Debt Help & Bankruptcy Canada

At Grant Thornton Limited, we provide solutions for people with debt and financial challenges. Consumer proposals, bankruptcy, and other debt solutions.

Is a car a necessity or luxury? guess it depends on where you live….

Most people need to commute to work, there’s generally not an option, but is car ownership even possible in some locations?

If you buy a condo in Downtown Vancouver and you want a parking space, there is a good chance you are going to pay a lot for it.

In Calgary the simple act of parking your car at work is expensive: some of the most expensive parking in Canada.

An analysis in a Toronto real estate blog looked at parking, car payments or depreciation, insurance, gas, and maintenance. It found — even for Sunday drivers — the cost of ownership was $870 per month. That’s $10,400 per year.

Transportation experts  have reported the numbers are similar in Vancouver and that’s why many young urban professionals look at the other options.

What are the options? If you can’t afford a car, the good news is that you dont have to go into debt to get one either. There are many services popping up that can help you bridge the gap: Gar to Go, Uber and a few others.

“Now with car-sharing programs, more and more young people in particular have found realistic ways to get around. As a consequence, you can see they’re taking out licences less and they are not buying cars; they are finding lower cost substitutes.

But though car ownership may have become a luxury for people living downtown, it is still a necessity in some other areas. For many in Metro Vancouver and the Fraser Valley, commuting by transit is not an easy option.

A recent study by the Pembina Institute found only 19 per cent of Metro residents live within walking distance of rapid transit, compared to 21 per cent in Calgary, 28 per cent in Ottawa, 34 per cent in Toronto, and 37 per cent in Montreal.

There are options, there are always options.

Our trustees offer free consultations, credit counselling, consumer proposal administration and bankruptcy services. Call 310-8888 for a free, no obligation consultation.

car icons_orange bike_green

Happy upcoming September ‘New Year’

For many of us, September feels more like the start of a New Year than January does. September marks the end of summer and brings a ‘back-to-school’ reality that we feel (whether or not we have school-aged children).

September is a time to re-focus, get back to work and also—back on budget!

If you have back-to-school-shopping to tackle, then budgeting is essential. Too often compelling advertising, apparent sales and our child’s idea of what they need, can cause us to spend more than we have . . . and more than we can afford. Buying clothing, back packs, lunch boxes, stationery supplies and electronics can be an expensive undertaking. If your child is off to college or university the costs can be even higher to set up dorm rooms and to purchase books, food plans and transit passes.

A good start to managing your budget is to involve your child in the planning. Refer to lists the school or post-secondary institution has provided. Remind your offspring of the difference between ‘needs’ and ‘wants’ (it will serve them well for their future money management too). Determine together what is essential for when school starts and what can wait to see if it is really required. Encourage your child to pay something towards some of the ‘needs’ from their savings; or at least to pay for their perceived must-have from the ‘wants’ list. There are many back-to-school budget planners online to help you track planned and actual expenditures. These can help you avoid impulse purchases and stay within budget.

Budgeting for upcoming expenses

Balancing the budget

 

But what if you don’t have back to school expenses…

September can also the ideal time to pause and refocus on your personal or family finances. It’s a good opportunity to revisit your near and long term goals.

In the near term you might be looking at how you’re going to plan and pay for the expenses associated with the upcoming holidays (both Thanksgiving and Christmas) or deal with the additional rising costs of heating and electricity. There is also thinking about getting yourself ready, do you have what you need for fall and winter (ie:a fall/winter coat and other clothing)?

If you are carry debt, resume your commitment to paying it off; remember to start first with high interest rate credit cards. It can be a time to check in again on your household budget and ways to trim expenses. And, it can be an opportunity to start saving for upcoming holiday spending. Even a little money put away each week starting now, can help toward the costs of future Christmas or Hanukah celebrations.

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 in at 310 8888.

 

 

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.

 

Forget any potential tax refund, what if you owe money to Canada Revenue Agency?

Are you dreaming of a tax refund? Many of us are ever-optimistic and complete our tax returns (maybe with professional help) hoping a refund might be coming our way—to fund a vacation or, likely the better choice: to pay down credit card debt.

However, you may be one of thousands of Canadians who has not yet paid any personal income tax for the 2012 tax year, and/or owes for previous years (and hopefully has a formalized payment plan in process) or, is an outlier nervously avoiding the reality of several years of unfiled tax returns.

Paying personal income tax regularly – and fully – is often the bane of the self-employed. For entrepreneurs there may be no one tasked with diligently deducting (and remitting) tax, before income or a draw from revenues is taken.

Tax debt cannot be taken lightly. CRA has unique powers to make sure they collect what people owe. Knowing that none of us like to pay taxes they charge penalties and interest on all overdue taxes. It’s a policy designed to keep us on the straight and narrow. If you do get into arrears, CRA can withhold child tax credits and GST credits until the debt is paid. They can take money from your bank account or 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.

I say ‘almost’ because there are situations where some relief from tax debt is available.

If you owe personal income tax and cannot pay the balance in full, you can explain your financial situation to CRA and negotiate a payment plan. For example, if you owe $1,000, you may offer to pay $100 per month for the next ten months. However, even if CRA accepts your offer, you will continue to be charged interest until your debt is paid.

Another option is to make a formal Proposal to CRA. Developed with the help of a professional 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 creditors (banks, stores) is quite common and can be a way to negotiate lower debt amounts and/or expanded repayment schedules.

When making a Proposal to CRA it is not a ‘for-sure’ opportunity to obtain a reduction of your tax debt (and extended payment terms). You must show that your filings are up to date, not fraudulent in your representation and, that prior to your Proposal you have been a taxpayer in good standing. You have to be able 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 as required and any tax owing paid as it becomes due. Depending on your situation, payments 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 ensure it might be the most viable solution to an individual’s distinct situation.

And, if you haven’t filed your personal tax return for several years, get the tax package and forms for the missing tax years from the CRA. Fill them out and send them in. If there is a balance owing you will have to pay a late filing penalty of a percentage of the tax you owe plus a percentage for every month you are late. You will also be charged interest on the outstanding amount. Check the CRA website for current percentage rates and other implications. There is no escape from CRA and addressing your tax situation will bring you some relief—eventually. Make sure you file regularly in the future and maybe, one day in the not too distant future . . . a tax refund will come your way.

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