The advantages of consumer proposals with a Trustee can save you from debt settlement companies. Here’s how. Continue reading
Is there really good debt? Debt is a four letter word and it’s strangling many Canadians. Even if you have what people refer to as good debt, if you are having difficulty servicing it, then you have debt problems, no matter how you classify the debt itself. However, many believe that mortgages and student loans are good debt.
Let’s have a look at mortgage debt. Mortgages have been considered good debt because they allow you to buy an appreciating asset which you can then sell at a considerable profit. According to the Royal Bank of Canada:
- Canadians have taken on $80-billion worth of mortgages, personal loans and credit card debt in the past year
- Household debt totalled $1.82-trillion in January
- Most of the growth came from new residential mortgages, which rose 5.4% per cent in January compared to a year earlier, to nearly $1.3 trillion
- Non-bank lenders, which represent about one-fifth of mortgages, drove the residential housing market over the past year, with outstanding mortgage debt rising 6.3% compared to 4.3% cent among banks
The Globe and Mail received a memo from the Canadian Mortgage and Housing Corporation (CMHC) stating that it was “concerned about reduced household flexibility resulting from elevated debt levels as well as diversion of capital into residential housing investments.” Ten to twenty years ago Canadians were able to buy into an affordable housing market that greatly appreciated. However, with detached housing prices rising above $1-million in Toronto and Vancouver, it’s increasingly difficult to buy into the housing market and unlikely that level of appreciation will ever be seen again. So if you have a reasonable down payment and you can handle the monthly mortgage payments within your budget, then you can handle this debt and therefore it is good debt.
Let’s have a look at student loans. Student loans have always been considered good debt. In years past a university degree guaranteed you a good job upon graduation. However, in today’s world we have record numbers of unemployed and under-employed graduates with a mountain of student debt. Statistics Canada’s Survey of Financial Security reports that student debt grew 44.1% from 1999 to 2012, or 24.4% between 2005 and 2012. And, one in eight Canadian families is carrying student debt. The average student is having a great deal of difficulty paying off their student loans and according to the Canada Student Loans Program, most students take nearly 10 years to pay off their loans – with some taking the maximum 14.5 years. Under this scenario, is it really good debt?
The reality is that both good debt and bad debt can strangle you. Returning to financial health requires the help of a professional. Struggling from paycheque to paycheque is no way to live. Contact Ira Smith Trustee & Receiver Inc. With immediate action and a solid financial plan we can set you on a course to a debt free life Starting Over, Starting Now.
A restructuring and turnaround process that does not garner the support of the creditors can lead to bankruptcy. Bankruptcy ends up being a result of a restructuring and turnaround process that has gone awry.
- Bankruptcy and Insolvency Act (“BIA”): Contains 275 sections and is intended to be a complete code for bankruptcies. The law dealing with bankruptcies is within the BIA itself
- Companies’ Creditors Arrangement Act (“CCAA”): Deals with corporate restructuring and turnaround (as does the BIA) and contains 22 sections. Most of the law dealing with the CCAA has developed from Court decisions as the statute is very thin!
Once in motion it’s extremely difficult to set aside an assignment into bankruptcy. That is why the interests of all stakeholders must be carefully considered and addressed in order for a restructuring and turnaround plan to be successful. Take for example the motion which was recently brought before the Ontario Superior Court of Justice (In Bankruptcy and Insolvency) by Casimir Capital Ltd., an intermediary or broker of various underwritings and placements. Up until January 31, 2014 when it resigned, it was a member and registered as a securities dealer with the Investment Industry Regulatory Organization of Canada (“IIROC”).
Casimir Capital Ltd. brought a motion seeking to set aside its deemed assignment into bankruptcy, and a review of a decision of a trustee to allow certain creditors to vote against a proposal put forth by the firm to settle its debts. At that meeting, 93.7% of the creditors voted against the proposal. However, in the motion, Casimir argued that some of the creditors should not have been allowed to vote as it disputes the validity of their claims.
The decision: In Re Casimir Capital, 2015 ONSC 2819 (CanLII), Casimir’s motion was dismissed. In his ruling The Honourable Mr. Justice Pattillo stated that the trustee “…was correct in allowing the Disputed Creditors to vote.” and “…the steps taken by the Proposal Trustee in reviewing and validating the proofs of claims filed, including the Disputed Creditors, for the purpose of voting at the first meeting were more than sufficient.”
The court noted that even if the votes of the disputed creditors were disallowed, 69.4% of the other creditors, whose claims are not disputed, voted against the proposal. The Court also agreed with the trustee that the debtor’s motion to have its deemed assignment in bankruptcy set aside fails in any event because even if the disputed creditors votes are set aside, the votes of the remaining creditors still defeat the proposal. As you can see, this restructuring and turnaround attempt was doomed for failure, as essentially none of the needs of the stakeholders were successfully addressed. Therefore in this case, a deemed assignment in bankruptcy was the end result. I am sure the professionals involved did the best they could with what they had to work with, but it obviously was not enough.
