THE EVOLUTION OF MORTGAGE FRAUD CANADA DUE TO AVERAGE HOME PRICES TORONTO

Average home prices Toronto:  Introduction

Everyday we’re inundated with stories in the newspapers, on television and online about the average home prices in Toronto and in the rest of Canada. Many are left wondering what they can possibly do to get into this very hot market. Unfortunately as a result there’s been a surge in mortgage fraud.

Average home prices Toronto:  What is mortgage fraud Canada?

Mortgage fraud takes place when fraudulent information is used to qualify for a mortgage. A classic example of mortgage fraud is a prospective home buyer submitting fake or altered employment letters, bank statements or tax returns to qualify for a large mortgage.

Average home prices Toronto:  How prevalent is mortgage fraud Canada?

According to credit reporting agency Equifax:

  • The number of mortgage applications flagged as potentially fraudulent has risen 52% since 2013
  • About 90% of all mortgage applications flagged for potential fraud have come from banks and not other types of mortgage lenders, largely because banks have become better at spotting fraud attempts
  • 13% of Canadians told Equifax it was okay to tell “little white lies” on their mortgage applications
  • Roughly 67% of mortgage applications flagged for fraud came from Ontario
  • Approximately 12% of suspected mortgage fraud came from British Columbia
  • Only 8% admitted to actually falsifying information on their own credit applications

Average home prices Toronto:  Why are typically law-abiding Canadians being driven to commit mortgage fraud in Canada?

It’s no secret that home prices are continuing to rise.  The latest federal legislation has made it more difficult to qualify for an insured mortgage. Many Canadians are realizing that home ownership is beyond their reach. In fact according to an online survey by Equifax, 84% of Canadians felt the country’s housing market had become too expensive for first-time buyers. Of those who didn’t own a home, 20% said they worried they may never be able to save enough for a down payment. Clearly desperate times are calling for desperate measures and a surge in mortgage fraud is the result.

Average home prices Toronto:  What should you do if you have too much debt?

Committing a crime is never the answer. And make no mistake, mortgage fraud is a crime. It can be punishable by hefty fines and/or jail. If your goal is to buy a house, we can’t do anything about the real estate prices, but the Ira Smith Team can help you get your debt issues under control so that home ownership may be in your future. Give us a call today so that Starting Over, Starting Now you can conquer debt and start saving for your future.

#VIDEO – WILL CANADIAN HOUSING BUBBLE BURST? EXPERTS PREDICTING SINCE 2013 REAL ESTATE MARKET CRASH IN TORONTO ONTARIO CANADA#

Will Canadian housing bubble burst?  Introduction

I have read recently several articles on will Canadian housing bubble burst?  I was curious about all the so-called experts calling for a real estate market crash in Toronto.  What piqued my curiosity was I vaguely remembered having written a couple of blogs on the subject a while ago in response to such articles.  So, I thought it would be interesting to go back and see how far back “experts” were predicting a Canadian real estate bubble. Especially a Vancouver and Toronto housing bubble.

Will Canadian housing bubble burst?  “Experts” predicting Canada’s real estate market crash since 2013

The first time these articles caught my attention was in mid-2013.  Many articles written were just like the one that appeared in the Toronto Star on Sunday, July 14, 2013 titled Canadian housing bubble looks ripe for popping.

I first wrote the blog FINANCIAL CRISIS IN CANADA: CAN REAL ESTATE PRICES TRIGGER ONE? posted on May 13, 2014.  In that blog, I pointed out some issues that led to the US housing crisis in 2007 and what issues we should look at in Canada as indicators to avoid the same fate for the Canadian real estate market.  Back then:

  • 7.5% of the Canadian workforce is in the construction industry, while 7% of the Canadian economy depends on residential construction – both record highs;
  • the unemployment rate rose from 6.9% to 7.2%;
  • the Canadian debt-to-income ratio has soared to a record 164% which is above levels experienced in the U.S. before the financial crisis; and
  • 70% of all household debt in Canada is made up of residential mortgage debt.

It is interesting to note that at the end of 2016:

  • the percentage of the Canadian workforce in the construction industry, and the percentage of the Canadian economy based on residential construction – both record highs then – is roughly the same at the end of 2016;
  • the unemployment rate was 7.2% and today is roughly 6.6%;
  • the Canadian debt-to-income ratio of 164% at the end of 2016 rose further to 167%; and
  • 71% of all household debt in Canada is made up of residential mortgage debt.

So not a lot has changed in the Canadian economy in the last three years.

