Archive for the ‘Options’ Category
The lighter side of Bankruptcy
I’m starting this blog with a little joke that found it’s way to me in my inbox. And it goes like this…
A businessman was in a great deal of trouble. His business was failing, he had put everything he had into the business, he owed everybody – it was so bad he was even contemplating suicide. As a last resort, he went to a pastor and poured our his story of tears and woe.
When he had finished, the pastor said, “Here’s what I want you to do: put a beach chair and your Bible in your car and drive down to the beach. Take the beach chair and the Bible to the water’s edge, sit down in the beach chair and put the Bible in your lap. Open the Bible; the wind will rifle the pages, but finally the open Bible will come to rest on a page. Look down at the page and read the first thing you see. That will be your answer; that will tell you what to do.”
A year later, the businessman went back to the pastor and brought his wife and children with him. The man was in a new custom-tailored suit, his wife a mink coat, the children shining. The businessman pulled an envelope stuffed with money out of his pocket and gave it to the pastor as a donation in thanks for his advice.
The pastor recognized the benefactor and was curious. “You did as I suggested?” he asked. – “Absolutely,” replied the businessman.
“You went to the beach?” – “Absolutely.”
“You sat in a beach chair with the Bible in your lap?” – “Absolutely.”
“You let the pages rifle until they stopped?” – “Absolutely.”
“And what were the first words you saw?” – The business man replied…. “Chapter 11″. 
For those who are not familiar with the US Bankruptcy Code, Chapter 11 is the USA’s version of Canada’s Assignment in Bankruptcy.
Am I advocating Bankruptcy? Absolutely not! Bankruptcy should always be the last resort. But it can be the only option to remain sane and move on with your life, when all other options are outside of your grasp. In my 16 years in the industry I have seem people with unexpected illnesses that has thrown their financial plan out the window, single people living in their cars because of an addiction, families torn apart by divorce or other personal issues that has left a pile of debt and little hope for regaining control. In each of these cases, the individual or the family were able to start again, learn from their mistakes, and rebuild their lives. A chance they may not have had otherwise. There will always be those who abuse the system and give a bad rap to those who truly need the relief.
As always, it is imperitive that you get expert, impartial advise to help you make the best decision possible. It may seem odd, but Bankruptcy Trustee’s are one of the few professionals who not only can provide advice on all options, can refer you to a reputable firm for services outside of those they can provide, provide the advice you need for free and are heavily mandated by law and a professional association that is in place to ensure the integrity of and public trust and confidence in the system.
I received a call today from a Debt Consolidation Company planning to expand into Nova Scotia. They were looking for a Trustee to refer business to. We chatted about what they needed and what they offered to their clients.
He informed me that their objective is to help individuals find the best solution. I thought, “Us too!”. He explained that they have individuals complete an assessment package to assist them in determining the best option. And I thought, “We do that too!”. He further offered that they charge the client a fee for this advice. And I thought “We DON’T do that!”. Our consultations are free. Yet, these credit counselling companies are popping up AND, apparently, expanding.
He indicated that many people call them because they are afraid of the “B” word (that would be “Bankruptcy”); and I totally get that. Bankruptcy should always be your last option and we strive to help individuals find solutions other than the “B” word. In fact, and we pride ourselves on this fact, approximately 40 percent of the people who walk through our doors, walk back out again. Not because we couldn’t help them, but because we helped them to find an alternate solution. And it didn’t cost them anything. Other than, perhaps, the embarrassment of talking to a Trustee in Bankruptcy.
Which leads me back to “the cost of embarrassment”…it seems to me that if you are struggling financially, perhaps you would be better off not paying a fee for a service that you can get for free.
There is a movement in the bankruptcy industry to change the title from Trustee in Bankruptcy to something that better reflects our wide range of advice/services. I would say that’s a movement in the right direction.
Its true! Just because we help people find solutions to their financial woes, doesn’t mean we don’t have our own.
I’m sure fitness instructors sometimes have lazy periods, Investment advisors have lost money and great chefs order pizzas. The point is, we are all human and we all make less-than-perfect choices once in awhile. In fact, it is our very mistakes that help us help you. As other has been heard saying, “do as I say. Not as I do”.
So, here’s my confession. I have been suffering from a low credit rating for, oh my, ten years at least. What can I say, life happened – self-employment + two kids – no maternity leave + husband parental leave = dependency on credit / over-extension / drop in credit rating. And we’ve been struggling ever since to get back on track
And get back on track we will! Why? Because we are determined. We are working together. And I am a financial counsellor after all. Which basically means I have the skills, tools, resources to get out of this mess.
It is those skills and experiences that I, and my fellow Dr. Debts, share with you to help you on your financial path of success.
