The curse of the ‘broke bride’: and other financial considerations as love blooms.

Wedding season will soon be in full swing with many Canadians will tying the knot and making the journey down they isle for better or for worse. Sadly, almost half of these marriages will end in divorce, stats citing that money issues are a leading cause of marital strife and the eventual demise.

So what should you be thinking about before that life changing day? What questions should you be asking?

Prior to marriage – learn about your partner’s attitude towards money. Are they are saver? A spender? Dependent on credit cards or a ‘buy now pay later’ purchaser? You want to know sooner than later if you have a similar vision and goals regarding how you will spend and save your money. 

Have the talk–Do you know your soon-to-be souses financial status? Do they have student loans that remain unpaid, or a car worth less than the loan out on it? Is their credit score damaged? You should know the financial health of your partner, good or bad. A poor financial past can put a cramp in your plans to buy a house down the road, so talk about it early and have a plan, if needed, to move past it.

Heads-up on – the wedding budget. Lavish events with big budgets may seem the norm in today’s celebrity focused culture but it’s far beyond the reach for most of us. So, for the rest of us being money minded leading up to the big event can be a necessity, because the reality is, overspending on the wedding day can leave a bitter debt ‘aftertaste’. Bottom line: a wedding is a celebration . . . but a marriage is a long-term commitment. Setting a responsible budget for a wedding based on your means (including savings and/or family contributions) can go a long way to starting a marriage in a financially stable position.

How much debt is your fiancé bringing to the marriage? Their current financial obligations will now impact your ‘family’ finances for day-to-day living—and, your future plans. Ask too if they are current with their obligations to Revenue Canada (CRA). You won’t be liable for any debt they have to CRA but it’s an indication of their approach to personal finances—and, has implication to your joint lifestyle if they have significant arrears to address. Keep in mind: financial irresponsibility can lead to a poor credit score, later affecting the probability – or ease – of buying a new home or other large joint purchase.

If you intend to register or re-register real property (home, vacation property) in joint names upon marriage, get advice from a lawyer first. Understand the implications—including the very real likelihood that each of you is then deemed to have equal, shared ownership. Consider: you may have brought more assets to the marriage and if your partner was later to go bankrupt, half of (now) joint assets could be lost. 

Getting a supplemental credit card under your spouse’s existing card may seem to make sense and perhaps comes with a ‘romantic notion’ of your new status as a couple. Understand the risk: the moment you make your first purchase on that secondary card you are now jointly and severally liable for all charges on that card whether made by you or your spouse. If your spouse defaults on the credit card you are responsible for the entire debt.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation toll free from anywhere in Western Canada 310 8888.

Visit us online www.gtdebt.ca or www.gt.alger.ca 

You can’t take it with you… but—what CAN you keep in a bankruptcy?

There’s a lot of confusion and misconceptions about what you ‘lose’ or have to ‘give up’ through a bankruptcy and what is ‘exempt’ – meaning what you get to keep.

When you enter into bankruptcy (with the assistance of a Bankruptcy Trustee) this legal option will address your insolvency, provide you immediate protection from you creditors and an opportunity for a fresh start. (Remember, while most debts are covered by bankruptcy – not all are, talk to a Trustee for specifications.)

There are some assets you may not be allowed to keep if you file for bankruptcy. These are sold to pay as much as possible to your creditors against your debt. However, there are assets you are legally allowed to keep, these vary by province.

Some of the items you are generally able to keep, in Alberta, are:

  • Clothing up to a value of $4,000
  • Household furnishings and appliances to a value of $4,000
  • One motor vehicle not exceeding a value of $5,000 (equity)
  • Medical and dental aids required by you and your dependents
  • The equity in your principal residence up to a value of $40,000. If you are a co-owner of the residence, the amount of the exemption is reduced to an amount that is proportionate to your ownership interest
  • Personal property (i.e., tools, equipment, books) that you require to earn income from your occupation up to a value of $10,000
  • Social allowance, handicap benefit or a widow’s pension if the proceeds from the payment are not intermingled with your other funds
  • For farmers where your principal source of livelihood is farming: you may be able to keep up to 160 acres and personal property that you require for the proper and efficient conduct of your farming operations for the next 12 months

In BC:

  • Home equity in Greater Vancouver and Victoria up to a value of $12,000. In the rest of the province up to a value of $9,000
  • Equity in household items up to a value of $4,000
  • Equity in a vehicle up to a value of $5,000; The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
  • Equity in work tools up to a value of $ 10,000
  • Equity in essential clothing and health aids is unlimited

Keep in mind, if you chose instead to do a Consumer Proposal as your debt solution—you get to keep all your assets. A consumer proposal may also reduce your overall debt (by up to 75%). A Proposal isn’t bankruptcy but rather a means to explore other ways to address a variety of debt problems.  With the guidance of a Trustee you negotiate to pay creditors all, or a portion, of your debt over a specific time period or to extend the time allowed repaying the entire debt.  You need the majority of creditors to agree to the proposal—then all unsecured creditors are bound by it.