Will Canadian housing bubble burst?  Canadian real estate bubble 2014

Will the Canadian real estate bubble burst continued to be the subject of several articles in the newspapers quoting Canadian and American economists.  Author and portfolio manager Hilliard MacBeth was calling for a major real estate correction in 2014.  CBC News reported in Housing market a bubble set to burst, Hilliard MacBeth says.    The Globe and Mail reported in a video Canada’s housing bubble about to burst, author says.

Such articles motivated me to immediately follow-up with the blog CANADIAN REAL ESTATE BUBBLE BURST: WHEN? posted on June 12, 2014.  You can read that blog again.  In it, I provided somewhat of a contrarian view with evidence about why other experts were taking the view that there was not a Canadian real estate market crash looming.  I wrote that we should rightly be worried about the average Canadian debt level.

Will Canadian housing bubble burst?  What starts a housing bubble?

I believe the causes of a housing bubble are a rapid increase in housing prices fueled by demand, speculation and irrational exuberance.  That is certainly what happened in Toronto in the late 1980’s and can also be said about the more recent US housing crash (in addition to mortgage fraud covered up with the bundled subprime mortgages financial product).

This time around, it seems that in Canada, and specifically Toronto, the increase in housing prices is fueled by demand.  Unlike the late 1980’s, I don’t hear about people who cannot afford to purchase a home purchasing many homes to never take possession but merely to flip the contracts for a profit.  Today we just have the simple economics of supply and demand.  The reality is that the GTA represents over 70% of the Ontario population and the GTA expects to grow by over 100,000 people annually through to and including 2019.

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Will Canadian housing bubble burst? Toronto is a magnet

The reality is that Toronto, on a net basis, has an increasing population every year because Toronto is a magnet for the world of people looking for better opportunities.  These people must live somewhere and the normal life cycle calls for renting first and then buying real estate when you are more established and can afford to.

Is it any wonder?  For a second year in a row, Canada ranked second in the annual “Best Countries” survey from the U.S. News & World Report, with Young & Rubicam BAV Consulting and the Wharton School of the University of Pennsylvania.

So, the economy has not shrunk, mortgage rates have remained low and demand is outstripping supply.  Once could argue that it is only for the first time in 2017, that affordable housing options are drying up as the average Toronto home selling price is now roughly $875,983, per the Toronto Real Estate Board.

Will Canadian housing bubble burst?  The Chicken Little prize

Then of course there is Garth Turner; Canadian author, speaker and lecturer on macroeconomics, the housing market and investment techniques, member of the Canadian Parliament for nine years and broadcaster.  Who in 2008 published his book Greater Fool: The Troubled Future of Real Estate.  Mr. Turner has predicted a Canada housing crash coming for many years.

I think like everything in life, moderation is the key.  Prepare an honest family budget, only take on the debt you can truly afford, look at home buying and the related mortgage debt and other expenses carefully.  Once you have purchased your home, don’t spend more than you earn and stick to your budget.

If you did this over the last 5 years in Toronto, you were living in a home you love and have watched it grow in value increasing your net worth, if you have not mortgaged up along the way.  I am glad that I did not listen to Mr. Turner.

Will Canadian housing bubble burst?  Nothing lasts forever

If you have stuck to your family budget and not overspent, even if house prices fall, it means nothing to you.  However, if you have overstretched, taken on more debt than you can afford, spend more than you earn so that you have other non-mortgage debt, this will eventually catch up with you.

Perhaps an increase in mortgage rates when it is time to renew your mortgage will be the tipping point, or as interest rates increase and consumption decreases, negatively affecting the Canadian economy, companies will decrease their number of employees.  If your household requires both spouses working full-time to afford all your debt, and one loses his or her job, perhaps that will be your tipping point.

Will Canadian housing bubble burst?  What to do if you have too much debt

Have you gotten in over your head in the housing market to the point where you could not come up with $2000 in an emergency? Ira Smith Trustee & Receiver Inc. can help with your serious debt issues. Contact us today for a consultation. We approach every file with the attitude that corporate or personal financial problems can be solved given immediate action and the right plan. Starting Over, Starting Now you can take the first step towards living a debt free life.

 

TRICKS ABOUT TOP SCAMS IN CANADA YOU WISH YOU KNEW BEFORE READING OUR BLOG

Top scams in Canada:  March is fraud prevention month

March is Fraud Prevention Month so we thought this would be a great time to  bring you some of the top scams in Canada.  These are the most popular and enduring scams we want to bring to your attention.