Update (3 months later)…my credit score increased by 50 points +. How you ask? I followed my own advice. More specifically, I did the following:
- talked to someone who knew more than me about repairing credit ratings. ”Use your resources!”
- committed to stop using any new credit for three months. It took some juggling and commitment. “Prepare/review or revise your spending plan”
- Re-arranged my existing credit. I had to obatain new credit at a higher rate of interest and move some of my additional credit to avoid being maxed out. “Never max out your credit limits”
- Stayed on track for three months. “Commit to your plan”
There is no magic solution. The right steps may vary depending upon the circumstances. The common lesson is, don’t give up. Find a way that works for you and commit to it.
How can we help? Ask Dr. Debt today!! (click the link above to the right)
So often, people come to me, embarrassed and ashamed that they are facing bankruptcy, or a similar compromise of debt. They feel that they have failed. They are hard on themselves in a way that is not productive.
I created this pep talk in an effort to help them through this cross road in their life. Feel free to share this with anyone who you feel would benefit from it.
…
“You’re not here because you messed up. You’re here because you optimistically thought that you would continue on the progressive path you were on. But life happened and things change and you have to learn the rules of a new game. And its tough at first. But you will get through it. And you will learn from your experience. And be stronger because of it.
Life is a series of lessons. This is just one of them.
So hold your head up high. Walk out into the world. Be strong in the knowledge that you made a difficult decision that will benefit you and your family for years to come. Let the guilt go. Be thankful that you have learned this lesson at this stage in your life and not later.
I wish you health, happiness, peace and prosperity. “
What comes to mind when you hear the word “Consolidation”? Do you envision all of your debts being ‘paid off’ leaving you with the manageable obligation of one monthly payment? If so, you are thinking about a “Consolidation Loan”. A financial institution loans you money by paying off your debt and you pay them back. With interest, of course.
Nowadays, the word “consolidation” is being used in a much more liberal term. Many debt-relief agencies offer to “consolidate your debt”. The process is quite different. Your creditors are approached and offered a settlement. That settlement could be in full or in part (a percentage of what you owe) and could result in an elimination or reduction of interest.
In the Insolvency Restructuring Profession we call this “consolidation” or “settlement” a Consumer Proposal
So, what is the difference between a “consolidation loan” and a “debt consolidation”?
The most important distinction is the effect on your credit rating or score. A consolidation loan will not affect your score in a negative way and may, in fact, improve it. A debt consolidation, on the other hand, WILL impact your score negatively, the extent depends upon your credit score at the time of the ‘consolidation’.
A friend recently asked me if I could recommend a reputable debt consolidation company that will not impact your credit score. My answer was “Nope, they don’t exist!”. If you find one, let me know!!
(Blog submitted by 3rd party) / Author: Robin Williams
[Please note that the poster does not offer any recommendation for sites linked to these articles and cautions readers to use good judgement in contacting a company for assistance wth their finances.]
If you have multiple debts, you may face difficulty in making all your bill payments on time. In such a situation, like everyone, you too will wish to get rid of your bills. You can pay off all your bills by obtaining a consolidation loan. You can also seek help from professional debt consolidation companies. They advise you and offer you services to tackle your debt problems.
How can you benefit by professional debt consolidation advice?
Professional consolidation companies provide you with financial advice and help you combine multiple bills into one. They also offer you other benefits. These are:
* Free counseling: A certified counselor of the company will analyze your monetary situation and will help you determine your financial goals.
* Communicate with creditors: A representative of the consolidation company will effectively communicate with your creditors. Your creditors may stop harassing you with collection calls.
* Negotiate to reduce interest rate: The representative will negotiate with your creditors to reduce the rate of interest on all your bills.
* Eliminate other charges: The company representative will also negotiate with your creditors to help you eliminate or reduce late charges and over limit fees.
* Convenient repayment plan: The consolidation company prepares a repayment plan for you based on your credit needs and gets it approved from your creditors.
* Replace multiple payments with one: Instead of making separate bill payments, you have to make a single reduced monthly payment to the consolidation company and they will disburse it on time to all your creditors.
* Become debt free: With the help of a professional consolidation advice, you can pay off all your debts within 4-6 years.
There are also various non-profit debt relief companies that offer debt consolidation programs. By enrolling in one such program, you can obtain relief services at a lower cost. However, you must remember that there are less reputable companies. So, you must verify the company’s status before seeking consolidation advice from them. You must check its accreditations.
For details on all of your options, and an outline of the benefits and disadvantages of each, contact Dr. Debt (info@drdebt.ca) to arrange free consultation.