Unfortunately many companies and individuals find themselves in financial difficulties and surviving these financial difficulties can be a daunting task. Ira Smith Trustee & Receiver Inc. has helped many companies to not only survive, but prosper. Our corporate restructuring and turnaround strategies not only deal with short term crisis management but the long term viability of corporations. Contact us today so that Starting Over, Starting Now once again your company can a financially viable entity.
The need for seniors debt relief is gaining more attention in Canada. Seniors in our country are having a very rough time. “A financially secure retirement is becoming the exception not the norm”, says Lee Anne Davies, CEO of Agenomics, a consulting firm specializing in money management and aging. We’ve spoken about the plight of our seniors in several blogs:
However gray debt is on the rise and this problem is not going away any time soon. According to the Vanier Institute:
- Bankruptcy rates for those aged 55 to 64 have increased by more than 600% over the last twenty year.
- The insolvency rate for those aged 65+ increased by 1,747% over the last twenty years.
- Seniors in particular were 17 times more likely to become insolvent in 2010 than they were in 1990.
These are only two sources of the many who have written on the issue of seniors debt relief.
Why is gray debt on the rise?
Mortgages: People nearing retirement are taking on mortgage debt thinking that the property will appreciate substantially and quickly, providing them with a nest egg or retirement income when they sell. Others are mortgaging their homes to help out their kids.
There really isn’t any seniors debt relief available from a debt owing to a secured creditor, such as a mortgagee, who holds a valid charge against your property.
Lifestyle Debt: Many retirees are still living the same lifestyle as they were during their working years, but now they don’t have to money to fund it and as a result are falling into debt. Usually the type of debt that signifies lifestyle debt would be amounts owing against numerous credit cards. This would be unsecured debt from which seniors debt relief is available. However, the necessary lifestyle changes that seniors debt relief would require would be significant, as the credit card debt has arisen from spending more than the seniors earn.
Payday Loans: The number of seniors taking out payday loans is on the rise. Now retired, they may not qualify for traditional loans so they are falling prey to payday loan companies. Seniors debt relief is available for unsecured payday loans, but like credit cards, the solution will involve lifestyle and spending changes.
Are you struggling financially, you require seniors debt relief (or not so seniors debt relief) and don’t know where to turn? Contact Ira Smith Trustee & Receiver Inc. today. Our approach for every file is to create an outcome where Starting Over, Starting Now becomes a reality, beginning the moment you walk in the door. Call us today and take the first step towards living a debt free life.
Disaster Relief Scams is the topic we wish to warn you about this week. Last week we discussed the danger of scams including travel scams. Scams can be treacherous and unfortunately it’s easy to get taken in by organizations that we trust, especially charities. It’s virtually impossible to see massive destruction in the news and hear the heart breaking stories of lost lives without being moved. We’re primed to open our wallets and donate, often without doing our due diligence. This makes us ripe for disaster relief scams.
According to the Canadian Anti-Fraud Centre Canadians gave $70 million to scammers last year and the second most popular scam was the Disaster Relief Scam Charity Fraud. As soon as a new disaster strikes, charities seem to spring up like weeds in the garden, aggressively going after your donation dollars. Thirty charity websites were created within 48 hours of a devastating tornado in Oklahoma and only three appeared to be legitimate, according to TheDomains.com, a U.S. group which monitors domain name activity. A year after Hurricane Katrina hit, the FBI estimated 4,000 fake websites had been set up. Canada has government agencies such as the Canadian Anti-Fraud Centre trying to stay on top of scams of all types, but it’s a herculean task. As you see, disaster relief scams are very popular.
How can you protect yourself from Disaster Relief Scams?
- Don’t get taken in by an “urgent plea”. This is a common ploy of disaster relief scams. Take the time to do your due diligence. Check out the charity and make sure that they are legitimate before donating.
- Avoid donating to door-to-door canvassers and never give cash. Charities have websites with an e-donate feature which is much safer.
- org is a fundraising platform for donating to legitimate charities. They’ve already done the research for you.
- Give to an organization that has a track record in international aid such as the Canadian Red Cross, Salvation Army and Doctors Without Borders.
Scams, including disaster relief scams, have invaded the fabric of our lives and we must remain diligent. Many people have lost their life savings and their homes as a result of scams, so stay alert and stay informed. If you’re experiencing serious financial difficulties as a result of being scammed or for any reason, you need professional help as soon as possible. Contact Ira Smith Trustee & Receiver Inc. for immediate action and the right plan for you. We can help and Starting Over, Starting Now you can be well on your return to financial health.