Top scams in Canada:  Our Canadian Scam Hall of Fame list

  1. Online Dating Scams: Are you looking for love online? If so, you’re vulnerable. According to the RCMP, in 2016, 748 victims lost over $17 million to scammers pretending to be in love. We’re sure that the number is actually greater than $17 million but most people are too embarrassed to report the crime. Scammers create fake profiles and in short order start professing their love. Most of them say they are out of the country for some reason and have an emergency that requires money. E.g. a robbery occurred and they can’t get back home. There are many ruses to get you to part with your money. Never send money to anyone you don’t know!
  2. Canada Revenue Agency (CRA) Scams: Tax season is upon us so no doubt the CRA scammers have kicked it into high gear. According to the Canadian Anti-Fraud Centre here are two variations of the CRA Scam currently circulating:
  • You get a call from someone impersonating the CRA, claiming a recent audit has identified discrepancies from past filed taxes. They demand repayment immediately or they threaten you with extra fees and/or jail time or deportation.
  • You get an email that says a refund is pending from the CRA. The email includes a link that takes you to a website that looks like the CRA site. Here’s the catch; before you can get your refund you have to give your personal information – Social Insurance Number (SIN), Date of Birth, banking information, etc. Now they can steal your identity.
  1. Online Shopping Scams: We’re all used to shopping online. It’s convenient and cost-effective. But, the rule here is if it seems too good to be true, it usually is. Only make purchases from trusted sites. Don’t give your credit card information to a company because they have unbelievable prices. And watch out for phishing emails advertising big bargains.
  2. Fake Lottery Winnings Scam: You get a call telling you that you just won a big lottery! Here’s the catch; you have to pay a tax or insurance fee before claiming your winnings. Firstly, did you enter this lottery? FYI – You never have to pay anything to receive lottery winnings.
  3. Pyramid Scams: Pyramid scams promise large financial returns for a very small investment. Sounds too good to be true? It is. Pyramid schemes can cost you a lot of money. After you make your investment you have to bring in other people to make their investment, and so on… There is no guarantee that you’ll ever see you investment back, let alone make a profit. And, in Canada it’s illegal to take part in a pyramid scheme.

Top scams in Canada:  Things to remember

Every day fraudsters are coming up with new ways to scam you. Diligence is the key. Remember:

  • If it’s too good to be true, it usually is
  • Get rich quick schemes are a fast way to the poor house
  • Never send money to anyone you don’t know

Top scams in Canada:  What to do if you have too much debt because of being scammed or otherwise

Some Canadians have lost everything to fraudsters. If you’re experiencing serious debt issues as a result of fraud, or for any reason, you need the Ira Smith Team. We’re experts in dealing with debt. No matter how you got into difficulty we can help return you to financial well-being. Contact us today and free yourself of debt Starting Over, Starting Now.

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#VIDEO – CONSUMER PROPOSAL FAQ TORONTO CANADA: KNOW THE CONSUMER PROPOSAL PROS AND CONS TORONTO ONTARIO#

 Consumer proposal faq Toronto Canada: What is a consumer proposal?

This vlog provides answers to the most asked consumer proposal faq.  A Consumer proposal is an official method controlled by the Bankruptcy and Insolvency Act (BIA) readily available just to people. Collaborating with a licensed insolvency trustee (LIT) serving to administer your consumer proposal you make a proposal to:

  1. Pay your lenders part of exactly what you owe them over a details duration;
  2. Expand the length of time you need to repay the financial debts; and
  3. Stay clear of bankruptcy

Repayments are made with the LIT. The LIT uses that cash to pay each of your lenders be they for cash or credit cards. The financial obligations need to be repaid within 5 years.

Consumer proposal faq Toronto Canada:  Who qualifies?

As reviewed in our previous blogs on our blog site, you need to be a person, and not a corporation. As well, your overall financial debts need to not surpass $250,000 (not consisting of financial debts from a home loan, mortgage or credit line supported by your primary house).

You need to likewise satisfy the insolvency requirements. This implies that:

  1. your financial debts value is above the value of your possessions;
  2. if you sold off every one of your properties you would certainly not have adequate funds to repay your financial obligations completely; as well as
  3. you are having difficulty making the complete settlement on every one of your financial obligations monthly

Making just the minimal month-to-month settlements as disclosed on your credit card or loan statements does not count as repaying your financial debts.

Consumer proposal faq Toronto Canada:  What is the price of a consumer proposal?

Your consumer proposal repayments cover the expense for the consumer proposal. There are no different costs either for submitting a consumer proposal or charges paid to the LIT to administer your consumer proposal.

Consumer proposal faq Toronto Canada:  How long will my consumer proposal take?

A consumer proposal could last for no more than 5 years.   However you could reduce the term either by boosting the measure of your month-to-month repayment or by providing a round figure repayment all at once (if you can get an adequate round figure from either a financial institution or elsewhere).

Consumer proposal faq Toronto Canada:  What are the steps of a consumer proposal?

