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Is your credit rating affected?

Is My Credit Rating Affected?

In this video, Licensed Insolvency Trustee in the GTA area, Richard Killen, talks about the how your credit rating will be impacted by your current financial situation and is not directly due to the fact that you are undergoing bankruptcy or a consumer proposal. As a matter of fact, it is the solution you need to get out of your financial troubles and start improving your credit rating.

Here are a few key takeaways from Richard’s informative clip:

  1. Of course, a person’s credit rating is affected, but not so much by the bankruptcy or consumer proposal itself. It’s the non-payment of the debts that negatively affects your credit rating.
  2. Most people who go bankrupt or do a consumer proposal have already fallen behind in payments and their credit rating is already diminished.
  3. One thing for sure: the only way to restore your credit rating is by taking care of the immediate problem- and thats where the bankrupt or consumer proposal does the job.
  4.  Think of a bankruptcy or a consumer proposal as the solution, not the problem.

Should you still feel uneasy about your debt and losing your assets, it’s definitely worth it to give a Licensed Insolvency Trustee a call or a visit so that they can give you all the information you will need to make this important decision and also to alleviate any worry and stress you may have.

There is no cost for your initial meeting and we will explain all of your options to you. We can meet with you during business hours or book after hours appointments if that is more convenient. Richard Killen and Associates is a Licensed Insolvency Trustee in bankruptcy Scarborough and have 10 locations across the Greater Toronto Area. Call us at (416) 285-9511

How Your Credit Rating is Affected

Richard Killen talks about how your credit will be affected should you declare bankruptcy in Toronto.

How To Rebuild Your Credit Rating

How To Rebuild Your Credit RatingYour 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?

Find Out Where You Stand
First, to see where you stand, get your sactual credit rating  from TransUnion Canada or Equifax Canada.

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.

Five Myths About Bankruptcy

Five Myths About BankruptcyWhen facing financial desolation, it’s hard to think straight, you are so gripped by worry. Bankruptcy plays into many people’s doomsday scenarios, imagining that it will be the end of them financially and personally, as family relationships are ripped apart under the strain.

The truth is, bankruptcy and consumer proposals are about getting control back over your life and feeling relief as you take steps towards recovery. As soon as bankruptcy is filed, the calls from creditors begin to stop and an immediate stay of proceedings means that none of your assets can be seized, other than those signed over in security in case of default.

The immediate emotional and financial relief can relieve the enormous burden on a family and actually repair the relationships of frazzled spouses.

Here are five myths that many people hold about the bankruptcy process:

1. Everyone is going to know that I am a deadbeat.
Though bankruptcy is a public proceeding it isn’t publicized. So even though there are sections in the newspaper devoted to bankruptcy notices aimed at alerting creditors, these only involve large or corporate bankruptcies. The only way your neighbours and friends would know that you are going bankrupt is if you tell them or  they decide to go to Office of the Superintendent of Bankruptcy’s website, register as a user and pay an $8 search fee to find you.  The chances of this happening are small to none at all.

2. I will never get credit again
Again, not true. A first-time bankruptcy is usually a nine month process. When the process is finished, you are free of previous debt and financial obligations, there are many companies eager to lend you money again. Some people can even get a loan or secured credit card while they are bankrupt. If you are like most people, you can start rebuilding your credit rating right away by getting, for example, that secured credit card. You may qualify for a mortgage or car loan in a few years. Here are five ways you can rebuild your credit.

3. I will lose everything I own.
Contrary to popular belief, you don’t lose all your assets when you go bankrupt. There may be some things you will have to give up, especially if you have a lot of assets, but you will probably get to keep your furniture and personal effects, your car and your business tools.  You may not even lose your house. While a secured creditor has the right to repossess the security you gave them if you default on your contract, they can’t do this merely because you’ve gone bankrupt, as long as you have managed to keep up your payments. Another thing, if you are worried about being able to renew a mortgage don’t be. These things are usually done almost automatically and even if you are still in the bankruptcy when the renewal time comes people do not usually have a problem, especially with the banks.

4. I’ll take my spouse down with me.
Your spouse and their property should not be affected by your bankruptcy. Each person is responsible for their own debts. So if your spouse hasn’t co-signed a loan or guaranteed your debt, then they won’t be directly affected and their credit rating won’t be damaged. There may be indirect consequences, however. For example, your spouse may not qualify for a loan in future if your bankruptcy prevents you from being able to co-sign for it. But nowadays this is very, very rare. You can read more about the impact of bankruptcy on spouses here.

5. Bankruptcy will eliminate all my debts.
Hold on, cowboy. While bankruptcy will bring you considerable relief, no one can wave a magic wand and make everything go away (Although sometimes that’s what seems to happen.). Certain debts aren’t wiped out by your discharge from the bankruptcy. These include court fines, alimony, debts that were incurred fraudulently and any debts that you continued to pay after the bankruptcy started such as a mortgage, a car loans, etc. Then there are some student loans that you would be responsible for after your discharge.

All of these “myths” are misleading and can make a person shy away from seeing a trustee. Big mistake! Contact us and we will make sure you get correct information so you can determine what’s the right course for you; a bankruptcy, a proposal, or some other option. Only you can decide, so get the facts and then you’ll be able to make a good decision.

Five Ways to Rebuild Your Credit

Five Ways to Rebuild Your CreditYou’ve gone through a bankruptcy and you want to get your life back to normal as fast as possible. While it won’t happen automatically and you will have to be proactive about it, you can actually take steps to start repairing your credit rating right away – as soon as you’re discharged. Here are five ways to do it:

Speak to Your Bank Manager: They are a good source of information to get you started on the road to credit repair. In most cases they are also quite supportive.

  1. Start Saving: Creditors like to lend to people who don’t really need the money. So use your savings account or open one if you don’t have it. Every pay period, put in a small amount in the account, perhaps arranging for an automatic withdrawal.  Or if you were used to paying the trustee a certain amount each month during the bankruptcy process, just continue to put the same money in your savings account. By the end of the year you would have a nice balance in the account, sure to impress creditors. (This is called paying yourself.)
  2. Get a Secured Credit Card: This type of credit card is secured by a deposit account that you own. So if you can scrape together, say, $500, you can use that as a deposit with the credit card company and get a $500 limit on a new credit card. You would still have to make regular payments on it every month like a regular credit card. If you keep this card in good standing it will all count towards rebuilding your credit rating.
  3. Pay Your Bills on Time: Pay all your bills, including utilities and credit cards, promptly. Creditors like to get paid on time. Some people are under the misapprehension that if they carry a balance on their credit card from month to month then that will endear them to the credit card company and boost their rating. Not so. It just costs you money.
  4. Get a Copy of Your Credit Report: There are two main Canadian credit bureaus, Equifax Canada and TransUnion Canada. This is where all your credit information is stored. You are entitled to get a copy of your credit report. Get it. You can see if there are any mistakes and correct them. You also have the option of putting in a short note that will be given out to anyone who collects a credit report on you.

About Richard Killen & Associates

Since 1992, Richard Killen & Associates, a Licensed Insolvency Trustee, have helped thousands of people resolve their financial problems. With 25 years experience in this industry, our president, Richard Killen, and the rest of our team understand the difficulties that honest people can sometimes find themselves in. This expertise makes it possible to provide you with a service that effectively deals with the issues.

Contact us now for a fresh start!

"Serving the GTA for 25 years."