#VIDEO – BANKRUPTCY INFORMATION ONLINE: WHAT EVERY CANADIAN OUGHT TO KNOW#

Is there bankruptcy information online?

There is a large amount of bankruptcy information online.  Just go to the website of any Licensed Insolvency Trustee or bankruptcy lawyer.  There is information about:

  • Canadian bankruptcy
  • the Canadian Bankruptcy Act (BIA)
  • general bankruptcy information

Bankruptcy information online at the Ira Smith Trustee website

On our website, you will find bankruptcy information online such as:

The other source for bankruptcy information online

Canadian bankruptcy information online is at the Superintendent of Bankruptcy Canada website.

To take action you have to take it offline

Once you have gotten the online information, to take action, you need to take it offline.  It is not possible in Canada to file bankruptcy online yourself.

To file either a consumer proposal to achieve debt settlement or bankruptcy, you need to select a Licensed Insolvency Trustee.  A Licensed Insolvency Trustee administers the insolvency process in Canada.

The 10 Step Program of the Canadian Insolvency System

  1. Meet with a trustee to talk about your personal situation and your options.
  2. Work with the trustee to complete the required forms.
  3. The trustee filing your consumer proposal or bankruptcy and notifying your creditors.
  4. You attend a meeting of creditors, if required.
  5. You attend two counselling sessions.
  6. Subject to your provincial exemptions, the trustee sells your assets; you may also have to make surplus income payments to the trustee.
  7. In certain circumstances, you may have to attend an examination by an officer at the OSB.
  8. The trustee prepares a report to the OSB describing your actions during the bankruptcy.
  9. You attend the discharge hearing, if required.
  10. Your discharge from your bankruptcy and then the trustee completes the administration.

This is why to take action in the Canadian insolvency system you have to take it offline

How To Take Action To Achieve Debt Settlement

If you’re in deep financial difficulties and are looking for a way out, there is help for you. You need help from experts in debt – professional trustees.

We are:

  1. regulated by the Canadian government, as are our fees;
  2. licensed and have undergone a background check by the RCMP;
  3. subject to a stringent code of ethics; and
  4. required to maintain our competency by completing ongoing mandatory professional development each year.

Are you an individual or company who feels your situation is hopeless? Ira Smith Trustee & Receiver Inc. can prepare and put in place the plan MADE JUST FOR YOU.  The plan will free you from the burden of your financial challenges.  With our help, you will go on to live a productive, stress-free, financially sound life.

Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you can free yourself from debt.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

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SUBPRIME PERSONAL LOANS SECRETS REVEALED

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Subprime personal loans lending is dangerous business. It was instrumental in pushing the U.S. financial system to the brink of collapse from 2007 – 2008.

You may have read the book or seen the movie The Big Short.  It is a 2015 American film directed and co-written by Adam McKay. It is based on the non-fiction 2010 book of the same name by Michael Lewis.  It is  about the financial crisis of 2007–2008, triggered by the United States housing bubble. The film stars Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt.

Now, could subprime lending spell doom for Canada?

What is subprime lending?

Subprime personal loans lending refers to giving loans to individuals who don’t qualify for prime rate or regular loans.  The reason they don’t qualify is usually because of poor credit ratings.  There could also be other factors that set off red flags about their ability to repay the loan. As a result subprime loans carry a higher interest rate than normal loans.  This is because of the increased risk that the borrowers will default on payment.

Subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule.  Their diffculty is sometimes reflecting setbacks, such as unemployment, divorce or medical emergencies.

What is the state of subprime lending in Canada?

According to TransUnion, subprime lending is becoming a bigger part of the credit business in Canada.

  • The average amount owed on Canadian credit cards rose by 1.8% over the past year
  • But among subprime borrowers, it rose at more than triple that rate, up 5.7% in a year
  • The share of Canadian mortgage-holders with high debt levels (above 500% of disposable income) jumped from 3% in 1999 to 11% by 2012
  • Debt delinquencies are on the rise. The share of indebted consumers who failed to make a debt payment for 90 days rose by almost 3% over the past year

What to do if you think you need another loan but can no longer qualify for a normal loan

If you can’t qualify for a traditional loan, a subprime loan is not the answer to your problems.  High interest rate subprime personal loans is not an answer for being unable to repay your debts. Taking control of your debt with the help of a professional trustee is the answer.