A consumer proposal permits you to pay all or part of your unsecured financial debt in regular monthly amounts over an established amount of time (again, not exceeding 60 months).

In drafting your consumer proposal, the LIT must make sure that your consumer proposal provides a better result for your creditors than in your bankruptcy.

The normal steps are:

  1. A LIT will consult with you and develop a plan that you both think will work for both you as well as serve the needs of your financial institutions and others you owe money to.
  2. The LIT administering your consumer proposal will send the consumer proposal to the Office of the Superintendent of Bankruptcy.
  3. The LIT will mail out the consumer proposal to your financial institutions and other creditors who then have 45 days to approve or deny it.
  4. The creditors could additionally approve or deny your consumer proposal at a meeting of creditors, if such a conference was held. Typically, in a consumer proposal, there is no need hold a meeting.

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Consumer proposal faq Toronto Canada:  Can a consumer proposal eliminate debt collectors and avoid my income from being seized?

Yes, as soon as the filing of a consumer proposal happens, all financial institution and other creditor seizure activities (other than for family law obligations under a proper settlement agreement or court order) stops.

Consumer proposal faq Toronto Canada:  In a consumer proposal will I hand over my home and my auto?

Normally lenders who register a mortgage or other security for a loan are outside the consumer proposal process.  It is the equity you have in your residence or car that must be considered when you and the LIT first sit down to work out a budget and what type of plan you are going to make.

If you have enough income to keep paying the mortgage against your home and/or your auto loan and you wish to keep the assets, you can do so.  Again, your equity must be considered in the offer you make to your creditors and your income and expenses must be reviewed to make sure you can afford all these expenses plus the monthly payment under your consumer proposal.

KEEP IN MIND: If you were to surrender your secured properties after declaring your consumer proposal, you will not be relieved from any type of shortage financial debt since it happened after the declaring of your consumer proposal.

Make certain that if you are offering up secured possessions, you wait for the financial institutions to acknowledge that you have offered them up.  Also, wait until they have started their enforcement, consisting of offering the house or automobile for sale, BEFORE you give your consumer proposal.

Consumer proposal faq Toronto Canada:  Will I need to surrender my charge cards?

Generally, you should be ready to offer every one of your charge cards to the LIT and you will not be able to ask for a brand-new charge card until after your consumer proposal is finished. You will certainly nevertheless can make use of a pre-paid or guaranteed/secured charge card throughout this duration.

Consumer proposal faq Toronto Canada:  If I miss out on a repayment will I automatically become bankrupt?

We highly recommend you to make your repayments consistently and on time. You could postpone about 2 payments.   However if you drop 3 behind, your consumer proposal will certainly finish. If that were to happen, you will certainly no more have protection from your creditors and their collection efforts.  However, you will not automatically be deemed to have filed an assignment in bankruptcy.  You will just be left in limbo in an unprotected state.

Consumer proposal faq Toronto Canada:  What should I do if I have excessive financial debt?

If you’re thinking about a consumer proposal or are looking for ways to end your financial debt call Ira Smith Trustee & Receiver Inc.

Our strategy for every single person is to develop a result where Starting Over, Starting Now comes true, starting the minute you stroll in the door. You’re just one call away from taking the necessary actions to get back on the road to leading a healthy and stress free life.

BUNDLED SUBPRIME LOANS: WE DO NOT NEED ANOTHER GLOBAL ECONOMIC COLLAPSE & WORLD DEBT CRISIS

Bundled subprime loans:  Introduction

Bundled subprime loans.  To bundle, or not to bundle; that is the question. Bundled mortgage loans have become a hot topic these days because they are a tactic used by sub-prime mortgage providers to “beat the system”.

Bundled subprime loans:  How are mortgage lenders regulated in Canada?

  • Regulated lenders in Canada can’t lend more that 80% of a property’s value without obtaining a government-backed insurance
  • If the borrower has bad credit, lenders can’t lend more than 65% of a property’s value.
  • Insurance requires banks to run income stress tests on borrowers.

Bundled subprime loans:  The bundled mortgage loans definition

Bundled home loans package a primary mortgage with a second offering from an unregulated group. It is a product offered by sub-prime mortgage providers.

Bundled subprime loans:  How do they beat the system?

With a bundled loan the strict mortgage lending rules don’t apply. Borrowers can make down payments of only 10% instead of the 20% or 35% on mortgages not backed by government insurance.

Are bundled subprime loans legal?

At the moment bundled subprime loans are legal. However, the Office of the Superintendent of Financial Institutions (OSFI) assistant superintendent Carolyn Rogers warned mortgage providers under its jurisdiction against providing such products.