With a Consumer Proposal you keep control of your assets and it has shorter-term – and less significant – impact on your credit rating than bankruptcy.

More on bankruptcy exemptions in Canada.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available.  Contact us for a confidential, no-obligation, free consultation. Call us toll free from anywhere in Western Canada: 310 8888 or visit us online for more information and videos on this and many other topics: (AB) www.gt.alger.ca or (BC) www.gtdebt.ca

See us on YouTube: https://www.youtube.com/channel/UCwhtdNlBzwmnMsATvelc3cQ



Yes, death and taxes are inevitable.

You’ve heard the old adage that the only two certainties in life are: death and taxes.

Well, it’s ‘tax time’ again and the truth is that you can rarely escape your tax obligation to Canada Revenue Agency (CRA).

Unlike some of your other creditors, CRA has unique powers to collect what you owe and they will still charge penalties and interest on all of your overdue taxes. It’s a policy designed to keep us on the straight and narrow. So, if you do get into arrears, watch out, until the debt is paid in full, the CRA can

  • withhold child tax credits
  • withhold GST credits
  • can take money from your bank account
  • garnishee your wages without getting a judgment against you.

CRA has millions of taxpayers and they are almost always unwilling to accept less than full payment; ‘almost’—because there are situations where some relief is available. This is where we can help!

If you do owe personal income taxes and can’t pay the balance in full, you can always explain your situation to CRA and try to negotiate a payment plan. For example, if you owe $1,000, you may offer to pay $100 per month for the next ten months. If CRA accepts your offer, you’ll likely still pay interest until your debt is paid.

Another option is to make a formal Proposal to CRA. This is done with the help of a Bankruptcy Trustee. A Proposal isn’t bankruptcy but rather a means to explore other ways to address a variety of debt problems. Making a Proposal to CRA and your other creditors (banks, pay day loan providers/cash stores) is quite common. A Proposal can be a way to reduce the overall amount you owe, negotiate lower re-payments amounts and/or expanded repayment terms.

Making a Proposal to CRA does not guarantee a reduction of your overall tax debt or extended payment terms, but if you meet their criteria, there is a better chance it will be accepted. CRA will be looking to see if your taxes are filed and up to date and, if prior to your Proposal you have to have been a taxpayer in good standing. You’ll need to make a case for extreme circumstances hindering your ability to pay the full amount as due—and demonstrate you are truly an honest and unfortunate debtor.

The Proposal will only include taxes owing prior to the Proposal date. Tax returns due during the Proposal period must be filed and any tax owing paid as due. Depending on your situation, payments negotiated through a Proposal could be made for up to five years.

The other option to addressing tax debt is bankruptcy. It’s a common misconception that personal income tax debt is not discharged by bankruptcy. This is not true; personal income taxes are covered by bankruptcy and this solution should be discussed fully with a Bankruptcy Trustee to see if it’s the best solution for your situation.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta and BC 310 8888.

In Alberta: www.gt.alger.ca     In BC www.GTdebt.ca

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We can help with tax (CRA) debt!

Bankruptcy: New RESP Exemption

Finally some good news for Alberta consumers facing bankruptcy. Whether this is a move to further protect the opportunity for continuing education, and subsequently, the financial benefits that may come with additional education or just falling into line with current RRSP exemption rules, either way, it’s a move we are in favor of.

For some of the individuals that we see, debt is something they have always lived with, often times it’s a financial ways of life that has been passed down from their parents. Many of the people that struggle with financial challenges never had the opportunity to continue their education so we see this as a move to protect that opportunity, regardless of the debt solution.

Effective April 1, 2014, Registered Education Savings Plan (RESP) contributions are protected from your creditors if you file a bankruptcy in Alberta.