Make an appointment for a free consultation with Ira Smith Trustee & Receiver Inc.

We’ll discuss all your options.  The options include bankruptcy alternativescredit counselling, debt consolidation and consumer proposals.  We will also tell you about bankruptcy if that’s the best option for you.

There is a way out of your financial problems.  We can provide the right solution for you.  We will do so without resorting to a subprime loan Starting Over, Starting Now.

#VIDEO – TAX FRAUD PHONE CALLS ARE YOUR WORST ENEMY. 1 SECRET TECHNIQUE TO ALWAYS DEFEAT THEM#

Our previous blogs on tax fraud phone calls and similar scams

We have before written about tax fraud phone calls. These are scams perpetrated by criminals purporting to represent Canada Revenue Agency (CRA).  Our previous blogs are:

People are falling for the tax fraud phone calls all the time

These scams have also been well reported in the press.  CRA estimates that losses from these scams are in the millions of dollars.  CRA and the Canadian police forces estimate that the scam has worked on 9 in 10 Canadians.

How many types of scams are there?

CRA advises that there are many known scams, pitches and fraud types with new ones invented daily.  The more common ones are:

  • Telemarketing/tax fraud phone calls scams
  • Online scams
  • Email scams
  • Identity theft
  • Business scams
  • Mail scams

How do these scams work?

They all involve posing as a CRA.  CRA advises you should be wary of phishing scams asking for personal private information. The CRA would never ask for this type of information.

Some of these scams ask for this personal information. Others refer you to a website resembling the CRA’s.  At the website, you are prompted to confirm your identity by entering personal information. You should not click on links included in these emails. Email scams may also contain embedded malicious software that can harm your computer.  The software can also send them your sensitive personal information which you enter online.

The latest, and most aggressive scam works something like this.  Often, people are getting calls to their home by someone claiming to be a CRA agent. They notify the resident of some bogus tax arrears amount.  They then say they are about to be taken to court or police are about to come to their door to arrest them.

A fake tax agent has even shown up at homes demanding payment as part of the scam.  It used to be the scam was only done over the phone or computer.  Now the thieves are getting more brazen.  They are enlisting the services of confederates to show up at your home!

More information about the types of tax scams can be found at some of the following sources:

  • Protect yourself against tax fraud phone calls – Agence du revenu du Canada  www.cra-arc.gc.ca › Home › Security Apr 5, 2016 – Informing yourself        is the best protection against fraud. … If you receive a call saying you   owe money to the CRA, you can call us or check My … Is the requester asking for information I would not provide in my tax return? Is the …
  • Beware of new tax fraud phone calls scams – Agence du revenu du Canada        www.cra-arc.gc.ca › Home › Newsroom › Alert Jun 10, 2015 – Victims receive a phone call from a person claiming to work for the … If you get such a call, hang up and report it to the     Canadian Anti-Fraud Centre. … and businesses have in the CRA is a cornerstone of Canada’s tax system.
  • Tax season brings more tax fraud phone calls on CRA tax scam | CTV Ottawa News ottawa.ctvnews.ca/tax-season-brings-more-calls-on-cra-tax-scam- 2804420  Mar 4, 2016 – It was an automated call, accusing him of   tax fraud and requesting him to phone a 6-1-3 number back immediately or “face the consequences.”.
  • Canada Revenue Agency warning of aggressive tax scam, millions … www.citynews.ca/…/canada-revenue-agency-warning-of-aggressive-  tax-s…Feb 4, 2016 – “A lot of it has to do with tax fraud phone calls         and demanding immediate payment, threatening arrest, threatening jail, using really aggressive language …
  • Tax Fraud Phone Calls and Tax Scams | TurboTax Canada https://turbotax.intuit.ca/tax-resources/tax…/tax-fraud-and-tax-scams.jsp Taxpayers who knowingly engage in tax fraud and tax scams face fines, penalties … Unsolic Phone fraud – Wikipedia, the free encyclopedia https://en.wikipedia.org/wiki/Phone_fraud Communications fraud is the use of telecommunications products or   services without intention … A variant is a call forwarding scam, where   a fraudster tricks a subscriber into …. monopoly and/or excessive taxation of inbound overseas calls.

