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.

…and the tax man cometh — dealing with tax, the CRA, debt help and bankruptcy

Every year, without fail, just like snow and temperatures will eventually fall in the winter, mosquitoes will pester us in the summer… every April, the tax man comes. With the deadline for Canadians to pay their personal taxes (by April 30) lets explore the issue of when you OWE money to CRA (Canada Revenue Agency).

Currently we (the trustees at Grant Thornton) are seeing about 50% of our clientele dealing with with some amount of tax debt that is owed to the CRA . While this may seem like a relatively high number, tax debt is not unusual.

One of the major trends we continue to see is people not filing their taxes for fear of owing money – this is not only a mistake, but failing to file your taxes does not get you out of paying the taxes for the year, if you owe, it can actually lead to larger amounts being owed through fines and penalties. We have seen tax debt to the extent where 50% of the amount owed is a build up of fines, interest and penalties over multiple years.

Here are the most common reasons people fall behind on paying (or filing) their taxes:

  • High costs from relationship breakdown – separation or divorce has caused people to incur costs associated with legal bills and support payments, distracting them from focusing on tax filing and remittance requirements
  • Lack of knowledge – this is more common among self-employed people that have been making good money in their respective trade. Often these people may fail to recognize the need to maintain compliance with CRA – they often put aside the matter until it’s too late, or underestimate the amount they need to set aside to pay tax which ends up causing them trouble. Some small business owners simply do not know what is required and have been soo busy working on the profit side of their business, they neglect to care for the compliance side.
  • Procrastination – some people are born procrastinators and just put off dealing with their taxes until they have completely forgotten about them all together. Then one day they are forced to deal with many years of unfiled taxes.

“The biggest mistake we see people make is neglecting to file their taxes year after year, and letting costs build up to insurmountable amounts – frequently, the penalties and interest from either not filing or not paying becomes as much as the tax owing,” says Freida Richer. “People are eventually pushed to resolve their tax debt because of the following reasons:

  • the CRA begins to garnish their wages to a point where they have no choice but to deal with their taxes,
  • the CRA threaten to file writ on the property of their home,
  • they get pressure from family or have a change in their life (birth or marriage) and want to get their finances in order.
  • their is a freeze put on their bank account.

Whatever the motivation, people should know that only a Trustee can help negotiate tax debt with CRA.”

With tax season approaching, now is the time for people to be especially mindful of their taxes and keep in mind that filing them, even if you owe, is still better than neglecting them all together.  CRA is more inclined to work with you if your taxes are filed and up to date than if they find out you have not filed your taxes in years.

On another note, keep your receipts and all tax related documentation for seven (7) years, you never know when/if you will be audited and its much easier to save the information than to try to hunt it down later.

If tax debt has become a challenge that you are ready to deal with, contact one of our trustees where we can review your options. Consumer Proposals allow people to make a fair and reasonable proposal to their creditors, including the CRA, for a revised repayment plan. Often times we are able to consolidate and reduce the overall debt owing and provide and interest-free repayment schedule for up to 60 months.

With multiple locations across Canada, there is sure to be an office near you.

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Not our parents’ generation when it comes to personal debt

It’s been said before:  In a number of ways, we are not like our parents’ generation. Things will always change. Bottom line, we often think and act differently from our parents.

Perhaps new technology and the digital revolution spring to mind first?  It’s true. From the fax and laptop to smart phones and wearable technology, the world looks and works in many new, and evolving, ways.

What’s also true is our change in attitude and actions when it comes to personal debt. In 2012, the Globe and Mail reported on a poll conducted by a firm of bankruptcy trustees. The results show that most Canadians are quite comfortable with using debt as a financial strategy. Yet, this was a time when debt loads had risen to alarming new highs. The survey found that nine out of 10 respondents would consider borrowing money to cover an unexpected expense that was not an emergency.

By contrast, in the 1960s, families frequently lived a ‘middle class’ lifestyle and managed to own a home on one income (usually the Dad’s). The mindset was typically to save for needed things—rather than to borrow. And, this lifestyle rarely included the additional luxuries we see fairly common in our lives today: second cars, cable TV, eating out, vacations and plane travel, smart phones and tablets, pricey gym or golf memberships, designer duds etc.

The downside to our view of what constitutes the appropriate lifestyle of the 21st century is that to acquire and maintain this level of consumerism we may spend more than we earn (a concept that would rarely be considered acceptable in the 1960s)! In our work at Grant Thornton, we often see where this can lead:  Consistently living beyond ones means, borrowing, excessive purchasing and maximizing high-interest credit cards can put individuals and families into highly stressful situations with increasing debt loads (whether we believe we can afford it or not).

Our role is to help people address their debt problems and find ways to rebuild a solid financial future. We can help with tips and reminders so that you may not need our assistance again in the future, including: disaster proof your life (get your life insurance and an emergency fund in place), spend less than you earn, aggressively pay down high interest debt, read the fine print on any purchase agreements (you may be liable for significant interest payments if you miss the eventual payment due date) and delay consumption (save for that vacation rather than charge it).
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, ask us about a consumer proposal.  Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free at 310 8888.

BC: www.gtdebthelp.com

AB: www.GT.Alger.com

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.

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Big income . . . and big debt?