The law that protects RESPs is the Civil Enforcement Act (AB), a provincial law, which was amended to safeguard your contributions for the future post-secondary education costs of your child.  With increasing tuition costs, this is good news for the consumer, especially the consumer struggling with their finances and contemplating filing a bankruptcy.  You can breathe a sigh of relief knowing that the contributions made to the RESP plan for, in some cases, over a significant period of time, are now given the same exemption status as RRSP and Pension funds.  The change also preserves the funds in the plan contributed by the federal government referred to as the government grant portion of the RESP.  The grant portion can be significant at up to $500 per beneficiary each year up to a lifetime limit of $7,200.

For those who are considering bankruptcy in Alberta, you don’t need to cash out your RESP under the belief that the funds would be seized on filing a bankruptcy.  For more information on assets that are protected, please speak to one of the experienced Trustees at Grant Thornton.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Western Canada 310 8888.

For Alberta: http://www.gt.alger.ca

*Written by Freida Richer, CIRP   Principal and Trustee in Bankruptcy for Grant Thornton Limited.

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The payday loan love affair is over (or should be).

It’s February and the month has been aglow with talk of love and romance. However, one relationship that is waning in appeal (and rightly so) is Canadians’ love affair with payday loans.

These small, short-term unsecured loans are rarely linked to a repayment date aligned to a borrower’s payday—but that was the initial concept: If you are short of money and can repay a loan once you get paid . . . then come on down!

Sometimes these loans are called ‘cash advances’ and they typically rely on the borrower having previous payroll and employment records.

Payday loans may seem attractive to some consumers in need of ready cash but consider that for a $15 charge on a $100 14-day payday loan the annual percentage rate is over 391%*!

In addition to being expensive, payday loans are also a short-sighted way to address financial troubles. If you are regularly strapped for cash and have maxed out other (more cost-effective) sources of credit it may be a sign that you are carrying an unreasonable and unmanageable debt load.

Payday loans will not help ease your debt problems; they are an expensive way to just keep your head above water. Bottom line, if you are struggling to make ends meet and drowning in debt repayment, it’s time to look at available options to solve your problems—for the long term.

You might consider a consolidation loan (to address your debts), but you may not qualify because of your debt ratio or impacted credit score.

One popular option is a Consumer Proposal. It focuses on what you are capable of paying (not just what you owe)—this could be 75% less than the total amount you owe. You can qualify for a Consumer Proposal if you owe up to $250,000 of non-mortgage debt—and most debts can be covered. This essentially allows you a fresh start.

With the guidance of a Trustee you negotiate to pay creditors all, or a portion, of your debt over a specific time period or to extend the time allowed to pay the entire debt. You need the majority of creditors to agree to the proposal—then all unsecured creditors are bound by it.

It’s time to break off the unsatisfying relationship with payday loans and develop a sound financial future.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta 310 8888. www.gt.alger.ca

*Estimate, actual amounts may vary.

Determined to deal with your unmanageable debt load? Then consider a consumer proposal.

Maybe it’s the credit card bills clearly itemizing unplanned holiday spending. Or, perhaps your New Year’s resolution is to finally deal with your debt. Whatever your motivation, it’s important to know all of your options.

One popular option is a Consumer Proposal – which has become favoured over bankruptcy. A Consumer Proposal is a way to address debt but not negatively ‘impact’ yourself – and your assets and credit rating – as much as you would through a bankruptcy.

A Consumer Proposal focuses on what you are capable of paying (not just what you owe)—this could be 75% less than the total amount you owe. You can qualify for a Consumer Proposal if you owe up to $250,000 of non-mortgage debt—and most debts can be covered. This essentially allows you a fresh start.

With the guidance of a Trustee you negotiate to pay creditors all, or a portion, of your debt over a specific time period or to extend the time allowed to pay the entire debt. You need the majority of creditors to agree to the proposal—then all unsecured creditors are bound by it.

With a Consumer Proposal you keep control of your assets and it has shorter-term – and less significant – impact on your credit rating than bankruptcy.

For example, if you make a Consumer Proposal your credit score will be affected for three years after you have paid the full amount promised to your creditors in your Proposal. In contrast, although it varies by credit agency—in general, your credit score would be affected for six years after discharge for a first bankruptcy and for 14 years for a second bankruptcy.

Keep in mind too that some consumers cannot qualify for a consolidation loan (to address their debts), whether because of their debt ratio or their impacted credit score. With a Consumer Proposal it is not about ‘qualifying’. This solution is seen as a consolidation of your debt and a repayment plan—based on your current circumstances.

Avoiding bankruptcy may be important to you too. Your profession or employer may review your credit history and view a bankruptcy as unfavourable. Also, if you are a director of an incorporated company you cannot legally continue to perform this duty if you have filed for bankruptcy.