Bankruptcy Canada FAQ could change your life, but only if you took positive action after reading it. Can the Better Business Bureau (BBB) change your life? Definitely. We all think that the BBB could only change your life in a positive way. However the BBB could also change your life if it helped one of its member’s perpetrate a scam. If you suffer financial damage by relying on a BBB member’s scam, then you very well may have to read our Bankruptcy Canada FAQ to consider getting out of the debt the scam placed you in. In the past we’re warned you about several scams:
As consumers we all try to be diligent about companies we choose to do business with and it’s quite common to check with the BBB to see how they’re rated. However, it’s a common misconception that the BBB is a government agency that advocates and protects the consumer. We should be wary about relying on the BBB ratings. Any scam will hurt you and if it has caused a serious debt problem, then you will have to read our Bankruptcy Canada FAQ in order to change your life for the better.
What is the BBB?
- The BBB is NOT a government agency.
- It is a FOR PROFIT
- It is NOT a consumer watchdog.
- BBBs are franchises designed to generate profit.
- They sell advertising and memberships to companies.
How does a company acquire a BBB accreditation? Businesses pay a fee for accreditation review and monitoring for continued compliance and for support of BBB services to the public.
How is the BBB funded? The BBB is funded from the advertising and membership dues paid by its accredited companies.
Could this create a conflict of interest? This has been an ongoing issue and many are of the belief that this is a conflict of interest. Do you believe the BBB can accurately “rate” a company that is one of its paying clients? In addition only companies that are BBB members can defend their reviews and you can’t post a positive review about a company that is not a BBB member, so it’s not a level playing field.
Here is a perfect example: SaveOnResorts.com is rated an A+ by the BBB. Yet many websites including Scam-Detector, RipOffReport and ComplaintsBoard have numerous complaints against them dating as far back as 2007, and call it a travel scam. Even TripAdvisor advises caution when booking with SaveOnResorts. Logic dictates that there is no conceivable way that SaveOnResorts.com could have an A+ rating. Yet, they are a paying member of BBB and enjoy an A+ rating, which no doubt has cost many people money. There is nothing new about a travel scam, but one that comes with a glowing report from the BBB is a prime candidate to have to drive you to read our Bankruptcy Canada FAQ.
It seems that having a BBB accreditation will not prevent you from being ripped off by that BBB accredited member! Buyer Beware! Don’t take things for granted and always do your due diligence. Such a scam could cause you serious financial harm, forcing you to consider all options in dealing with your debt, including reading our Bankruptcy Canada FAQ to find out more about the bankruptcy process.
We hope that you will never be a victim of a scam or experience serious financial difficulties for any reason. But if life throws you a curveball, find out information by reading our Bankruptcy Canada FAQ and then contact the Ira Smith Team today. We can help put you back on the road to financial health with practical advice and a solid financial plan. You can also gain quick answers to find out all about the personal bankruptcy process by reading our Bankruptcy Canada FAQ. Starting Over, Starting Now you can put your money problems behind you and regain a great quality of life.
Watch for our next blog when we’ll be discussing Disaster Relief Scams.
Can the employment credit check beat you up? We previously discussed whether bad credit could hurt your job search. Now we know that an employment credit check certainly can. Even though a credit score was designed to predict whether or not you’re a good credit risk when you apply for a loan, a credit card, mortgage, a car lease, etc., more often than not you now have to submit to an employment credit check when applying for a job. But, should a potential employer be allowed to check your credit score and not offer you a job if you have a low one?
It sounds punitive, doesn’t it? After all, how can anyone improve their credit score without a good paying job? “There’s a certain irony that the people who are most vulnerable and who most require access to jobs could be discriminated against because they have poor credit ratings,” said Murray Rowe Jr., president of Forrest Green, a Richmond Hill-based credit advisory group.
Several states in the U.S. agree. California, Connecticut, Hawaii, Illinois, Oregon, Vermont, and Washington have enacted measures limiting the use of credit reports and the employment credit check when determining whether a person is the right fit for a job. New York City recently announced that lawmakers are expected to pass a bill prohibiting employers from reviewing the credit histories of prospective workers. And, according to a New York-based think tank, the application of credit reports has moved far beyond their intended purpose.
The federal government of Canada doesn’t agree. In fact it recently introduced mandatory credit checks as part of a new security screening procedure for public servants. Two unions representing federal employees object to the employment credit check policy and call it an unnecessary invasion of privacy.
Regardless of where you stand on the issue of employment credit check, the one thing that we can all agree on is that serious financial issues can jeopardize more than your bank account. It’s very important to deal with your financial problems as soon as possible with the help of a professional trustee and to not let them bully you. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you can live a debt free life and have the confidence to apply for the job of your dreams.