Celebrities – and ‘regular folk’ too – often file bankruptcy or consumer proposal for similar reasons:

Limited financial education: If, like a whirlwind celebrity’s (think YouTube insta-sensation) rise to fame you go from having nothing to having the world at your fingertips, a financial education is not usually part of the package. Learning how to effectively save, budget, and invest can take years, and sometimes a team of help, to achieve. When handed huge checks to cash, many celebs go out and buy the biggest house and fastest car, rather than learning how to properly handle their money.

For ‘mere mortals’ a significant career promotion with pay increase (or an inheritance or elusive lottery win) can add a boost to our credibility and add some additional buying power. But, it’s essential to learn how to manage your money, your budget and your long-term financial planning.

Materialism: Our culture can be highly materialistic. It prompts some people to try to ‘one up’ each other with larger houses or forever be ‘keeping up with the Joneses’ with more expensive vehicles. Young people, in particular, can be susceptible to the ‘celeb mindset’ believing their ownership of the latest designer handbag or electronic item is a given. The easy access to credit cards to people with limited income and often limited money management experience (see above) can lead to serious debt problems.

Celebrities, like the rest of us, can get caught up in having the finer things in life. But, a great TV gig can get cancelled and when the paycheques stop rolling in, it’s harder and harder to maintain that same standard of living without getting into serious debt.

Lack of investment in self: Often the stars surround themselves with lawyers, accountants, and insurance professionals to help them with proper estate, tax, and insurance planning. Sometimes they don’t double-check the work done on their behalf, or they don’t properly vet the financial professionals they hire. Not surprisingly, many fall prey to unscrupulous advisors.

The lesson here for ‘man on the street’ is to take ultimate responsibility for your own financial affairs. Yes, seek the advice of proven professionals. Ask other trusted sources for referrals. Get second opinions. And – refer again to the info above – get educated!

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 at 310 8888.

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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.

 

 

Meeting with a Bankruptcy Trustee is no scarier than dinner with your in-laws.

When you’re struggling with unmanageable debt, we know everything else in your life can suffer. The thousands of people we have helped over the years share similar stories. They’ve told us of struggling to pay the minimum amount on credit cards, borrowing from one card to pay another, liquidating assets to pay bills and still being overwhelmed with day-to-day financial obligations. We know this can happen to anyone. Suddenly a change in your work, health or personal situation can take you from managing—to being in serious financial difficulty.

 

The idea of meeting with a Bankruptcy Trustee can perhaps be intimating or feel like a blow to self-esteem. As you might imagine though, we have met with men, women and couples from all walks of life; all ages, occupations and backgrounds. Ultimately: anyone can find themselves with debt problems and that’s when we can be of help.

 

Meeting with a Trustee, here’s what to expect:

  1. Call or email us to schedule a confidential, no-cost, no-obligation appointment. We have several locations where we can meet and flexible office hours. You will be asked to bring along (or know) some of your financial details such as monthly expenses, debts (and to whom) and your monthly income.
  2. The Trustee will review the information you have provided and go through the options available to you, what may happen, the costs and timeframe surrounding your options. These might include Informal proposal, consumer proposal or bankruptcy. (Only a Trustee can help you file a consumer proposal or bankruptcy)
  3. If we cannot help you, we will recommend options to you and refer you to someone who may be of assistance.
  4. You will always have time to review and consider your options. We will not pressure you to make a decision. You will have a better understanding of the options available to address your debt problems and you will understand the next steps and implications.
  5. If you enter into a formalized process to address your debts, and documents are signed, then garnishees and collection calls will stop.

Remember, debt problems can happen to anyone. A Grant Thornton Trustee can be a source of important information and guidance to help you toward solutions—and peace of mind.

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 at  (your area code)310 8888.



Take a ‘staycation’ . . . and other creative ways to have fun and spend less.

It’s summer and thoughts turn to fun ways to spend time and . . . (unfortunately) money. Whether it’s a family vacation, home improvements, backyard parties or out-of-town visitors – the impact on your wallet can be significant.

If you are already struggling with a worrying debt load, it’s likely time to change what you do this summer.

A recent BMO travel study found that more than half of all Canadians plan travel within their home province this year (in Albertans that number is an outstanding 81 per cent). This scaling back on vacation plans is due in part to cost-conscious Canadians who also see the impact of rising gas prices and are seeking to build savings; all positive news—and even more relevant if you need to address debt.

Paying off debt doesn’t have to be viewed as a burden, in fact, it should be viewed as an accomplishment. Reducing debt brings a sense of relief. Focusing on paying off your debt can provide an opportunity to explore cost-cutting alternatives to many summer activities.

Consider these ways to spend less and have fun:

  • ‘Staycation’: plan a ‘holiday’ in your own province. Be a tourist in your own City of one nearby. Load up on traveler information and see the sites you often overlook because they’re close to home.
  • Host a backyard ‘drive in’. Set up your TV outside for an evening video-fest and make it a pot luck BBQ or picnic with friends and family. (Maybe invite your close neighbours too, if it’s likely to get noisy!)
  • Camp in your own back yard. Adults and children alike can enjoy a night star gazing or reading under canvass. The bathroom and fridge are nearby and if it rains: enough said!
  • If you’re game to try crafts or Do-it-Yourself to save money on entertainment or home improvement projects, social sites like Pinterest and Houzz can be fun tools to get your creative ideas flowing.

 Remember to use the money you ‘save’ for debt repayment first—and start with high interest rate credit cards:

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.

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 

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.

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.

 

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