.

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What does the free consultation entail?

Posted by in Bankruptcy
14
Jan 2014

Free ConsultationIf you are having financial trouble, you may have thought about going to see a trustee. One of the things you will see our office advertise is a free consultation. Now, everyone loves to hear that something is free, but is there a catch? Will you be pressured into signing papers? Will the information I get be as reliable as places that charge for consultations? All these questions can make you more anxious or hesitant about booking a consultation. Here are some answers to common questions we get regarding our free consultation.


Who will I be meeting with when I come for my free consultation?

When you come in for a free consultation, you will be meeting with one of our experienced Insolvency Counsellors who are prepared to sit down with you and answer all of your questions.

Will the information I get be as reliable as places that charge for consultations?

All trustee offices should provide you with the same information because they are all following the same set of government rules and guidelines.

What makes someone an Insolvency Counsellor?

Our Insolvency Counsellors have all passed the national ICQC exam offered by CAIRP, have all completed the required 100 hours of counselling under direct supervision of another qualified insolvency counsellor, and have shown at least one year of experience in counselling to be recognized as Bankruptcy and Insolvency Act (BIA) Insolvency Counsellors.

How much experience do our Insolvency Counsellors have?

All of our Insolvency Counsellors have experience in the bankruptcy industry before becoming qualified counsellors. In becoming qualified BIA counsellors they all have the experience mentioned above. In addition, most of our counsellors have been accessing financial situations for at least 4 years, some for over 20 years.

How long will the appointment take?

Usually 30 minutes to one hour depending on how many questions you have.

Do I need to bring anything?

The information we suggest you bring is:

  • 2 pieces of government issued ID
  • Information on who you owe and approximately how much you owe (credit card statements, Equifax report)
  • Documentation on any assets you own (vehicle ownership, RRSP statement)
  • Proof of Income (recent paystub, bank statement that shows money going into your account)

If I don’t have some of the above-mentioned items can I still come in?

Yes, but we recommend trying to figure out approximate amounts before hand so we can advise you accordingly. We know that sometimes your situation can feel disorganized and overwhelming however it is helpful to bring in as much information about your situation as possible so they the counsellor can figure out what your best options are.

What type of questions will I be asked during this appointment?

We ask a lot of questions, most of them involve finding out how you got into your situation, determining how much you owe, how much you own, and doing up a monthly budget. This is all to help determine if a bankruptcy, consumer proposal, or division 1 proposal could help in your particular situation.

Will I be pressured into signing papers?

No.

What if a bankruptcy, consumer proposal, or division 1 proposal is not right for me?

We will tell you if we think there is a better option that we do not provide or if you may be better off trying other options first. Either way you will still be leaving with a better understanding of your financial situation.

What happens if I want to go forward with a bankruptcy, consumer proposal, or division 1 proposal?

If you decide that you want to go forward you will meet with one of our trustees. The trustee will review the information taken during the initial consultation, answer any additional questions you may have. The trustee will also explain the papers you will be signing if you still want to do bankruptcy, consumer proposal, or division 1 proposal.

Can I think about it before I sign the papers?

Absolutely. Many people come in for the initial consultation then take a few days to think about their options. Filing for bankruptcy, or doing a proposal is an important decision. If you then decide you want to go forward you can call us and to set up an appointment with one of our trustees.

What if I have more questions that are not answered here?

Your best option is to call us or set up a free consultation where we will have lots of time to answer all questions. Please give us a call at 1-866-702-9801.

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