Here is the 1 simple secret technique to protect yourself from tax fraud phone calls and similar scams

There is 1 simple secret technique though that most people do not know about.   Knowing this will allow you to not fall for the tax fraud phone calls and other tax scams.  When you are contacted, do not give out any personal information.  Then, either go to your CRA My Account login online or call CRA to check the status of your tax account.  You will know that you are dealing with the real CRA and can find out the true status of your tax account.  Once you learn that there are no problems with your tax account, then you will not fall prey to the scammers.

Then contact the Canadian anti-fraud centre or phone the CRA fraud phone number.   Report the contact the thieves made with you.

What can you do if you have too much debt and now you have been scammed out of the money you were going to use to pay those debts?

Are you insolvent and looking for solutions? The Ira Smith Team is here to offer alternatives to bankruptcy and bankruptcy.  We offer the help in Vaughan and throughout the GTA.

Are you an individual or company who feels your situation is hopeless? Ira Smith Trustee & Receiver Inc. can prepare and put in place the plan MADE JUST FOR YOU.  The plan will free you from the burden of your financial challenges.  With our help, you will go on to live a productive, stress-free, financially sound life.

Our motto is Starting Over, Starting Now! Ira Smith Trustee & Receiver Inc. can help you overcome your financial difficulties. Contact us today.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

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ONLINE PAYDAY LOANS TORONTO: GOOGLE FINALLY REALIZES ITS HUGE MISTAKE!

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A company with huge global influence has banned ads for online payday loans Toronto. Google has taken this bold step. For the first time has announced a global ban on ads for a category of financial products. We have discussed payday loan companies in several previous blogs.  We have said they are vultures that prey on the poor and vulnerable who feel that they have no other option.

Does online payday loans Toronto borrowing make sense?

Borrowing from physical location and online payday loans Toronto companies adds more debt.  Adding new debt to existing debt does not help you.  It only helps the payday loan companies laugh all the way to the bank. These companies should be illegal.  Instead, they’re operating out in the open and bombarding us with ads on TV, in print and online. For someone deep in debt payday loan companies first seems like a lifeline. But instead of a lifeline, they’re more like a noose from which there is no escape.

What do other experts say about online payday loans Toronto?

I can only hope that other companies will follow Google’s example. Shutting out payday loan companies from advertising will actually help the vulnerable. ACORN is an anti-poverty group in Canada.  They are campaigning against predatory lending and are celebrating this move by Google.

“Sometimes I think people go to these places just out of desperation so quickly that they don’t even think about it and doing it online makes it even easier for people,” said spokeswoman Donna Borden. “A lot of people that we talk to say, ‘I should have waited and thought it out’.” Jeffrey Schwartz, executive director, Consolidated Credit Counseling Services of Canada says, “Payday loans can create a harmful cycle of debt especially for those who are the most vulnerable in society. This decision will help to protect susceptible consumers online.”

What about other high interest loans other than online payday loans

A further Google U.S. ban on ads for loans with an annual interest rate of 36% or higher does not now apply in Canada. These high-interest instalment loan products are for the most part unregulated. Why isn’t our government protecting Canadians from payday loan companies? In the meantime congratulations to Google. Stepping up to the plate and banning ads from predators is a huge step in the right direction.

What to do if you fell prey to the seductive online payday loans Toronto companies and now have too much debt?

If you’re in deep financial difficulties and are looking for a way out, there is help for you. But not from payday loan companies. You need help from experts in debt – professional trustees.

We are:

  1. regulated by the Canadian government, as are our fees;
  2. licensed and have undergone a background check by the RCMP;
  3. subject to a stringent code of ethics; and
  4. required to maintain our competency by completing ongoing mandatory professional development each year.

Are you an individual or company who feels your situation is hopeless? Ira Smith Trustee & Receiver Inc. can prepare and put in place the plan MADE JUST FOR YOU.  The plan will free you from the burden of your financial challenges.  With our help, you will go on to live a productive, stress-free, financially sound life.

Contact Ira Smith Trustee & Receiver Inc. today. Starting Over, Starting Now you can free yourself from debt.