“They are rules. They are not guidelines, and they are not principles. We absolutely expect regulated entities to be adhering to them,” Rogers said. “Anytime a regulated entity is or appears to be designing a product or an approach that is, by its design, circumventing the rules we would take issue with that.”

The OSFI will be cracking down on bundled loans. Canada’s six biggest banks do not offer bundled loans for good reason.

In the United States, before December 2007, when banks bundled mortgage loans and sold the resulting mortgage-backed securities, the poor credit risk combined with the drop in US home prices, many say explained the global economic collapse & the world debt crisis complete with allegations of white-collar crime.

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Are bundled subprime loans worth the risk? Do you want another global economic collapse and world debt crisis?

Borrowers can be at risk if they load up on too much debt at high rates of interest. “I would suspect that at least 10% of homeowners who are taking out this type of product may find themselves in hot water within the first couple of years of home ownership,” said Scott Hannah, the head of Canada’s Credit Counseling Society, a charity that advises consumers on debt. The Credit Counseling Society’s Hannah urged regulators to ban the products.

Scott Hannah is absolutely right. Loading up on too much debt is never a good idea. Are you overwhelmed by debt? Don’t despair. Ira Smith Trustee & Receiver Inc. can help. We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Give us a call today and Starting Over, Starting Now you can be on your way to debt free living.

#VIDEO – AVERAGE CANADIAN DEBT: THE EASIEST WAY TO REDUCE YOURS AND MAKE YOU ONE OF THE SMARTEST CANADIANS#

Average Canadian Debt:  Introduction

The average Canadian debt will never be repaid if you only make the minimum monthly payments.  Making simply the minimal payment on your charge cards and car loans is leading a lot more borrowers right into trouble, says a brand-new study.

Average Canadian Debt:  February 2017 released TransUnion study

Chicago-based TransUnion checked 1,010 customers in Canada.  They discovered 88 percent of bank card owners in Canada commonly make a higher payment compared to their minimum due on their rotating financial debts every month. Regardless, 39 percent of those charge card owners doubt of the advantages of repaying greater than the minimal payment noted on their credit card statement!

“Making more than the minimum payment makes them a more attractive customer to their financial institution,” stated Todd Skinner, president of TransUnion Canada.

bankruptcy policy TPR average Canadian mortgage debt

Average Canadian Debt:  The new Total Payment Ratio (TPR) statistic

TransUnion is currently utilizing exactly what it calls a trended information report over 24 months, as opposed to a month-to-month picture. They find this offers a clearer representation of the state of a person’s financial resources. It remedies a stat that could be manipulated if, for instance, your credit report was pulled in January after your financial debts increased through the holiday period.

The credit rating company has actually likewise developed exactly what it calls a TPR statistic.  It decides the connection between the repayment measure as well as the defaults throughout the many debts. The TPR calculation separates a customer’s complete month-to-month credit repayments by the complete minimum due on every one of the customer’s credit items.  The greater the TPR the much less likely a customer falls back on repayments.

Average Canadian Debt:  How to calculate a TPR

A person making $400 in repayments on 3 cards when the accumulated minimum due was $200 would have a TPR of 2.0. A person with $1,200 in repayments with an accumulated minimum due of $200 would have a TPR of 6.0.

In its research, TransUnion discovered among Canadians with a TPR of less than 5 on their charge card there was a 1.77 high threat of vehicle finance default.  This is specified as not paying back for 90 days or even more. When the TPR rose to greater than 15.0, the high threat of default went down to 1.4 percent.

Average Canadian Debt:  What a TPR score tells us about you

“This may sound intuitive — consumers who are able to pay more usually have more liquidity and are less likely to miss payments. But it is assigning a number to this intuition that is important,” stated Ezra Becker, vice-president as well as head of TransUnion’s worldwide research. The research study validated that as TPR boosted, delinquencies decreased for charge card and vehicle funding.

Average Canadian Debt:  You will never get out of debt only making the minimum monthly payment

Making the minimal repayment on a credit card leaves you little possibility of in fact ever getting out of financial debt. I understand that many times, people have actually been making minimal repayments on credit cards, by obtaining money from one card to pay a different one.

Credit card statements in Canada currently consist of a line that shows for how long it will take to repay your bank card expense in months.  It assumes that you are making just the minimal repayment each month as well as not increasing the amount owing. There are no regulations as to exactly how they place it on the statement. It’s typically in the small print that many people overlook.

Average Canadian Debt:  What should you do if you have too much debt

Get in touch with a licensed insolvency trustee. We’re government licensed and supervised.  Our costs are government controlled and we’re subject to a stringent code of principles.  We must also take necessary professional development courses yearly.

