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.

 

 

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



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.

A Consumer Proposal Can Mark New Beginnings towards Financial Health

Fall is the perfect time to take a serious look at your finances and to consider options to deal with your debt, perhaps a Consumer Proposal? You and the kids are back to daily routines after the summer months during which you might have found yourself using more credit on extras such as vacations, fuel for the RV, costs for soccer camp and summer festivals. Let’s not forget to mention the ever growing hype of back to school shopping which, in 2013, will see us spend an average $428 per child, up 18.2 % from 2012. This is higher for post-secondary/university students at an average of $572 per child according to a recent survey conducted for the Bank of Montreal.

Freida Richer, CIRP and Trustee with Grant Thornton Alger Inc. notes that there seems to be a habitual tendency for people to postpone the review of bills and state of their finances until after the summer months at which point they are hit with the reality of their overspending. Ideally, you should have enough cash flow to support aggressively paying down the debt in 3-6 months, while putting the brakes on credit purchases. The bad news is that if the debt load is too high and you have little cash flow, this plan is not feasible but the good news is that Albertans are working and receiving a steady flow of income which may support the ability to resolve the debt through a Consumer Proposal. A practical solution as it is based on your ability to pay. Also, you need to anticipate that in just a few months, you will be entering the most expensive month of the year so it’s important to plan now.

A Consumer Proposal is an offering to repay a portion of total unsecured debt through monthly payments and/or a lump sum payment. The creditors vote on whether to accept or reject the proposal and, generally, as long as the offering gives them a greater return over bankruptcy, the vote will be ‘yes’. Once accepted, the amount you offered to repay is legally binding and you will not have to pay anything more. Some advantages to this solution is the freezing of interest and ability of creditors to take collection action against you.

Trustees are authorized to administer Consumer Proposals – other proposals are not the same.   For more information on proposals and other debt solutions, please contact Freida directly at 780-442-1990 or call toll free (anywhere in Alberta) 310-8888 to find out more information or to schedule a free consultation.

Visit us online www.gt.alger.ca