#VIDEO-ALTERNATIVES TO BANKRUPTCY: DO NOT BE EMBARRASSED TO HAVE THE “B” CHAT#

Introduction of the alternatives to bankruptcy

There are alternatives to bankruptcy.  Say the word bankruptcy and people immediately 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 bankruptcy, it is an option. Let’s explore why avoiding bankruptcy can do more harm than good.

Many реорlе аѕѕumе thеrе’ѕ only оnе tуре of bankruptcy. The one that еlіmіnаtеѕ all уоur debts.  Thаt’ѕ a BIG rеаѕоn реорlе ѕау things like, “I wоuld never dесlаrе bаnkruрtсу! It just dоеѕn’t seem to be the responsible thing to do. Right?”

What mоѕt реорlе don’t know іѕ that there are TWO tуреѕ of BIA proceedings for іndіvіduаlѕ. One is bankruptcy and the other is an alternative to bankruptcy. The alternative is a (consumer) proposal. The reason you would pick the alternative is to AVOID bankruptcy.

Two tуреѕ of BIA proceedings

Thеѕе two types of BIA proceedings are іntеndеd to асhіеvе very dіffеrеnt goals. Bеfоrе taking асtіоn it is іmроrtаnt to undеrѕtаnd what уоu want to achieve. What you are trying to achieve will determine whісh tуре of BIA proceeding іѕ right fоr you.

Here is a quick ѕummаrу of еасh type of BIA proceeding.   We also show how еасh one саn help уоu асhіеvе specific gоаlѕ in your fіnаnсіаl life.

What is bankruptcy?

Bankruptcy is most of the time 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)”.  

Bankruptcy used to be the mоѕt common type of BIA proceeding fоr consumers. Its lіquіdаtіоn and discharge fеаturеs are dеѕіgnеd to end debts and give уоu a frеѕh ѕtаrt. In the United States it is referred to as “Chapter 7 proceedings”.

 (Consumer) Proposal:  One of the best alternatives to bankruptcy

The proposal provisions used by companies  is “restructuring” or “reorganization”. Individuals with large debts can also use the restructuring provisions.  Yet, there was no similar provisions available to small individual debtors in the BIA.

Parliament wished to find a way to provide for people with smaller debts to be able to restructure.  A Parliamentary committee consulted with the stakeholders in the Canadian insolvency world.  As a result, the consumer proposal legislation came into force in the 1990’s.  Now, the consumer proposal provisions are used more than the consumer bankruptcy provisions. Canadians are now able to AVOID bankruptcy while still obtaining the help and counseling of a LIT.

The main use of the (consumer) proposal provisions of the BIA is to:

  1. allow you as a debtor to keep your assets, if you can afford to in your budget;
  2. AVOID bankruptcy, and provide a better alternative to your creditors than a bankruptcy would. You can relieve yourself of your debts, for an amount less than the total face value of all your debts;
  3. If the рауmеnt plan іѕ ѕtruсturеd well, make affordable monthly payments; and
  4. allow for the affordable monthly payments to cut ALL debts.

To meet all your debts in full but уоu can’t afford to ассоmрlіѕh that gоаl, this mау be just the ѕесrеt уоu need to know! In the United States it is called “Chapter 13 proceedings”.

Why avoiding bankruptcy can do more harm than good

There are alternatives to bankruptcy which merit review. But bankruptcy can often be 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. Those who limped along in a poor financial state did not;
  • this puts to rest the misconception that filing bankruptcy closes the door to new credit;
  • those who didn’t file bankruptcy are just insolvent;
  • individuals who go bankrupt get a sharp boost in their credit score after bankruptcy;
  • the recovery in credit score is much lower for individuals who do not go bankrupt; and
  • insolvent individuals who do not go bankrupt exhibit more financial stress.

Where to go for information on alternatives to bankruptcy

Are you insolvent and looking for solutions? The Ira Smith Team is here to offer alternatives to bankruptcy and bankruptcy.  We offer the help in Vaughan and throughout the GTA.

Our motto is Starting Over, Starting NowIra Smith Trustee & Receiver Inc. can help you overcome your financial difficulties. Contact us today.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA:  Not because you are a dummy, because you need to get your life back on track

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BALLOON PAYMENT CAN COST YOU MORE THAN YOU BARGAINED FOR

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A balloon payment is one example of financial lingo that can be very confusing.  Often we get involved in situations that we don’t really understand. We’re going to be delving into financial terms that not only cause confusion, but can cost you more than you bargained for. Balloon payments are a perfect case in point.

