Under the Ontario Business Corporations Act, you are not allowed to be a director of a corporation while you are in the bankruptcy process. During the period from the date when you sign the initial bankruptcy papers to the date when you are discharged from your bankruptcy, you must not be a director of any corporation, whether for profit or not. If you are a director of your church via a Not-For-Profit corporation, you should resign your position as a director. As soon as you are discharged from your bankruptcy, you may become a director again. Note that this does not apply if you are filing a Consumer Proposal – it only applies to a bankruptcy.
When you file an Assignment in Bankruptcy, you must assume that your creditors will do a computer search within their bank system. If you are a director of your church, a letter will be sent to the church by your creditor requesting clarification of your status. In extreme circumstances – if your church has a bank loan, the bank may reduce the authorized total loan available to the church or ask that the loan be paid off. Unfortunately, the letter will be sent to the person at the church who normally deals with banking matters. It may or not be you.
Discussing this with your trustee before you file the bankruptcy papers will save on the embarrassment later.
After you are discharged from bankruptcy and perhaps even before you are discharged from bankruptcy, it is time to start researching what steps you need to take in order to rebuild your credit. Once you are discharged, you will be essentially starting over at zero in terms of credit history and standing. Step 1: Research all major credit card companies and find out who is willing to give you a credit card. You may have to apply to a few different banks in order to get approved. Each application reduces your credit score. Mastercard has several credit cards such as Capital One, Canadian Tire and Affirm may be a place to start. You may want to research pre-paid secured credit cards as a safe place to start. Once you have been approved, use your card each month but be careful never to exceed the card limit. It is crucial to pay off these cards in full each month to improve your credit history—this is your fresh start and the foundation of good credit history, it will give you more freedom in the future. Good Luck!
You must take Action and get out of Debt! You know you need to get out of debt. You think about it all the time—you feel you can’t stop worrying. Stop worrying and start taking action! These two baby steps can start to relieve your fear and stress instantly.
Step 1: Make a list your debts you need to pay excluding rent or mortgage. List the name of the creditor, amount of maximum allowed debt, amount of actual debt, interest rate and amount of minimum monthly payment.
Step 2: Know yourself. You can decide to either consolidate/combine the debt into one payment OR start to pay off your smallest debt while paying interest on all other debts. If you have the personality where you need to see results in order to stay motivated then choose the second option. However, if you can consolidate your debt into one easy payment and stay focused—you will be pleased with the results.
One of the factors in the calculation of your credit score is the amount of your total available credit which is currently being used. As you pay down your debt, your credit score will be rising at the same time.
Talk to a trustee in bankruptcy regarding these options and let an expert help you decide what is best for you and your financial situation. The moment you become debt free is the moment you can begin to save for your future and have the life that you deserve.
You are debt free! Now what? Saving for your children’s education fund should come second to saving for your retirement. Your child’s degree will not pay for you to be able to live comfortably in your retirement. You should also not assume that your children will be able to help you financially in your retirement. Even if they could help you – will they? If you save for retirement first, you will be able to move to the next stage of saving for your child’s education as well. Let’s consider (4) retirement savings options:
3. Non-registered savings and investments (See Part II)
4. Basic savings accounts (See Part II)
RRSP contributions are tax deductible. For example, if you contribute $2,000 to your RRSP in 2015(before March 1), it can be deducted from taxable income when filing your income tax return for 2014. Secondly, the money you contribute to your RRSPs grows and compounds over time.
Tax-Free Savings Account (TFSA)
At the present time, a tax-free savings account allows a yearly maximum contribution of $5,500 and allows savings to grow tax-free. However, you need to research before making contributions and withdrawing cash from this account. Be mindful of maximums because Canada Revenue Agency charges a penalty if you exceed your maximum or otherwise withdraw from the account.