Will I be able to get a mortgage renewal after bankruptcy?
First, you must find out if your mortgage contains a clause giving the lender the right to foreclose. If the answer is yes, I suggest you talk to a trustee to consider your options.
However, if you have income, it is in the best interest of the lender to continue receiving interest payments. Therefore, in most cases you will be able to renew your mortgage even after you go bankrupt. The lender normally only looks at your payment history to make sure there that there are no NSF cheques or problems with your payments. The lender will be able to increase the mortgage and renew the existing mortgage.
What happens to my tax refund in a bankruptcy or proposal?
If Canada Revenue Agency (CRA) is one of the creditors in a bankruptcy, any refund you are entitled to, for the year of bankruptcy and any prior year, may be retained by CRA to offset the amount owing. After discharge, any debt still outstanding to CRA which formed part of the bankruptcy, cannot be recovered by CRA. Post-bankruptcy Income tax refunds are property of the estate and any subsequent income tax refund may be retained by you.
If CRA is one of your creditors in a proposal, any refund you are entitled to, for the year of the proposal and any prior year, may be retained by CRA to offset the amount owing. You are entitled to all future income tax refunds.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
Ok! You assumed the recession was over last year. So why are you still in as much or more debt than you were two years ago? The answer is not always obvious. You might think everything is well if you are paying the minimum payments on all your credit cards each month. This is not exactly true. If you owe $10,000 on a credit card debt with 18% interest charged it will take you 30 years and 4 months (plus $6.546 of interest) to pay off the card. Miss one payment, make one late payment, buy anything on the card– just keep adding months and interest.
How do you stop the madness?
Plan your recovery properly. Most people have only a vague idea where they spend their money. Start by knowing and reviewing where you stand financially. First, make a list of your debts:
Name of debt
Amount owed
Interest charged
Minimum monthly payments
Second, prepare a list of any assets you have. Make sure you review life insurance for cash surrender value and RRSP’s or if this list includes any assets that can be cashed and used to pay a high interest credit card. This is a first consideration but please make sure there is no income tax consideration such as when you cash an RRSP.
Third, make sure you do a budget of your monthly living expenses. This sounds easy but it is not. You might have to monitor your spending for several weeks to determine your true expenses paid by cash. The budget must include allowance for periodic cost like car insurance, clothes, children’s sports that may be paid periodically during the year. I have suggested to many people that a savings account be opened to bank this money each month so it is available when needed.
Now the interesting part starts:
Do you have a surplus of money left over each month in your budget to make the minimum monthly payments on your debts? If you do – congratulations – that surplus after making the minimum payments should be used as an extra payments on the credit card that charges you the highest interest. A treat to yourself every once in a while is also a good idea.
What if you do not have enough money to make the minimum monthly payments? The first sign of this is that your debts have been increasing for the past few years even though you always have made the monthly payments. If you review past credit statements you will likely find a combination of missed payments, cash advances or charges on your credit cards of expenses that were shown on your monthly budget. Most of us cannot easily increase our income. The only other choice is to lower expenses. This may require help from an outside person. You may have a relative or friend who can help you in preparing, analyzing and revising your family budget. If you have no such person or if you want absolute confidentiality there are many financial advisors and credit counsellors some of whom are fee based.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
Consumer Debt & How To Deal With It Learn What To Do & Who To Talk To
The average Canadian struggles to make ends meet on a monthly basis, while trying to pay their debts.
A solution is to prepare a detailed personal budget and stick to it to solve your debt problems.
However, there is often a need to seek Professional Assistance and Advice to deal with your financial situation.
Where I can turn for advice?
Chartered Insolvency and Restructuring Professionals (CIRP) are available for a free consultation to offer suggestions for solving your difficulties.
Some options that may be available to you, depending on your specific personal circumstances, include the following:
Proposal
Orderly Payment of Debts
Informal Arrangements with Creditors/Credit Counselling
Debt Consolidation Loans
Bankruptcy
Why should I choose a CIRP/Trustee for advice?
Trustees are licensed by the Superintendent of Bankruptcy to administer proposals and bankruptcies, to act as receivers and to monitor restructuring under the Companies’ Creditors Arrangement Act. They are governed by the Bankruptcy and Insolvency Act (BIA) and the Code of Ethics for Trustees.
The Office of the Superintendent of Bankruptcy (OSB) is an agency of the Canadian Federal Government under Industry Canada and is responsible for regulating the process and protecting the public interest.
The OSB is also responsible for ensuring that the BIA is administered properly and that all fees charged by the Trustees are in accordance with the BIA.
By choosing a Trustee in Bankruptcy who is also a CIRP you are getting more that a licence holder. A CIRP/Trustee must also comply with the bylaws, Rules of Professional Conduct, Standards of Professional Practice and Mandatory Professional Development requirements of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).
The CIRP certification identifies insolvency and restructuring professionals who are the leaders in providing insolvency and business recovery services.
Credit Ratings
What is my Credit Report?
The two largest Credit Reporting Agencies in Canada are Equifax and TransUnion.
These Agencies are repository of Consumer Credit Information. They do not make any credit decisions, rate consumers, or grant credit.
The agencies receive information about you directly from your credit grantor, which is based solely on that grantor’s experience with you. This information is then compiled by the Agency in a Credit Report that is made available to the “members” of the credit granting agency, or to you, the debtor. A copy of your Credit Report is free of charge if it is mailed to you via Canada Post, however, there is a charge of approximately $15 if your credit report is requested over the Internet.