What is a balloon payment?

A balloon payment is a lump sum payment that’s attached to a loan which could be in the form of a mortgage, car payment or personal loan. It has a much higher value than your regular repayment charges and is typically applied at the end of the loan period.

What is the advantage of a balloon payment?

A balloon payment allows you to defer a predetermined amount or percentage of the total amount of your loan to a lump sum at the end of your finance period. This allows you to make much lower repayments than you would if the entire amount owing was spread out during your finance term.

What is the disadvantage of a balloon payment?

The disadvantage of a balloon payment is that at the end of the term you have to come up with what can be a HUGE lump sum payment to pay off the remaining balance of the loan in full. Unless you’ve been very diligent about budgeting and squirreling away the money for being able to make that special payment, chances are you’ll be left in financial hot water.

Is a balloon payment right for me?

If you are VERY sure of what your financial situation will be by the end of the loan term and you know with certainty that you’ll be able to make your balloon payment, then it may be right for you. However, for the majority of consumers, this type of financing may pose too big a risk. At the end of the loan term if you don’t have the money for the larger repayment amount and if refinancing isn’t an option you could lose your car or house (or whatever you’ve financed).

Are you heading into financial trouble due to an upcoming balloon payment?

Are you in financial hot water as result of an upcoming large loan repayment? Are you struggling with debt? Contact the Ira Smith Team. We’ve got the solutions to your debt problems. Book a free consultation today and Starting Over, Starting Now you can rid yourself from an unmanageable debt load. Watch for future blogs when we’ll be discussing other confusing terms that can impact you financially.

#VIDEO – DEBT COUNSELLING ON: OUR KILLER 6 STEPS TO IMPROVE YOUR FINANCIAL SITUATION #

The debt counselling ON process

We are licensed to practice in the Province of Ontario, so when we do debt counselling, that is where the “ON” comes from.  We have previously written on various debt settlement issues, including:

In terms of our Debt Counselling ON process you contact us to discuss your bankruptcy alternatives debt relief if you are unable to meet your financial commitments under credit agreements on a monthly basis. Our debt counselling ON process assesses if you are over-indebted, as follows:

Step 1

Complete our Debt Relief Worksheet, in full, with complete backup where requested, providing details of your income, monthly budget and debt commitments. Examples of the backup documentation you will need is a copy of your pay slip, ID, the latest statements of all your debts and your last year’s filed income tax return and notice of assessment from Canada Revenue Agency (CRA).

We can email the Debt Relief Worksheet to you and then you can submit it to us with the backup.  That way, we save you an initial trip to our office.  Our clients appreciate this, so they don’t have to take time off work just to obtain the worksheet.

Step 2

We will review your completed Debt Relief Worksheet to do an initial assessment to check if you are over-indebted, determine the debt counselling ON options available to you and then arrange for a consultation with you. This could either be a face to face or a telephone consultation.  We want to make it as easy as we can on you.  You are already under enough stress from your debts!

Step 3

During the consultation, we will verify your budget and your existing debt commitments. A new budget will be agreed upon to determine the amount available for debt repayment. At this stage we will also provide you with details of all the costs involved, as well as an interim debt settlement plan.  Until now, our service is free.  It is at this point that we will discuss costs with you to enter our debt counselling ON program to supervise your debt settlement plan.

Step 4

We will contact all your creditors to verify your debts. You WILL also be listed on the Credit Bureaus as being under our debt counselling ON program and the listing will stay there for a few years AFTER you  have successfully completed the debt settlement program.  We will, if necessary, further negotiate the proposed debt repayment plan with your creditors.  We will do the negotiations, but we cannot settle on anything on your behalf until we have your approval.

Step 5

If your creditors accept the proposed debt settlement plan, it will be made an order of the court.  This makes our debt counselling ON program binding on both you and your creditors.

Step 6

We will obtain from you post-dated cheques to cover the monthly payments you promised in your debt settlement plan. The aim of this is to collect the monthly payments from you and ensure that the correct amount in terms of the final debt repayment plan is paid by us to your creditors. This will continue until the amount you promised to pay under your debt settlement plan is paid in full.