Not to mention, sometimes it can be a psychological thing—people in general don’t like the ‘b’ word (bankruptcy). A Consumer Proposal provides a solid solution to resolving debt issues without committing to bankruptcy.

If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta 310 8888.

When it comes to dealing with your debt or credit issues: be sure to seek out the right path to recovery

The New Year will arrive and may find you filled with anxiety over your debt load and concern about your credit history. If your resolution is fuelled with a desire to improve your financial situation, be sure you get the right help.

There are numerous misleading, unqualified, unlicensed (or sadly, even fraudulent) parties ready to exploit consumers in need. They may make excessive or false claims as to the results that can be achieved whether that is: debt solutions, debt elimination, credit analysis, or credit repair. An upfront payment is typically required before any service has been provided. And, often the services offered are steps you could undertake yourself at little to no cost.

Caution is the name of the game. Educate yourself about professionals in the field of credit and debt counseling service providers and the role of a licensed Bankruptcy Trustee/Consumer Proposal Administrator.

Nonprofit credit counseling providers are there to help consumers review their credit and debt situations, provide solutions and assist consumers to improve their financial situation. If a consumer needs or wants to make a formal arrangement to address their debt—such as a Consumer Proposal or an Assignment in Bankruptcy, then the credit counselor refers the person to a Bankruptcy Trustee. Changes in legislation this year will see some credit counselors working to obtain their license as a Bankruptcy Trustee or they may simply choose to work more closely with existing Bankruptcy Trustee colleagues.

The Trustees in Bankruptcy at Grant Thornton always provide free and confidential thorough consultations to anyone struggling with debt or credit issues. This ‘one stop’ approach provides an opportunity to explore your situation in-depth with a respectful professional who is aware of all possible solutions to address debt problems and ways to rebuild a credit history. Our Trustees provide information, resources and tools at no charge.

The Bottom line: if you are ready to seek help to address your debt problems or repair your credit history there are no quick fixes or magic answers. Conscious effort, time and a plan is what is required. Our respectful, experienced professionals are here to help and will guide you on the path toward a happier and more financially stable year (and future) ahead.

If you are facing financial struggles and an unmanageable debt load—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Contact us toll free from anywhere in Alberta 310 8888, or text 403-482-9000 (standard rates may apply) or visit our website www.gt.alger.ca.

Wishing everyone a safe and wonderful holiday season!

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We’re not being the Grinch . . . but we do cry ‘caution’ as the holidays approach

It’s that time of year again. Likely you are among the majority of Canadians who will soon be celebrating, gift-giving and entertaining this holiday season.

The downside of all of the family and social time, travel, merriment – and presents – is the spending that occurs to make it all happen. Christmas in particular is highly-promoted commercially; as consumers we are bombarded to buy, buy and buy and the retailers are starting to advertise and prepare for the holiday season earlier and earlier.

February and March are often the busiest times in our office. We find holiday spending, mostly on credit cards, can be that final ‘straw that breaks the camel’s back’ for many people. Debt loads that may have already been stretched before the holidays may now be pushed to the limit and with the New Year more people are looking for a fresh start.

There are strategies to help avoid the temptation to overspend.

There are a few good strategies to implement to keep your holiday spending within a set budget:

  1.  Have a discussion with your family (including children) about ways to celebrate the spirit of the season while being ‘low consumers’. Rather than buying lots of toys for example, explore activities to do together as a family that are low-cost, fun and build shared memories.
  2. Secondly, you may consider not exchanging gifts in your family at all and instead donate a modest amount to charity, or volunteer together with a agency serving a holiday meal to people in need.
  3. If you are planning on exchanging gifts, you might elect to save up in advance of the holidays so you know exactly what you can afford to spend.
  4. Set a modest budget and choose not to use credit cards this way it will help you to avoid impulse buying or overspending.
  5. Another great idea (and growing consumer trend) is exchanging homemade gifts or services among family and friends. If you are planning large family meals, make it ‘pot luck’ where everyone brings a dish. This keeps the cost (and work!) manageable for everyone.

Take some time now to reflect on your wishes for the holidays, plan your approach and your budget . . . and you truly may enjoy—a Happy New Year!

Here is a recent consumer report (Calgary Global News) on managing debt during the holidays: http://globalnews.ca/news/939201/get-a-handle-on-debt-before-the-christmas-crunch-warn-experts/

 

If you are facing financial struggles or an unmanageable debt load—one of our professionals is available to provide options for your situation. We can help you explore a consumer proposal; bankruptcy is not your only option. Contact us for a confidential, no-obligation, complimentary consultation, toll free from anywhere in Alberta 310 8888 or visit www.gt.alger.ca.

