Richard Killen on Tunedin with Lucy Zilio
In this video, Lucy Zilio talks with Richard Killen on Richard Killen & Associated 25th Anniversary.
Richard, a Licensed Insolvency Trustee (LIT) talks about more and more people with debt challenges choose a consumer proposal over bankruptcy. Watch the video for more information.
What Happens To My Debts If I Go Bankrupt
In this video, Richard Killen, a Toronto-based Licensed Insolvency Trustee talks about, What Happens To My Debts If I Go Bankrupt.
People sometimes ask me what is really happening with regards to my debts if I go bankrupt or if I do a consumer proposal? The first thing that happens with regards to your debt, when a person does a bankruptcy or proposal, the first thing that happens is a Stay Of Proceedings goes into effect. It’s kind of like a wall that goes up and separates them from their debts, from their creditors. This Stay Of Proceedings prevents the creditors from being able to continue to pursue them for the money. So, the first thing that happens is that you get this relief from the creditors who you are delinquent with. But eventually, when you go bankrupt or do a proposal, you are essentially trying to get to debt free land. And, when you get your discharge from the bankruptcy, or when you get the certificate at the end of the proposal, to show that you have paid the proposal in full, essentially you have reached debt-free land. So, what happens at the end is, basically, you are no longer responsible for all the debts you had on the date you went bankrupt. Now there is an exception to that, that exception, of course, is a secured creditor. A secured creditor, if you own a home or a car, and you want to keep the car, then you are going to have to keep paying that creditor throughout the bankruptcy or proposal in order to retain the asset.
If you are uneasy about bankruptcy you should definitely visit a licensed insolvency trustee so that you will be given an advice about your bankruptcy problems.
Is A Payday Loan A Good Idea?
In this video, Richard Killen, a Scarborough-based Licensed Insolvency Trustee talks about whether a Payday loan is worth considering.
I guess one can say that going into debt, any kind of debt, is hardly ever a good idea. Usually, the cost of the debt outweighs whatever benefits you may get from borrowing the money. However, sometimes debts make a good case for making some worthwhile. For instance, is a mortgage worthwhile? Because you borrow a large amount of money for buying a house, you are going to pay back that money with interest but the house will appreciate in value. And over time that appreciation more than outweighs the cost of the debt. Maybe that kind of debt is a good idea.
Ultimately, it always boils down to whether the cost too much and how much is the cost? Now there is going to be interest on any loan and that is what you must consider. Now, unfortunately, Payday loans are on the high end of all interest calculations so one can say that it is tough to say if a Payday loan is worth it.
If a Payday loan is a part of your coping with bills, you should consider having a consultation with one of our trustees. It may be the most stress relieving call you make this year.
Will I Lose My Home If I Go Bankrupt?
In this video, Richard Killen, a Toronto Licensed Insolvency Trustee answers the question most homeowners ask, which is “Will I lose my home if I go bankrupt or do a consumer proposal?”
Because you may have debt problems, you may be concerned with losing your home and most people figure that “if they go bankrupt they are never going to keep their house.” And for most people, that is a very traumatic thought, however, it can be avoided.
I found that over the last 10 years, very few people who own a home with equity have to lose the home if they don’t want to. They can find a way to keep it. The only way to keep it is to deal with the matter of equity. The trustee is responsible for obtaining the equity from the property in order to pass the money along to the unsecured creditors. They have the right to their money.
Therefore, if a person or family wants to keep their home, they’re going to need to arrange for financing or to pay the creditors. Of course, it depends on how much equity there is in the home. If you really want to keep your home, generally you can. You can keep it whether it’s a bankruptcy or proposal. In fact, if it’s a consumer proposal your home equity is not up for grabs. This really only applies to a homeowner declaring personal bankruptcy.
If you are a homeowner and considering a debt solution, I encourage you to call our office. Why lose sleep wondering what will happen. Your initial meeting is free, and in that meeting, we will explain all of your options so you may make an educated decision on the best option to obtain debt relief.
5 Keys to Securing your Financial Freedom
Financial freedom – that’s what everyone aims to attain at some point in life. We all dream of “getting there” financially, to live the rest of our life without financial fear or worry, a life where we don’t merely work to pay the bills and not have enough left over, but actually want our hard work to pay off in the sense that we can meet all our debts, have enough in savings or investments to secure us during our golden years and then still have some more available to spend, to take pleasure in and enjoy life with.
Is financial freedom a reachable dream? It is quite reachable, but it takes some specific goal setting and realistic financial planning.
These key points, adapted from Robert Kiyosaki’s Rich Dad Poor Dad, can help you align your money goals in the direction where you are able to secure your financial future easily.
Budgeting is basic
A budget can provide a solid structure for all of your financial activities. It will help you monitor income and expenses for a specific period, so you can see how much money is coming in, how much is available to use, where you’re overspending and where you can make cutbacks. It gives you a concrete plan to prioritize where your money should go and to live within its limitations.