A qualified licensed insolvency trustee (bankruptcy trustee) MUST initially check every one of your alternatives with you in order for you to prevent bankruptcy.  The trustee must as well find the very best bankruptcy choice option for you. Lots of times the trustee could effectively carry out a financial debt restructuring for you as an option to avoid bankruptcy.

Get in touch with Ira Smith Trustee & Receiver Inc. Allow us aid your recovery to financial health and wellness.  Let us give you back tranquility of mind, body and soul, Starting Over, Starting Now. Call us today.

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THE TRUTH IS YOU ARE NOT THE ONLY PERSON CONCERNED ABOUT PLANNING FOR RETIREMENT CANADA

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Planning for retirement Canada:  Introduction

Planning for retirement Canada appears to be a very troubling matter.  As we’ve discussed before, many Canadians will have to alter their views about retirement as they face the prospects of outliving their money. Some will have to put off retirement indefinitely; others will have to continue to work part-time. But the harsh reality is that very few Canadians will be financially able to maintain their current lifestyles.

Planning for retirement Canada:  Canadians are concerned

In a recent Royal Bank of Canada “Financial Independence in Retirement” poll, Canadians over the age of 55 revealed that:

  • 46% feel that they’re falling short of saving enough to retire
  • Only 33% are now willing to tweak their lifestyle plans to face that reality

The top concerns of the Canadians polled were:

  1. The ability to maintain their current standard of living
  2. The ability to cover the costs of health care
  3. How to make the most out of savings
  4. How to deal with inflation
  5. What lifestyle changes to make
  6. How to manage debt in retirement

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Planning for retirement Canada:  Will you outlive your money?

As our life spans continue to increase, more and more Canadians will be facing the prospect of outliving their money. In 2015, Statistics Canada projected that by 2061 more than 78,000 Canadians will be over 100 years old – versus 5,800 in 2011. And, sadly we are ill ready for the financial ramifications of longevity.

If you’re like most Canadians you won’t able to maintain your current standard of living. Are you worried about covering the costs of health care? Do you know what lifestyle changes to make? Will you be able to manage debt in retirement?

Planning for retirement Canada:  Will you have debt in retirement?

Are you managing debt now? If these things are occupying your thoughts call Ira Smith Trustee & Receiver Inc. today? We’re experts in dealing with debt and we can help. Starting Over, Starting Now we can give you back peace of mind and a solid plan for moving forward towards retirement.

#VIDEO-CANADIAN HOUSEHOLD DEBT NEWS: ARE CANADIANS ADDICTED TO BORROWING#

Canadian household debt news:  Canadians hunger for more borrowing

The Canadian household debt news is that the hunger for borrowing from our Canadian financial institutions stayed vibrant.  It established a new high for Canadians’ borrowing, Statistics Canada reported in December 2016. The widely followed measure of Canadian household debt service ratio rose to a new high of nearly 167 percent.

The numbers will certainly heighten the issue for our provincial and federal governments. The consumer economic situation has actually ended up being over-reliant on bank borrowing.  This as well makes it susceptible to a real estate slump and a climbing rate of interest.

Canadian household debt news:  Finance Minister Bill Morneau says “What? Me worry?”

The current StatsCan reporting covers the 3 months before Finance Minister Bill Morneau tightening up home loan financing regulations once again in October. His action made to prevent Vancouver as well as Toronto house purchasers from taking on bigger home mortgages compared to what they can manage.

Credit-market financial debt reached C$ 2.005 trillion from C$ 1.980 trillion in the previous quarter. Those responsibilities leapt by 1.3 percent in the 3rd quarter, faster compared to the 0.9 percent gain in family income.

Overall personal financial obligations surpassed the dimensions of Canada’s economic climate for the 2nd straight quarter.   It made up 101.2 percent of GDP from July to September 2016.

Financial debts have actually climbed up together with the Vancouver and Toronto real estate boom.  Job creation and low-interest rates encourage more borrowing.

household financial obligations household debt news Canadian household debt to gdp Canadian household debt by province

Canadian household debt news:  Bank of Canada Governor Stephen Poloz says “What? Me worry?”

Bank of Canada Governor Stephen Poloz reduced rates of interest two times in 2014 to 0.5 percent.   He claimed he should act to ease damages to personal incomes from plummeting oil prices. On December 15, 2016, the Bank of Canada published its newest Financial System Review. The semi-annual record specified that family monetary susceptibilities as well as discrepancies continues to climb in Canada.