How do I improve my Credit Rating?
The first step is to ensure that the information in your credit report is accurate. After that, the only way to improve your credit report is to use credit wisely.
Wise use of credit includes:
Do not apply for a myriad of credit sources; limit yourself to two credit cards with small credit limits
Pay your bills on time. Work with your creditors to allow time to pass to show that your payments habits have improved.
Be prepared to show the stability of your employment and your residence. Creditors want to know that you have a reliable source of income and that they can easily contact you if necessary.
Get a secured credit card and be sure to pay the balance off every month.
Keep an emergency store of cash to be used to pay your living expenses if something goes seriously wrong with your income sources.
Communicate with your Creditors…
If you run into temporary problems in paying your debts, it is best to talk to your creditors and inform them of your situation as soon as possible. Let them know that you fully intend to pay your bills, but, due to your current circumstances, you need a bit of leeway for a short period of time. Most creditors are willing to negotiate a short term arrangement that will work for both of you, as long as you are sincere in your efforts to comply and meet the payment schedule as arranged.
Options to Help Solve Your Financial Problems
Proposal to Creditors…
This option allows you to advise your creditors that you are unable to repay all your debts, but are willing and able to pay a portion of your debts over a period of time (usually a maximum of 60 months).
You pay what you can reasonably afford to pay. The exact portion of the debt that you would repay is based on your family income and financial obligations. Any interest charges stop the day the proposal is filed with your creditors.
With the help of a Trustee, you would prepare an offer to your creditors. If the required majority of your creditors agrees, the proposal is binding on all of your creditors.
If you wish to find out more about a proposal you will need to talk to a Trustee/CIRP.
Under this option you compromise or settle your debt generally for a lower amount without interest charges. There is also a fee to the Trustee/CIRP as set out under the Act but this fee usually comes out of your monthly payments.
Orderly Payment of Debts…
This option is not available in every province. You apply for a Consolidation Order setting out the amount and times when payments are due to the Court. Payments are then distributed to your creditors. The interest rate is lowered to a rate set by the Court. In addition to payments to your creditors there is also an administration charge. A Trustee/CIRP in your community will be able to advise you who to contact for this program. Please note this option is not available in Ontario.
Under this option you pay 100% of your debts, judgment interest and administration charges.
Informal Arrangements with Creditors and Credit Counselling…
You negotiate directly with your creditors with the assistance of a CIRP/Trustee or a Credit Counsellor. This option usually calls for the repayment in full of all your debts at a reduced interest rate.
Credit Counsellors/Agencies are not able to compromise Canada Revenue Agency debt. Only a proposal made under the BIA can accomplish this.
You need to exercise caution when you choose a Credit Counsellor, as anyone can call themselves a “credit counselor”. Ask if they are licensed, and if so, by which agency. Before you commit yourself, enquire about their qualifications and the training they have completed, together with a full disclosure of how they are regulated. Ask if they are receiving funding from any of your creditors and how they are paid for assisting you.
Generally under this option you pay 100% of your debts, plus interest and fees
Debt Consolidation Loans…
Banks or financial institutions may “consolidate” your debts into one loan. The lender pays off all your debts to the different creditors and in return, you make monthly payments to the lender.
To qualify, the lender will assess your income, credit rating and your ability to repay.
Interest rates can vary and the lender may request a co-signer or ask you to pledge assets as security for the loan.
Under this option you pay 100% of your debts, plus the interest and any fees charged by the lender.
Bankruptcy…
This option can be taken when you are not in a financial position to repay a reasonable portion of your debt.
The process relieves you of most debts, and legal proceedings by creditors generally stop on the day you sign the papers with the trustee.
A first bankruptcy can be completed in 9 months. Payments to the Trustee/CIRP are based on your family income. The process and procedures will be explained to you during your FREE initial consultation with the Trustee/CIRP.
Most of your personal assets are exempt from seizure, up to a maximum value amount for each type of asset. Business assets may also be exempt from seizure, depending on the type and value of the assets.
Under this option the amount you pay is governed by the Bankruptcy and Insolvency Act, based upon your unique situation.
As a debtor, you have rights…
While laws differ from province to province, here are a few basic rights to which every debtor is entitled.
THE DEBT COLLECTOR CANNOT:
Contact you at an unreasonable hour
Exert excessive or undue pressure for payment i.e. cannot use profane language or threaten you
Approach your employer without your consent except for verifying your employment
Humiliate or abuse you or your family or cause anguish in the process of collecting payment
Use forms that are not approved by the Government while collecting dues
An Important Point…
Please be advised…
Chartered Insolvency and Restructuring Professionals who are licensed as Trustees in Bankruptcy by the Superintendent of Bankruptcy have statutory duties, responsibilities and powers.
They are not advocates for the debtor. However…
You can only access the Bankruptcy and Insolvency Act and its cost effective and efficient means of discharging your debts, by employing a Trustee in Bankruptcy.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
Ok! You assumed the recession was over last year. So why are you still in as much or more debt than you were two years ago? The answer is not always obvious. You might think everything is well if you are paying the minimum payments on all your credit cards each month. This is not exactly true. If you owe $10,000 on a credit card debt with 18% interest charged it will take you 30 years and 4 months (plus $6.546 of interest) to pay off the card. Miss one payment, make one late payment, buy anything on the card– just keep adding months and interest.