Blog Articles - Krieger & Company

COVID-19: We’re Here To Help With Changes To Our Debt Solutions During COVID-19

Michael Krieger — Thu, 26 Mar 2020 19:55:48 +0000

COVID-19 (Coronavirus) is having powerful impacts on our way of life and our wallets. From increased expenses in obtaining essential supplies, income loss or reduction due to reduced hours and shortages of work, or priorities being focused on supporting family and friends through this difficult time- the economic impacts are significant and will be long lasting. You’re not alone and Krieger & Company continues to support honest Canadian individuals and businesses trying to navigate through this difficult time. As an essential service, we are fully operational remotely and can handle your financial needs without the need to leave your home. We are focused on relieving the stress your financial obligations bring during this difficult time. That said, nothing is more important than the health and safety of our clients and colleagues. Note: PSTN (Public-Switched Telephone Networks) are particularly congested right now. If you struggle to reach us by telephone, please ensure you are trying our local number 905-508-8088. Alternately, please reach out to us via e-mail at hello@krieger.ca or via our contact form and we will call you back right away. What we are doing for COVID-19: New Clients – As always, our assessment of your financial situation and advice is provided only by a licensed insolvency trustee. Potential clients who reach out to us via telephone and e-mail will have an initial assessment booked via videoconference, rather than an in-person meeting. Government changes due to COVID-19 have allowed our assessment of your financial situation to take place via videoconference. You may be asked to provide some information ahead of the meeting to streamline the process. We are still here to help those who are struggling with their debt through the filing of consumer proposals and bankruptcy. Additional Counselling – We have been providing additional counselling sessions, free of charge, to help our clients adjust their personal budgets to their changing circumstances while maintaining proposal payments and other obligations. Counselling Sessions – Counselling sessions are essential in navigating this time when your budget may be stressed, as well as to build your credit during a proposal or bankruptcy process. We don’t need to be together in person to have productive conversations. Our counselling sessions will be held via videoconference with a licensed insolvency trustee or licensed insolvency counsellor. Counselling completion forms and worksheets will be prepared during the session and sent to you for electronic signature. Meetings of Creditors – The Office of the Superintendent of Bankruptcy has updated their directive to encourage a chair of a meeting of creditors to encourage electronic communication in […]

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How long does a consumer proposal stay on a credit report? (Updated)

Michael Krieger — Thu, 10 Oct 2019 18:53:59 +0000

Both Equifax and TransUnion have shortened the time that consumer proposals remain on a credit report and impact a credit score. A consumer proposal will continue to appear for three years after a consumer proposal is fully performed. It will now also be limited to a maximum of six years after the consumer proposal was originally filed. This means that a consumer debtor taking the full five-possible-years to complete their consumer proposal will see the consumer proposal for only one additional year. This comes as welcome news for Canadians trying to find relief from their debts using a consumer proposal, a government-endorsed arrangement with their creditors. A fresh start, free from debt, is now available even sooner with less impact on their credit. How long will Equifax show a consumer proposal? A registered consumer proposal is a legal agreement set up between you and your creditors, in which they agree to allow you to pay off a percentage of your debt. A consumer proposal will be removed from your Equifax credit report 3 years after you’ve paid off all the debts according to the proposal, or 6 years from the date it was filed, whichever comes first. Equifax Education How long will Transunion show a consumer proposal? The consumer proposal and all accounts reported as satisfied through the proposal will be removed from your file three (3) years from the date you satisfied the proposal or (6) years after the date you defaulted on the account, whichever date comes first. Transunion FAQ What does this mean for me? As a result of this change, there is little benefit in completing a consumer proposal in the final two years, at least as it relates to a credit score. Previously, any acceleration of consumer proposal payments would reduce the time the proposal shows on your credit. This is no longer the case. After the maximum of six years, debt included in a consumer proposal and the historical record of the proposal being filed, is purged from the credit bureau. Once purged, it no longer impacts the credit score. Older information, such as a past proposal or collection activity, has always carried less weight the older it becomes. Something taking place six years ago, while appearing on the report, had only a minor impact on a credit score. Payment history in the past few months or years had a more significant weight on a credit score. This change is for creditors- such as landlords and mortgage companies- who often fail to understand the consumer proposal process. Removing this […]

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Mounting Debt Pressure While Insolvency Rates Stable