About one in five Canadians acknowledge that it’s their bad spending habits that have brought about their financial hardships. You can make enough money, even more than enough money, and you can have the most sophisticated budget in the world, but if you don’t break off little every day spending habits that allow money to leak out of your wallet, you’ll never be able to straighten out your financial situation.
If you get in the habit of tracking your expenses and consistently keep to your budget, you will learn to recognize these bad spending patterns. To undo them, start forming new habits that can help you manage your money properly — try looking for ways to increase your income, educate yourself to manage your expenses carefully, start a plan to pay off your debts and learn saving habits.
Learn to save
If spending money is very easy for you to do, then you’ll have to reverse that and make saving money second nature to you instead. Saving habits won’t form overnight, so be patient and stay committed. A good budget will incorporate a savings plan — save for an emergency fund, save for retirement, save for college tuition, etc. One of the best ways to save money is to put it away in a separate account so that, one, it’s out of your reach and you can’t spend it easily, and two, you can see how your money is growing. Once the amount reaches a certain level you’re comfortable with, learn ways to invest it so that it can keep growing.
Get rid of debt
Planning for your financial future includes examining your debt status. If you have a debt problem, bring it under control right away. Ignoring it will only compound the debt – and the stress you’ll be feeling. Don’t hesitate to get professional assistance from accredited credit counselors who can work with your creditors and make arrangements to pay smaller monthly payments. You may feel overwhelmed and helpless, but you’ll find that you actually have many options available to help control the bleeding, including filing for a consumer proposal or declaring bankruptcy. Set up a meeting with an accredited trustee to discuss your financial circumstances and find out what debt relief option is the right choice for you.
Debt can deprive you not only of financial security, but of your dreams, hopes and goals in life, so make it a life goal to live debt free.
Gain financial knowledge
As Benjamin Franklin says, “An investment in knowledge pays the best interest.” You don’t necessarily have to be academically educated on finance, just do the necessary research and planning to help you make well-informed money and investment decisions and to keep you up to date on current financial matters.
These five key steps will guide you to set a realistic financial plan that’s devoid of guesswork, misinformation and wishful thinking. Once you have a solid financial plan to measure by you can become singularly focused on how you can make your money work for you so you won’t have the pressures of making a living hanging over your head and you can finally be financially free to do what you really want in life.
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.
10 Debt Danger Signals
After the expense of the holidays, many of us wonder how much debt is too much. Yes, Canadians are used to carrying record debt loads, but there comes a point where the burden may become too heavy.
Here are 10 danger signs that could reveal your spending is out of control:
1. You are making only minimal payments on your credit card balances as you head towards maxing them out.
2. Even so, you continue to use them for everyday purchases, such as groceries or gas.
3. You are using one credit card to pay off another. The fact that you have more than one or two credit cards is in itself a danger signal.
4. You borrow money to make it from one payday to the next.
5. You miss payments and due dates for bills and loans.
6. Creditors are after you for payment, threaten to sue or repossess your car, furniture or television, or hire a collection agency to recover the money for them.
7. You argue a lot with family about money, or hide your spending habits from them.
8. The size of your debt grows month after month. Or it has grown so large that you are afraid to look at the real total.
9. Extra money earned through overtime, tips or bonuses is relied on as part of your regular monthly income.
10. Thoughts about money and debt crowd out all others and put your life under a cloud.
Although your situation may be dire, it is never hopeless.
If you feel your debt load is becoming too much, come into Richard Killen & Associates for a free assessment. As a federally licensed trustee, we can take you through all the possible financial coping strategies – whether it is debt consolidation, negotiating with creditors, a consumer proposal or even a personal bankruptcy – and find out what works best for your particular situation. And you make all the decisions.
After all, we’re talking about your peace of mind, right?
Will Bankruptcies Increase as Economy Improves?
As the outlook gets rosier for the Canadian economy, those in deep dept may pay the price with bankruptcy.
With the U.S. economy expected to undergo a widespread recovery next year, Canada will likely fall suit, with rising interest rates as well. Normally this would be good news. However, Canadians are going into the biggest shopping season of the year staggering under the load of a record $1.51 trillion in debt.
Our debt levels significantly outstrip those of American consumers. Excluding mortgages, our average debt has increased 2.7 per cent to $20,891, a recent article in the Globe and Mail points out.
On the tipping point
Lulled by five years of rock-bottom interest rates, we have taken on mountains of debt. While an improvement in the economy would normally be accompanied by a fall in the number of bankruptcies, our financial situations are so precarious that a small rise in interest rates could have disastrous consequences.
“We might see bankruptcies rising alongside interest rates,” affirms CIBC economist Benjamin Tal in a Huffington Post article.
With a frenzied beginning to the holiday buying season – seen in the Canadian embrace of America’s Black Friday madness – all indications are that household debt will go even higher, as December’s credit card bills become due in January.
