Do I Need to Meet My Creditors?
The last people you want to meet when going through a bankruptcy in Ontario is your creditors, right? You know, the people who have been sending you notices, phoning you non-stop, garnisheeing your wages and generally making your life difficult.
What are the chances you will have to get face to face with people who definitely aren’t part of your fan club? The chances are very small. In our experience at Richard Killen & Associates, fewer than one in 100 personal bankruptcies will require such a meeting. The creditors have the option of requesting a meeting but rarely exercise this right, especially if yours is a “summary administration” (if your assets in a bankruptcy are valued under $15,000).
That said, there are two situations where a trustee must call a meeting of the creditors: If the Office of the Superintendent of Bankruptcy (OSB) tells the trustee to call one, or if creditors who are owed more than 25% of your total debt request one.
The main purpose of the meeting is to give your creditors a chance to learn all the ins and outs of your financial situation, and to give directions to the trustee on the administration of the estate, if they so choose. The creditors can also review the trustee’s preliminary report, review the OSB’s report, examine the proofs of claims of other creditors, vote on resolutions, perhaps appoint inspectors (to provide the trustee with direction and the authority to take certain actions) and so on.
While creditors can ask you questions about your finances, you don’t have to answer any queries that aren’t related to your financial situation past, present or future. You also have the right to bring a lawyer to the meeting, though this rarely done. The chairman (usually the trustee) keeps things on topic.
But, as we pointed out before, creditors aren’t quick to request meetings in consumer bankruptcies. They can usually find out what they need to know faster and easier by calling the trustee directly or sending him/her an email. Creditor meetings occur automatically in commercial bankruptcies, where the financial issues are often more complex and more creditors are involved.
While a meeting with creditors is nothing to look forward to, a meeting with Richard Killen & Associates will help you reduce your stress levels considerably. At your free consultation we will outline all your options, so you can meet your personal situation head on and take the first steps in getting your financial life back under control.
How To Rebuild Your Credit Rating
Your credit rating has taken a beating. You regularly pay bills late. Sometimes you can’t make even minimum payments. Perhaps you’ve gone through a bankruptcy or the consumer proposal process.
But what now? How do you rebuild your credit rating?
OK, you’ve absorbed the bad news. If you’ve gone through the bankruptcy or consumer proposals process with a licensed trustee such as Richard Killen & Associates, you would have had some credit counselling sessions that would give you valuable advice about how to manage your finances and restore your credit rating.
Replace Bad Credit With Good
You would be shown, for example, how to use credit wisely. You should buy only what you can afford to pay back and make payments on time. In fact, all your bills should be paid on time.
Simple to say, hard to do. The credit counselling sessions provided by Richard Killen & Associates Ltd. will give you strategies on how to achieve this discipline.
As a credit-redeeming strategy, you might even want to purposely get a loan, though it will probably be at a high interest rate. Just borrow $1,000 or so and make sure you make your monthly payments religiously. Automatic debit from your account is probably the best way to ensure that. After six months or so you’ll be receiving an R-1 rating from this creditor. That’s a start.
But Don’t Go Overboard
The loan-on-purpose strategy notwithstanding, you shouldn’t get too much credit. The more you have available to you, the more tempting it is to use. Having too much credit can also hurt your credit report. So do not fill in too many applications for credit and loans because every time you do, your credit history is checked, which can affect your score.
Get a Secured Credit Card
A secured credit card requires you to have a balance. So, for example, if you have a balance of $500, then you might have a credit limit of $500, maybe more depending on the creditor and your arrangements. In effect, it is a no-risk or small-risk credit card. But the very act of using the card and paying your credit card bills on time will help to restore your rating.
No Minimum Payments
Get in the habit of paying your bills, especially your credit card bills, in full, rather than making a minimum payment and carrying the balance. We can’t stress this tactic too much. It is the key to good credit card management.
There are many strategies you can use to get back to financial health. The best first step could be a free consultation with a licensed trustee at Richard Killen & Associates Ltd., who will help you to understand your options in dealing with credit challenges.
Why Do People Go Bankrupt?
Well, because their debts exceed their means to pay them.
OK, after stating the obvious, here’s a bit more detail. More than 118,000 Canadians a year are filing for bankruptcy or doing consumer proposals. Here are some of the top reasons why.
Excessive Use of Credit
Not surprisingly, this continues to be leading cause of bankruptcy. Many of us spend too much, save too little and rely too much on plastic credit. The problem of being overextended can combine with one of the reasons below to push people over the edge. While carrying a heavy debt load, they might, for example, get sick and become unable to work, leading to financial disaster. Mortgages, bank and finance company loans, taxes and student loans are some of the other types of credit that fall into this mix.
Job Loss or Seasonal Employment
If you lose your job, or are without work for extended periods, then it is hard to stay on top of debt payments. Even having work hours cut back or overtime eliminated can lead to financial problems. To make ends meet, a cash-strapped family might turn to credit cards to pay monthly bills, digging a deeper hole for themselves. Building an emergency fund is the best way to cope with this kind of problem.
The difficulties with medical issues aren’t as acute in Canada, with our public health care, as they are in the United States, where serious diseases or injuries can lead to massive bills that can wipe out savings, retirement accounts and education funds. Still, if you are laid up and can’t work, without adequate insurance or savings, then a spiral down into insolvency may be inevitable. And not all medical costs are covered by health care or insurance.
Divorce and separation can cause a number of financial hardships. First there can be hefty legal fees, which themselves may drive people into bankruptcy. Division of assets, child support and alimony can also cause severe problems. Wage garnishments, if support or alimony payments are not kept up, can drive some ex-spouses over the edge. And others who don’t receive their court-mandated support can also find themselves floundering.
The list of other common financial pitfalls can include failed businesses, non-payment of taxes, inadequate pensions, unexpected disasters and gambling problems. When faced with these kinds of problems, you should seek out the advice of an experienced Licensed Insolvency Trustee, such as Richard Killen & Associates, who will guide you through your options and help you find the quickest road to recovery.
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