Our debt counselling ON program works best for individuals that owe a maximum of $250,000, not including any mortgages or lines of credit secured against your home.  If you owe more than $250,000, we can also assist you in a different plan tailored for those that owe larger amounts.

So how can I obtain debt counselling ON – NOW!

If you’re trapped in a high interest debt cycle, I could tell you that you need to pay off high interest debt, but how would you do it? You need a professional trustee to help you manage debt before it reaches a critical stage where bankruptcy is your only option. We have been able to help many individuals carry out a successful debt settlement program. Successful completion of such a program, will free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

Contact the Ira Smith Team today. Before considering declaring bankruptcy, there are other bankruptcy alternatives which include our debt counselling on program.  Contact us today so that we can help and Starting Over, Starting Now you can be restored to financial health.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA:  Not because you are a dummy, because you need to get your life back on track

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IS SHOPPING PUTTING YOU INTO FINANCIAL RUIN?

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The road to bankruptcy is

paved with good deals.
Forbes

Apps are a big part of our lives now. We use apps to do everything from ordering coffee to banking and we’ve discussed apps in two recent blogs:
BANKRUPTCY EXPERTS DISCUSS POSSIBLE DANGER OF USING DIGITAL WALLET APPS
HAVING TROUBLE BUDGETING? OUR TOP 6 LIST OF APPS TO HELP YOU

Now there’s an app that may help shopaholics or splurge spenders who rack up large amounts of credit card debt. The app is called Ally Splurge Alert and it acts as a shopping intervention which many may welcome considering that 46% of all Canadian credit card holders are carrying credit card debt.

According to BMO’s 2015 Credit Card Report:
• 33% don’t pay off their credit card bill every month
• 52% use their credit cards to make the majority of their purchases
• 32% don’t actually keep track of their credit card charges until they receive their bill at the end of the month
• 26% per are stuck in a vicious cycle where they pay off their credit card bill with all their available funds, then rack up additional debt paying for other expenses

Do you need a shopping intervention?

Nick Mastromarco, managing director of North American retail payments at BMO, “Credit cards are a popular payment tool for Canadians; however, unchecked spending habits can result in getting stuck in continuous monthly debt cycles that can hamper near and long-term financial goals.”

How does Splurge Alert work to curb your spending?

Splurge Alert asks the user to identify stores and areas where they tend to overspend and then select friends or family members who can intervene. The app uses geolocation technology to determine when the user is approaching an area considered a danger zone and sends out an alert message to the designated friend or family member so that they will stop the user from overspending. It’s certainly not going to fix your financial problems but it looks like a fun tool to help raise awareness about your spending habits. And you may even save a few bucks in the process.

Do you have too much shopping debt?

To deal with serious credit card debt you need professional help. A fun app or a shopping intervention is not going to keep the creditors at bay. Contact Ira Smith Trustee & Receiver Inc. We understand how stressful mountains of debt can be, but ignoring it will only make it worse and increase your stress levels. There is a solution to your debt problems and Starting Over, Starting Now the Ira Smith Team can get you on your way to living a debt free life.

#VIDEO-GREY DIVORCE: BABY BOOMERS ARE SPLITTING UP#

Grey divorce is a growing trend

Some are calling it grey divorce.  Baby boomers divorcing after many years of marriage.  People think they will be married forever but many times, it isn’t meant to be.  People have their families, and increasingly, they then find after decades of marriage that they just can’t relate to each other anymore.  Ultimately, they have to accept things are as they are not as they wish them to be.

We have previously written on grey divorce:

Grey divorce trend is not stopping

Since 1990 the divorce rate has doubled for couples over age 50 and researchers found after age 40 its often the wife who wants the divorce. People are no longer willing to compromise to live in unhappy circumstances. Longevity is a key factor.  We are all living longer, and spending four or more decades with the same person is becoming more difficult.

Nowadays, people in their forties and fifties and sixties feel very youthful and if you’re in a marriage that your needs aren’t being met, we have choices. Financial independence is more prevalent among grey divorce couples and baby boomers put an emphasis on individual happiness.  Should you live unhappily or as roommates under the same roof?