Michael Krieger — Fri, 16 Nov 2018 16:33:55 +0000

An increase in bankruptcies and insolvencies is predicted within the next year: Canadian Association of Insolvency and Restructuring Professionals TORONTO – (November 16, 2018) – Low interest rates and access to credit have allowed some borrowers to keep up with debt repayments that otherwise would have been unmanageable. However, rising interest rates, coupled with near record high consumer debt levels, are expected to increase the number of Canadian consumers who will be forced into insolvency, according to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). Historically there has been about a two-year lag between the time interest rates begin to rise and when consumer insolvency filings start to increase. Consider that rising interest rates during the periods of 1996 to 2000 helped fuel a 22% increase in the number of annual consumer insolvency filings from 1998 to 2003. Interest rates increases from 2004 to 2006 fueled a 54% jump in the number of annual consumer insolvency filings between 2006 and 2009. With relatively stable interest rates from 2010 through to 2016, annual consumer insolvency rates in Canada have been fairly consistent since 2012. However, with interest rates trending upward since 2017, CAIRP expects to see a corresponding trend for insolvency filings heading into 2019. “For more than a year, the issue of high consumer debt and rising interest rates have been a growing concern but they haven’t been reflected yet in the number of consumer insolvency filings. That’s due to the insolvency time lag that occurs between the point trouble begins and the point at which overextended individuals are forced to begin the debt resolution process”, says Chantal Gingras Chair of CAIRP, the country’s national association of insolvency and restructuring professionals which represents nearly 1,500 trustees and associates across the country. Compounding the concern is that rising interest rates will also cool consumer spending, Canadian GDP and business growth. These conditions could lead to an uptick in the unemployment rate, further accelerating the rate of consumer insolvency filings. “While none of these factors cause bankruptcies on their own, together they are the perfect storm,” says Gingras. Consumer Insolvency Filings and Prime Interest Rate 1996 to 2020Source: Statistics Canada; OECD; OSB Household Debt-to-Income and Inflation Rate 1996 to 2020Source: Statistics Canada; OECD; OSB Supporting CAIRP’s prediction, a recent member survey found that over seventy percent of insolvency professionals believe consumer insolvency filings will rise over the next five years. Almost all (97%) believe they will increase or stay the same over the next year. Ninety-five per cent of CAIRP members surveyed believe Canadians possess unhealthy […]

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Instant Tax Refund Comes at a Price

Michael Krieger — Wed, 20 Apr 2016 21:01:07 +0000

Get your tax refund instantly The TV and radio advertisements are clear: “get your refund instantly” and to “never wait for your tax refund”. It’s easy too- your tax refund is loaded onto a prepaid credit card or you can opt to receive your refund by cheque. The tax preparers aren’t secretive about their fees, particularly as the maximum is set out by Canada Revenue Agency: 15% on the first $300 and 5% on the rest of your refund. An average refund in 2012 of $1,641 (and the average higher since then) means you pay $112.05 in order to walk out with $1,528.95 in hand. Sounds like a great deal? Money now is better than money later, right? It’s only $112.05. How long would it take to get your tax refund? According to Canada Revenue Agency, a refund generally takes as little as eight business days to be processed, if filed electronically. Choose to let CRA direct deposit your refund and according to CRA you could get your refund even faster. Let’s assume that to receive your refund takes two weeks including the time to mail you the cheque. Understanding annual percentage rate (APR) The important concept at play is the annual percentage rate. If you borrow $100 and pay back $101 at the end of a whole year, your APR is 1%. If you borrow $100 for a day (instead of a year) but when you pay back the loan you pay an extra dollar, then you’re paying an APR of 365%. In terms of dollars, borrow $100 every day for the next year and pay back $101 the following day, you’ll have paid $365 in interest over the course of an entire year. The APR of getting your tax refund early Lets recall that most credit cards carry a APR of between 18% and 24%. At 24% (about 2% per month), charging $1,528.95 to your credit card would result in interest charges during the two weeks of just $14.11 (under 0.92%) or $366.95 per year (24%). This calculation ignores compounding interest and the interest-free period known as ‘grace days’ in order to simplify our calculations. Compare that to your tax refund loan: $112.05 is your cost of borrowing $1,528.95 for just two weeks which works out to an interest rate of about 7.3%. Multiply by 26 two-week periods a year to reach an annual cost of borrowing of $2,913.30 or 190.54%! This amount is nearly 8x the cost of borrowing from your credit card. Think twice before you take your tax refund on the spot Ask questions about the real cost of taking your […]

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Rebuilding Credit After a Proposal or Bankruptcy

Michael Krieger — Mon, 04 Apr 2016 18:40:05 +0000

One of the most common concerns from the many individuals who trust us with their financial difficulties is rebuilding credit and re-establishing credit. It’s not that these individuals want to run up credit after declaring bankruptcy or filing a consumer proposal, but they have a real concern over how their decision to tackle their debt will impact their next car purchase, renting their next apartment, obtaining a mortgage renewal, or being able to qualify for a credit card to use for online purchases and travel expenses. The most important thing to remember is that “good credit” only means you can make some minimum payment, but doesn’t show your ability to ever pay that debt off. We talked about this in an earlier blog on how credit scores are only a part of the puzzle. Sometimes, pulling the band-aid off is a needed step to reduce the total amount owed, save paying mounting interest, and get ahead of minimum payments. The first step is putting the past behind you through credit counselling, consumer proposals, or if necessary, bankruptcy. Counselling gives you the tools you need for rebuilding credit Every consumer proposal or bankruptcy includes at least two counselling sessions absolutely free. These counselling sessions are designed to provide the tools needed to avoid future debt problems and to use credit responsibly. Once you feel ready to manage your credit, we talk about what you can do to maximize your credit score, obtain credit and put you on the ideal track to financial recovery. You can have excellent credit within a matter of months or couple of years following a consumer proposal or filing an assignment in bankruptcy if you take the right steps. Rebuilding credit starts with your regular bills With all of your debt wrapped up in a consumer proposal or bankruptcy, paying your monthly bills on time and in full should be much easier and be the priority. Monthly bills such as your cell phone, cable bill, hydro, gas, and your car payment all report to credit reporting agencies like Equifax and TransUnion and will help improve your credit score just by going about your ordinary day. To accelerate the credit rebuilding process, your Trustee will work with you to apply for credit card(s) with the best possible terms- terms that you are understand and terms that you are comfortable with. Your Trustee will also ensure that you understand your obligations and how to best use that credit to rebuild your credit score as quickly as possible. Your Trustee has a network that understands If your needs stem […]

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