Recently, I received a question on this site, asking about our credentials – a very important questions. Given the broad range of “advisers” out there in both the real world and the world-wide web, you never really know who is imparting their knowledge on you, do you?
So, I thought I would take a moment and tell you about us…
As I write most of the posts, I will start with my credentials. I have been working in the Financial Counselling / Bankruptcy industry for 12 years. My training has been a combination of professional training and experience. I obtained my financial counselling certificate from The Association for Financial Counseling and Planning Education (AFCPE) while working in this industry. Nowadays (is that word actually in the dictionary?), the Financial Counselling Program is coordiante by the Office of the Superintendent of Bankruptcy and the Canadian Association of Insulvency Restructuring Professionals. More importantly, I feel that I have personally made most of the financial mitakes I write about.
Enough about me…we are supported by our Trustee, Darryl Haley, who has more than 30 year experience dealing with individuals and businesses in everything from money management to business turn arounds. He hold a CA designation and Trustee in Bankruptcy license.
In addition, we have several staff members with a wealth of training and experiences who talk to people every day about their financial situation and we draw upon other business colleagues and experts in their fields, to bring you relevant advice and experience.
So thank you for asking!
(Do you have a question for Dr. Debt? Click on “Ask Dr. Debt” and watch for a post addressing your question.)
If you step back and look at your finances, you will find that you are in one of three stages of financial being.
The first stage is “survival mode”. This is where you are just barely getting by. There is just enough cash flow to put a roof over your head, food on the table, gas in the car. But very little room for anything else. This is a dangerous place to be as any life event – big or small – can tip the scales and start you on a downward spiral. Credit is often used as a crutch, with the best of intentions, to balance out the budget.
The next stage is the “breathing room” stage. You are here if you have enough cash flow (not including credit) to survive and to deal with things as they come up. If the car breaks down, you can get it fixed. Maybe not right away, or it may set you back and you will have to adjust to catch up. Credit can be used as a safety net but caution should be stressed to keep the credit use at a minimum and ensure you can manage the payments comfortably.
The third stage, which is where we all strive to be, is the “comfort zone”. In this stage you are surviving, you can deal with irregular expenses as they come up, and you have the flexibility to do some or all of the things you want. Often times, credit is used to “enhance” this position. A dangerous game. You should proceed with caution.
So, what stage are you in? Where do you strive to be? The first step is AWARENESS. The second step is ACTION!
Trimming your budget is a lot like trimming your waistline.
Consumers spend millions of dollars every year looking for that magic solution to losing weight. And businesses increase their bottom line while relatively few consumers decrease their bottoms/middles etc.
The same phenomenon happens in money management. We tend to look for quick fixes – consolidation loans, second mortgages, payday loans.
Neither works for the masses. Why? They do nothing to address the underlying problem – taking in more calories than you burn / spending more monthly dollars than you make.
But alas, there is a magic solution to gain control of your finances! – AWARENESS. Pay attention to the details.
1. Track where your money goes and make decisions to change your habits.
2. Seek expert advice/guidance when needed.
3. Commit to a plan of action.
That’s it. That’s the secret.
It’s been six long months and my hands are cleaner than ever. Who would have thought I would make it this far?
I am referring to life without a dishwasher. Around mid-December, ours broke. My first reaction was sheer terror. I’m pretty sure I almost lost consciousness. Like many families struggling to make ends meet, I didn’t have any savings to buy another. The word credit kept flashing in my mind, but we were just managing what we had. I took a deep breath, pulled up my rubber gloves, and started washing.
It wasn’t so bad. “Not much more work then rinsing the dishes, loading and unloading the dishwasher”, I thought. Day 2! – It occurred to me that growing up we never had a dishwasher, we, gasp, washed and dried them – by hand. I then had a BFO (blinding flash of the obvious!). My gosh, we are raising a generation of kids who never have to wash dishes. Visions of power failures and piles of dirty dishes flashed by. I decided to start operation “Dishpan Kids”. I asked, in a way that made it sound incredibly exciting, “Who wants to learn how to wash dishes?”. It was fun. The family doing dishes together. What a concept.
I will admit, I had some setbacks. Entertaining guests poses some additional challenges (clean-up takes slighly longer than loading the dishwaher) and some surprises (during our last get-together, the guys did the dishes while the girls played cards…hmmmm…). A month or so after we began “Operation Dishpan Kids” I found out that the dishwasher actually was not broken. It’s something under the sink (that’s as intelligent as I get on that subject). It will probably take an hour and 20 bucks to fix. But you know what? I’m ok. I think I can go without. In fact, I kind of like it. I enjoy watching my family share in the responsibility and I have a really great two-level dish rack to dry my dishes on.