Grey divorce can be financially complicated

Financial advisors caution that splitting up later can be complicated.  Timing is critically important because people that are in their late fifties or early sixties may have planned for retirement to be right around the corner, and the financial ramifications of grey divorce may substantially alter those plans for both spouses.

According to Investors Group:

  • 80% of those in grey divorce (people who divorced at the age of 50 or older), say they will delay retirement because they need to work longer than planned
  • 62% say their post-divorce savings and investments will no longer be adequate to fund their retirement
  • 54% of those who divorced at or past the age of 50 found it difficult to make financial decisions surrounding their divorce
  • 53% had to adjust their retirement plans
  • 47% will have to scale back on their anticipated retirement lifestyle
  • 26% no longer have enough retirement savings

What should you do if your life is financially complicated?

If you are going or have gone through grey divorce and are experiencing financial problems, instead of going deeper into debt and just putting your head in the sand like an ostrich, contact us today.  Seek the help from a professional trustee, even if you’re not considering bankruptcy at this stage.

A licensed insolvency trustee will evaluate your situation and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or even bankruptcy. With immediate action and the right plan the Ira Smith Team can solve your financial problems Starting Over, Starting Now. We’re just a phone call away.

This vlog was inspired by our eBook – PERSONAL BANKRUPTCY CANADA:  Not Because You Are A Dummy, Because You Need To Get Your Life Back On Track

 

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STUDENT LOANS DEBT: WILL BANKRUPTCY ELIMINATE IT IF YOU ARE NOT THE STUDENT?

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An interesting American case about student loans debt

Student loans debt is nearly impossible to get rid of in bankruptcy. A case winding its way through the US court system has piqued our intellectual interest.  A father, who is a discharged bankrupt, is taking the lender who HE borrowed funds from for his child’s education to Court.  The lender is continuing to pursue collection efforts against the father on the basis that the provisions of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and commonly referred to as the “Bankruptcy Code” (“Code”), does not release the father from what is in reality student loans debt.  The father is taking the lender to Court for a ruling that by virtue of his discharge, he is released from that debt like all his other debts.  It has raised the question as to whether the same student loans debt rules should apply in that case.

The Canadian perspective

We are not qualified to express any opinion on the US legal case before the US Court, but we are qualified to discuss the issue from the Canadian perspective.  We started thinking whether or not this same situation could arise in Canada for student loans.

Last week we discussed student debt bankruptcy from the perspective of the student. Previously, we have written blogs and created a vlog about student loan debt, including:

So this week, we’re discussing student loan debt and bankruptcy from a very different and interesting angle. Could a Canadian lender take the position against a Canadian parent borrower who on the loan application described the purpose of the loans for the funding of his or her child’s Canadian post-secondary education, that the loans qualify as student loans under the applicable Canadian statutes, including, the Bankruptcy and Insolvency Act (Canada) (BIA).  Stated otherwise, are such loans the same as student loans under Canadian law and can bankruptcy eliminate such loans if you’re not the student?

Are student loans necessary?

Many young Canadians require student loans in order to get a post-secondary education. To qualify as Canadian student loan debt, the loans must be issued under a specific Canadian student loan statute:  the (i) Canada Student Loans Act; (ii) Canada Student Financial Assistance Act; (iii)  Apprentice Loans Act; or (iv) any enactment of a province that provides for loans or guarantees of loans to students.

All students require financial assistance to be full-time university students.  The only real places that such assistance can come from is either the parents, if they are willing and able to do so, student loans, or both.  Many Canadian parents pay a hefty portion of students’ tuition fees, even if it means sacrificing their financial stability, to help their children avoid a post-graduation life burdened by tens of thousands of dollars of student debt.  Others may wish to, but they cannot afford to do so.

So are student loans and the resultant debt necessary?  In most cases, yes.

Can a parent co-sign for or guarantee their child’s student loans?

The short answer is no.  As I have already stated, to qualify as a student loan, the loan has to be made under the provisions of one of the Federal loan statutes mentioned above, or any such similar Provincial legislation.  Nowhere in those student loans statutes is there a place for either a guarantor or cosigner.  In fact, the Federal statutes all have similar language stating that upon the death of the borrower, the Federal government will repay the outstanding portion of the loan.  In addition to there not being any sections that allow for a guarantor or cosigner, the specific section dealing with the death of the borrower does not limit the government’s guarantee by using words like “….and if the lender is unable to collect in full from any guarantor or cosigner”.  The reason is simple, student loans cannot be guaranteed or otherwise borrowed by anyone other than the student.