The Financial System Review stated that the Bank of Canada really feels that these discrepancies will certainly not adversely impact the Canadian economic climate.  Steps have actually currently been implemented to prevent negative after effects. Steven Poloz specified that plans to reduce the threat to the monetary system in its entirety have actually been presented in current months.  He further stated that will certainly act to ease the possible repercussions for the monetary system of increasing family financial obligations.

On the bright side of Canadian household debt news, household financial obligations as a share of family net worth stayed at 20 percent in the 3rd quarter of 2016. As well as debt-service repayments were not altered at 14 percent of disposable income.

Canadian household debt news:  What to do if you can no longer say “What? Me worry?”

Not all families’ stories have happy endings. If you’ve borrowed too much or life has thrown you a curve ball and you can’t make your mortgage and other debt payments, contact Ira Smith Trustee & Receiver Inc. We’re here to help you solve your debt problems and set you on a path to debt free living Starting Over, Starting Now. All it takes is one phone call to schedule a free, no obligation appointment.

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CANADIANS CASHING IN RRSPs BEFORE RETIREMENT IS NOT A SOLUTION

tax consequences

Cashing in RRSPs before retirement: Introduction

Cashing in RRSPs before retirement is never a good idea.  It seems that as life gets more and more expensive, fewer Canadians are saving for their retirement. A recent BMO survey reports that only 46% of Canadians are planning to contribute to RRSPs this year. What is most alarming is that 38% of Canadians have made early withdrawals and were cashing out RRSPs before retirement this year, compromising their retirement savings. In fact on average, Canadians have withdrawn $17,213 from their RRSPs this year, an increase of $1,305 from last year.

Why are Canadians cashing in RRSPs before retirement?

  • 30% – Purchase a house
  • 21% – Living expenses
  • 18% – Pay off debt
  • 18% – Pay for emergencies
  • 13% – Other

Why are Canadians cashing in RRSPs before retirement instead of using the Home Buyers’ Plan to buy a house?

Canadians are using the Home Buyers’ Plan but it’s only for first-time buyers. They access their RRSPs to buy houses and borrow up to $25,000 from their RRSP. The money must be paid back over 15 years. There is no penalty for making the withdrawals, as long as you pay the money back in the specified time frame. Unfortunately if you’re not a first-time buyer or need more than the $25,000 allowed, you have a problem.

Are Canadians concerned about cashing in RRSPs before retirement?

  • 75% are very concerned about the consequences
  • 73% say they’re familiar with the tax penalties or the rules for repayment under the Home Buyers’ Plan
  • 19% don’t expect to pay the funds back

So notwithstanding that Canadians understand the consequences of cashing  out RRSP before retirement, they do not feel they have any other alternative.

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Is cashing in RRSPs before retirement for living expenses ever a good idea?

According to Chris Buttigier, director of wealth planning publications with BMO Wealth Management, “It’s concerning to see that so many Canadians are dipping into their RRSPs to meet short-term needs, which should only be considered as a last resort. Canadians need to consider more options that may be available before making any withdrawals. Make sure you have fully considered the ramifications of the early withdrawal tax consequences. In most cases, RRSP withdrawals will count as income in the year the money is taken out and taxed at your highest marginal rate”.

Is cashing in RRSPs before retirement to pay debt a good idea?

It’s clear that many Canadians are in financial trouble. Before cashing out RRSPs before retirement and emptying out your retirement savings to pay living expenses and debt, contact a professional trustee. There are other options than cashing in RRSP before retirement and compromising your retirement.

We approach every file with the attitude that financial problems can be solved given immediate action and the right plan. Don’t be one of the Canadians cashing in RRSP before retirement.  Make an appointment with the Ira Smith Team for a free, no obligation consultation and Starting Over, Starting Now you can get back on track to debt free living. Give us a call today.

#VIDEO – BANKRUPTCY TRUSTEE IN VAUGHAN TRANSFORMS INTO A LICENSED INSOLVENCY TRUSTEE IN VAUGHAN#

Bankruptcy trustee in Vaughan:  Why did we transform into a licensed insolvency trustee?

Similar to caterpillars turning into butterflies, this bankruptcy trustee in Vaughan went through a metamorphosis. The Office of the Superintendent of Bankruptcy officially changed the name “bankruptcy trustee” to “licensed insolvency trustee” (LIT).  As of April 1, 2017, all licensed trustees must have fully transitioned to the use of the LIT designation in all advertising, communications and representations.

The purpose of this blog is to offer an overview of the Canadian insolvency process. Think of it as a bankruptcy and insolvency lesson 101.

Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan:  What is the purpose of the Bankruptcy and Insolvency Act

Among the primary functions of bankruptcy, it is to release the individual from specific financial debts.  It is to give a straightforward honest but unfortunate debtor a “new beginning.” The debtor has no responsibility for discharged financial obligations.