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Sometimes bankruptcy really is the best option

We know from experience that debt problems are typically not a sign of weakness or bad decisions. Often circumstances beyond a person’s control such as divorce, illness, inherited debt or unemployment can make debts unmanageable.

So, our role is to help people explore every possible way to resolve their debt problems. There are options and we frequently help people implement solutions that avoid bankruptcy. We understand people may feel there is a stigma or a sense of failure attached the idea of going bankrupt.

However, there are times when bankruptcy is absolutely the best (or only) course of action.

Keep in mind that sometimes efforts to avoid bankruptcy can actually make things worse. An individual may use a line of credit or take on a new loan to deal with debt. These may help in the short term but ultimately can increase debt problems. We know people want to avoid bankruptcy because of the impact on their credit rating. While it’s true your credit rating ‘takes a hit’ when you go bankrupt—it is also negatively impacted when payments continue to be missed.

The positive outcome of going bankrupt is that you are finally able to have a ‘fresh start’ after years of trying to cope with excessive debt and feeling like you are not getting ahead. And, many people don’t realize that tax debt to Revenue Canada is a dischargeable debt in bankruptcy too.

When you declare bankruptcy you are allowed to keep your RRSP’s and you may be able to keep your home, car and your ‘tools of the trade’ (exemption amounts apply), so realistically you can be in a good position to ‘start over’ and rebuild your financial situation. Keep in mind that during a bankruptcy you will be making regular payments towards your estate and once you’re discharged from bankruptcy, with the habit of making these payments, you could consider taking this same amount each month and placing it in an emergency fund,  savings for retirement or a down payment.

Bottom line: there are situations where declaring bankruptcy is the responsible choice and the quickest way to a new, stronger future.

To learn more about bankruptcy and whether it is the best course of action to address your debt issues, contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta 310 8888 for a free consultation or visit our website at www.gt.alger.ca for more information on your debt options.

Why a consumer proposal is (almost) beating out bankruptcy as the best way to deal with debt.

Across Canada individuals are increasingly using a consumer proposal to address (what has now become) their unmanageable debt. A proposal is based on what you are capable of paying . . . not what you owe – and it allows you a fresh start without going bankrupt.

Under a consumer proposal, with the guidance of a Trustee, you negotiate to pay creditors all or a portion of your debt over a specific time period, or to extend the time allowed to pay the entire debt. You just need the majority of creditors to agree to the proposal—then all unsecured creditors are bound by it.

After you make your proposal, most creditors can no longer ‘hound’ you for collection of their accounts and public utilities can’t discontinue their service. Also, a consumer proposal prevents your creditors from garnishing your wages.

In 2006 only 15 per cent of insolvent Canadians chose to make a consumer proposal. Now that number is at an all time high of 40 per cent. There are a number of reasons why.

Firstly, in 2008, changes to the Bankruptcy Insolvency Act (BIA) increased the limit of the size of non-mortgage debt for qualifying for a proposal from $75,000 to $250,000.

And too, economists suggest it’s a sign of improving times where consumers are more optimistic about the future and are keen to ‘clean-up’ their debt issues in ways that are manageable—and without going bankrupt. With a consumer proposal you keep control of your assets and it has shorter-term – and less significant – impact on your credit rating than bankruptcy.

For some it’s all about keeping their car, home or signed jersey by Jerome. A consumer proposal starts with the consumer – you propose a deal to your creditors to pay back the debt. If you want to sell your car to do it, that is your choice. Remember, whatever you negotiate with your creditors should be fair otherwise they may just ask for your prized collection.

Remember too, in a bankruptcy you are mandated to make some payments toward your debts—for example (depending on the debt) you might be required to pay $1,000 a month for 21 months. In contrast, with a proposal you might negotiate to pay $600 a month for 40 months. This can be a more manageable option.

And, sometimes avoiding bankruptcy is very important. Your profession or employer may require that you not be an undischarged bankrupt. You also can’t be a director of an incorporated company if you are an undischarged bankrupt.

Not to mention, sometimes it’s also a psychological thing—people in general don’t like the ‘b’ word (bankruptcy). A consumer proposal provides a solid solution to resolving debt issues without committing to bankruptcy.

To learn more about a consumer proposal and whether it is the best course of action to address your debt issues, visit our website at www.gt.alger.ca or contact us for a confidential, no-obligation, complimentary consultation toll free from anywhere in Alberta 310 8888.