Will bankruptcy eliminate student loans debt?

Student loans are nearly impossible to get rid of in bankruptcy. Section 178(1) of the BIA states:

“(g) any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred:

(i) before the date on which the bankrupt ceased to be a full- or part-time student, as the case may be, under the applicable Act or enactment, or

(ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student;

(g.1) any debt or obligation in respect of a loan made under the Apprentice Loans Act where the date of bankruptcy of the bankrupt occurred

(i) before the date on which the bankrupt ceased, under that Act, to be an eligible apprentice within the meaning of that Act, or

(ii) within seven years after the date on which the bankrupt ceased to be an eligible apprentice;”

So if you’re a student, bankruptcy will only eliminate student loans if you’ve ceased to be a full or part-time student for more than seven years and either declare personal bankruptcy or make a debt proposal to your creditors, most likely through a consumer proposal. The only other option is to attempt to seek from the Court relief because of undue hardship, but this is very difficult, if not impossible.

What is required to meet the burden of undue hardship?

You’ll be discharged from your student loans obligations in bankruptcy only if the Court is satisfied that you meet the two pronged test:

  • acted in good faith in connection with your obligation to repay your student loan debt; and (emphasis added)
  • have experienced, and will continue to experience, financial difficulty that will prevent you from repaying this debt

It’s then up to the bankruptcy court to decide whether or not they forgive your loans, either in full or in part. One of the difficulties in trying to prove undue hardship is that there is no clear definition for what constitutes hardship; each bankruptcy court across Canada may use a slightly different interpretation. The only thing that’s clear is that you must prove that having to continue to pay the student loans after bankruptcy would be a financial hardship for you.  If you try this route, the Court will look at ALL of your income and expenses.

The Court may decide you are not trying hard enough, or, may look at things like your small car you use to get to work, which you purchased used (instead of taking public transit), your cell phone and your internet expenses, and decide that these are luxuries you do not require.  If you are a smoker, the Court may very well decide that if you were not addicted to tobacco, you could start to repay some portion of your student loans.

If you think my examples are picayune or silly, just look up the case of Fournier (Re), 2009 CanLII 31606 (ON SC).

Will bankruptcy eliminate student loan debt if you are not the student?

I don’t know what the eventual disposition of the US case which I mentioned at the beginning of this blog will be, but based on all of the above, in my view in the Canadian context, a parent, relative or friend cannot guarantee, cosign or borrow for a loan that qualifies as a Canadian student loan.  If you borrow in order to fund your child’s education, then you are borrowing under an ordinary commercial transaction and the applicable student loan sections of the BIA do not apply.

So if you have borrowed for this purpose, only the normal provisions of the BIA apply, and you will be discharged from that and your other debts upon your discharge from bankruptcy.  However, if you pledged any of your assets in support of such borrowings, such as your home, the lender does have the right to enforce its security against such assets if you cannot repay, whether you are bankrupt or not.

What should you do if you have too much debt?

If you’re drowning because of your finances, we know we can help you. Although many people believe that bankruptcy is the only way of out serious debt, that’s not always the case. Ira Smith Trustee & Receiver Inc.can discuss other bankruptcy alternatives with you which include credit counselling, debt consolidation and consumer proposals.

If we get to see you early enough, at the first sign of trouble, you can utilize and implement one of the bankruptcy alternatives, to free you from the burden of your financial challenges to go on to be a productive, contributing member of society and not be plagued by debt problems.

Bankruptcy law is very complicated and requires the expertise of a professional licensed insolvency trustee. Ira Smith Trustee & Receiver Inc. is here to help. With a cumulative 50+ years of experience dealing with diverse issues and complex files, we can get you back on your feet Starting Over, Starting Now. We can help. Call us today.


People consider us bankruptcy experts because we wrote the eBook which is sold on Amazon.ca, explaining the Canadian personal insolvency and bankruptcy system, specifically directed to the person stressed out with too much debt.