Homes and cars
Many Canadians have been lured into the housing market with low interest rates, even though house prices have soared in key markets. In Vancouver, for example, the average price of a single-family detached home is now close to, gulp!, $1 million.
Overall there has been a marked increase in mortgage debt that puts many at risk if we see an increase in interest rates.
Auto loans and installment loans have been responsible most of the debt increases, up 6.8 per cent and 5.8 per cent respectively, Equifax Canada points out. Installment loans are loans with fixed monthly payments, which can include loans us for cars, furniture or home renovations.
Not all bad news
While our debt levels have come up, delinquencies and bankruptcies have actually gone down in recent quarters. Perhaps people are more determined to live within their means, or they have become aware of how precarious their situation is.
If after the turkey leftovers are gone, and the bill statement begin to fill your mailbox and email inbox, you feel that your debt situation is getting out of hand, call us at Richard Killen & Associates.
As one of Toronto’s friendliest and most respected Licensed Insolvency Trustees, we’ll sit down with you for a free assessment. We will lay out your options, whether it is taking an amalgamation loan, negotiating with creditors, offering a consumer proposal or going into bankruptcy and starting again with a clean slate.
Let it be a very Happy New Year for everyone.
Who Does a Bankruptcy Trustee Work For?
We’re often asked by people who consult us: “Whom do you work for, the creditors or me?” The answer is: neither and both. To do our job properly, we need to work with both parties.
To be clear, a bankruptcy trustee is an officer of the court. We are licensed by the the Superintendent of Bankruptcy to act in a fiduciary capacity for all the participants, whether in a bankruptcy or a proposal. Fancy words, but what it means is that we are there to protect the interests and legal rights of both the debtor and the creditors.
So while we don’t in fact work for you, we do work with you to ensure that you can find the best solution for your circumstances.
When we first get together, during a free consultation at Richard Killen & Associates, we will ensure that you understand all your options. The most important thing we can do here is explain what the probable consequences will be for each of the options available to you. Only a trustee can do this comprehensively and effectively – probably because the trustee is the one who will be doing the actual work involved.
If you decide things will go forward after the free consultation, we’ll do all the necessary paperwork to get things started. After that, we will work with you and your creditors to administer the process in a way that is fully compliant with the law, so that you – and the creditors – get the full protection of that law.
So, even though the trustee doesn’t actually represent you the same way a lawyer or other professional does, he provides you with the best protection the law can supply and ultimately gets you to the destination you were seeking when you made your decision in the first place. That’s a lot to pack into a free consultation, isn’t it? Call Richard Killen & Associates and find out more.
How Much Debt is too Much Debt?
Canadians like their stuff. They’re not afraid to go into debt for their new cars, homes, large-screen TVs and other items, big ticket and small. As a result, many of us owe way too much.
Moody’s, one of the world’s leading credit agencies, recently gave Canada an AAA rating for its “relatively solid economic performance” and stable banking system. But at the same time it warns that the country’s high household debt levels and soaring house prices pose “a potential risk” to those strengths.
Even though debt isn’t usually a good thing, sometimes it can be justified. Rather than simply buying something we can’t afford, debt can be a shrewd way to get ahead if you’re reasonably sure that you will have the means to pay it off.
For example, a graduating lawyer expecting to make $250,000 could probably take on a mortgage and expect to pay it off in a decade, where someone freelancing in a shakier industry might find themselves on the road to financial disaster owing this much money.
So how much debt is too much?
A recent Financial Post article reports:
Statistics Canada says that the average level of household credit market debt to disposable income was 163.6% between April and June. That means we owe almost $1.64 for every $1 that we make. . . . Economists have said that a more stable ratio would be between 110% and 120%. The ratio was closer to those figures in the early 2000s when the economy was on firmer ground, says Cris deRitis, senior director at Moody’s Analytics.
From the bank’s point of view, when you total your monthly debt payments along with heating and taxes for your house, this number should not exceed 40% of your income. Lenders call this the Total Debt Servicing Ratio (TDSR). If you exceed this ratio, then you will have a hard time borrowing money.
When you make out a budget, you can figure out what minimal amount you need to support your lifestyle. Once you know this number, you can figure out how much money you can put towards your debts. If you don’t have enough money left over to pay these, then your debt level is too high.
And keep in mind that the bank doesn’t know this number when they offer you more credit. Just because you’re eligible for increased credit doesn’t mean you can afford it.
Generally speaking, if you’re worried that your debt level is too high, it probably is. The fastest way of all to measure this the 50% rule. If more than 50% of your income is going to servicing your debt load, your debt is too high. No question about it.
So in the end, if you’re having trouble servicing your debts and would like some help in assessing your prospects and options for dealing with the problem, call us at Richard Killen & Associates. We can help you sort it out and the consultation is free.
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