A discharge from bankruptcy is available to personal bankrupts, not to corporations. Although a personal bankruptcy case typically causes a discharge of financial debts, the right to a discharge is not absolute. Some sorts of debts may not released.  Section 178(1) of the Bankruptcy and Insolvency Act (Canada) (“BIA”) sets out the types of debts that are not released by the discharge of the bankrupt.  The kinds of debts that are not released are child support and alimony, fraud or near fraud, debts arising from Court orders.

Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan: Where can I do some of my research?

You must initially do some of your own research to get an idea of exactly what your choices are. One place to start is our website to learn about:

  1. Bankruptcy – Personal Services
    1. Credit Counselling
    2. Consumer Proposals
    3. Bankruptcy Alternatives
    4. The Bankruptcy Process
    5. Why use a Licensed Insolvency Trustee?
    6. Rebuilding Credit
    7. Personal Bankruptcy
    8. TOP 20 PERSONAL BANKRUPTCY FAQs
  1. Bankruptcy – Corporate Services
  2. Bankruptcy – Creditor Services
  3. Our Blog titled Brandon’s Blog

Once you have a good handle on what to expect, speak to a LIT to begin discussing what actions you have to take next.

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Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan:  The BIA

The BIA allows for a procedure that permits people and companies to be released from all of their financial debts through either:

  1. a restructuring (Consumer Proposal, Division I Proposal or the Companies’ Creditors Arrangement Act) under secure arrangements of the federal bankruptcy statute; or
  2. through bankruptcy by turning over their property to a licensed insolvency trustee to realize upon it for the general benefit of creditors.

Either way, the funds available for distribution to the creditors is paid out by the licensed insolvency trustee.  It is according to the scheme of priority laid out in the BIA.

The bankruptcy courts will consider approving a repayment plan that will repay the approved part of the financial obligations in no more than 5 years. When you use the restructuring provisions of the BIA (Consumer Proposal or Division I Proposal), you need to have a pay back strategy to show your creditors just how you are going to pay back your debts. A successful restructuring plan is an alternative to bankruptcy and will allow a person or company to avoid bankruptcy.

There are various rules and ways that must be followed, but that is a topic for a blog of its own. Your licensed insolvency trustee can go over all the issues with you and is there to aid you through the process.

Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan:  How does it all work?

Bankruptcy is designed for debtors experiencing financial problems who cannot pay their present financial obligations and don’t have enough cash flow to offer a restructuring plan to avoid bankruptcy. The aim is to get a release from their existing debts.

The premise of the BIA is that the individual must deliver all of his or her non-exempt assets to the licensed insolvency trustee who will sell them for distribution to the creditors. In return, other than for either secured debts or the class of debts not released by a discharge from bankruptcy discussed above, the person’s debts will be erased. The person will be able to maintain any type of property that is categorized as exempt under provincial regulations. In this way, after receiving their discharge, the individual is allowed to return to society as discharged bankrupt, to start all over again.

Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan: Your credit score

Filing for bankruptcy could impact your financial resources and credit score for years. You should very carefully weigh all your options before choosing the bankruptcy option.  That is a discussion a licensed insolvency trustee will be happy to have with you and will help you in first trying to find one of the possible bankruptcy alternatives.   Hopefully together you can see which one is best for you.  Only if there is not an available alternative, will the trustee recommend bankruptcy.

A current bankruptcy filing may prevent you from acquiring a mortgage or other financing for years. Credit card businesses will instantly end your charge cards when you file for bankruptcy. Likewise, if you are trying to find a job or rent a place to live, some employers or property owners might look unfavourably on a current bankruptcy filing. If other applicants are as qualified as you and don’t have a bankruptcy on their record, you probably won’t be chosen.

Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan:  Fresh start

Bankruptcy permits people or companies that are unable to pay their debts settle their monetary difficulties and start restoring their credit. Declaring bankruptcy will trigger the “stay of proceedings”, preventing creditors from starting or continuing any legal action to collect their debts.

bankruptcy filing will stay on your credit report for about 7 years. Since many financial debts can be discharged in bankruptcy with certain exceptions, people can take certain steps to begin boosting their credit rating after filing for bankruptcy and for sure after obtaining their discharge.

Bankruptcy trustee in Vaughan now a licensed insolvency trustee in Vaughan:  What to do if you are experiencing financial hardship

People experience financial hardship for many reasons. If you’re experiencing financial hardship and are looking for a way out, contact Ira Smith Trustee & Receiver Inc. With immediate action and the right plan for moving forward we can set you on a path to debt free living Starting Over, Starting Now. All it takes is one phone call.

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