- Payday Loan Companies: There Are Options
- Payday Loan Companies – Update
- Payday Loans Are Not The Answer To Your Financial Problems
- Payday Loans: Ontario Cracks Down On The Cash Store
- Canadian Payday Loans No Credit Check: Too Good To Be True!
- Payday Loans Toronto No Credit Check
Governments in Canada and the United States have passed legislations aimed at cracking down on the industry, yet payday lenders continue to operate. In its latest move the Consumer Financial Protection Bureau in the U.S. has proposed new regulations designed to put payday loan companies out of business. The most damaging to the industry is the proposal to limit the number of loans per customer to six per year which is expected to hurt lending volumes and revenue by as much as 75%.
Payday loan companies that have substantial pawn operations are positioned to weather the storm and survive the new U.S. regulations while the smaller payday lenders will most likely disappear from the landscape. Is this better for the consumer? Absolutely! Payday loan companies take advantage of people who are seriously strapped for cash. They see a catchy ad and have no idea that their loan could be costing them almost 600% in annual interest. The consumer gets trapped into borrowing money they can’t hope to repay. A pawnbroker lends money against valuables. If you have something to pawn (typically jewelry), then you can walk away with some cash. At least the consumer isn’t being sucked in a borrowing cycle that will eat him alive.
If you’re considering a payday loan from one of the payday loan companies or a pawn shop, stop! You need professional financial help, not more debt. Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you could be well on the road to financial health.
Credit score rating is an important part of what lenders look at when you apply for a loan, but it is not the only thing. We all know that credit score rating is used to determine your credit worthiness, but what you may not know is that your credit score rating is not the only factor used. Even with a great credit score rating, you may still be rejected when applying for credit. How is this possible?
In order to have a good credit score rating you must be able to show that you have the means to repay credit. However, your ability to repay credit may change depending on your income and your debt load. Using mathematical formulas, something called a debt service ratio (DSR) is calculated. Your DSR shows what percentage of your monthly income goes toward paying off debt. You may be managing your debt today, but if your DSR shows that with additional credit responsibilities you may have trouble meeting or managing your existing expenses, your credit application may be rejected. The same applies to an entrepreneur who’s looking to finance his/her small business with a small business loan. The credit worthiness of the individual has to be taken into account, as that’s who the lender is really loaning the money to, either directly or by way of a personal guarantee.
If you offer collateral as security in exchange for credit, the value of your collateral must be established. An asset that you think has great value may not be worth what you think it is in the eyes of the lender. Typically real estate and guaranteed investments are better forms of collateral than your jewelry, car, machinery or equipment.
Unfortunately many people are carrying too much debt but are fearful of the bankruptcy process, so they attempt to borrow more money in order to either consolidate their loans or for a specific need. Adding more debt is not the answer. Personal bankruptcy is an option, but not one to be feared. And, there are bankruptcy alternatives to be considered as well. Don’t run away from debt. Contact the Ira Smith team. We can help you deal with debt and Starting Over, Starting Now you can be well on your way to a debt free life
Thankfully, there are alternatives to personal bankruptcy. Say the word bankruptcy and people naturally recoil. I don’t know if there is more stigma attached to another word in the English language. In reality bankruptcy is not something to be ashamed of, it should not be avoided at all costs and it’s not a deep dark hole; it can be the light at the end of the tunnel. As with other alternatives to personal bankruptcy, it is an option. Let’s explore why avoiding bankruptcy can do more harm than good.
What is bankruptcy? Bankruptcy is incredibly misunderstood. According to the Office of the Superintendent of Bankruptcy Canada Bankruptcy is a legal process designed to relieve honest but unfortunate debtors of their debts. At the end of the process, the bankrupt is released from the obligation to repay the debts they had when the bankruptcy was filed (with some exceptions).
Why avoiding bankruptcy can do more harm than good: Although there are alternatives to personal bankruptcy which merit review, bankruptcy is often a good thing. A recent report by the Federal Reserve Bank of New York states:
- People who filed bankruptcy had access to more new lines of credit than those who limped along in a poor financial state which clearly puts to rest the misconception that filing bankruptcy closes the door to new credit.
- Those who didn’t file bankruptcy were described as insolvent.
- The individuals who go bankrupt experience a sharp boost in their credit score after bankruptcy, whereas the recovery in credit score is much lower for individuals who do not go bankrupt
- Insolvent individuals who do not go bankrupt exhibit more financial stress than those who do.
Are you insolvent and looking for solutions? The Ira Smith Team is here to offer alternatives to personal bankruptcy and bankruptcy help in Vaughan and throughout the GTA. Starting Over, Starting Now, Ira Smith Trustee & Receiver Inc. can help you overcome your financially difficulties. Contact us today.